8-K
MOTORCAR PARTS OF AMERICA INC (MPAA)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 9, 2021
Motorcar Parts of America, Inc.
(Exact name of registrant as specified in its charter)
| New York | 001-33861 | 11-2153962 |
|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
| 2929 California Street, Torrance, CA | 90503 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (310) 212-7910
N/A
(Former name, former address and former fiscal year, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule l4a-12 under the Exchange Act (17 CFR 240.l4a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). 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. ☐
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 |
| Item 2.02. | Results of Operations and Financial Condition |
|---|
On November 9, 2021, Motorcar Parts of America, Inc. (the "Company") issued a press release announcing its earnings for the fiscal quarter ended September 30, 2021 which is being furnished as Exhibit 99.1. The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to such filing. The information in this report, including the exhibit hereto, shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.
| Item 9.01. | Financial Statements and Exhibits. |
|---|
The following exhibit is furnished with this Current Report pursuant to Item 2.02:
| (d) | Exhibits |
|---|---|
| Exhibit No. | Description |
| --- | --- |
| 99.1 | Press Release, dated November 9, 2021 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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 hereunto duly authorized.
| MOTORCAR PARTS OF AMERICA, INC. | |
|---|---|
| Date: November 9, 2021 | /s/ David Lee |
| David Lee | |
| Chief Financial Officer |
Exhibit 99.1
NEWS RELEASE
CONTACT:
Gary S. Maier
(310) 972-5124
MOTORCAR PARTS OF AMERICA REPORTS STRONG FISCAL 2022
SECOND QUARTER
| • | Record net sales for the quarter and six-month period |
|---|---|
| • | Net sales for the quarter up 13.5 percent; 29.8 percent for six months; and 25.1 percent from the pre-COVID-19 six months |
| --- | --- |
| • | Net income for first half $4.5 million versus $12.2 million in the prior year, predominantly impacted by non-cash and non-economic foreign exchange items; and $38,000 for the pre-COVID-19<br> six-month period |
| --- | --- |
| • | Net income before impacting items for first half $21.8 million versus $15.1 million in the prior year (Exhibits attached); and $14.5 million for the pre-COVID-19 six-month period |
| --- | --- |
LOS ANGELES, CA – November 9, 2021 – Motorcar Parts of America, Inc. (Nasdaq: MPAA) today reported results for its fiscal 2022 second quarter ended September 30, 2021 – reflecting record sales for a quarter and six-month period.
Net sales for the fiscal 2022 second quarter increased 13.5 percent to $175.5 million from $154.7 million a year ago, and 16.7 percent from the pre-COVID-19 fiscal second quarter two years ago. Net sales for the three months ended September 30, 2021 included $13.7 million in core revenue compared with $12.8 million in the prior-year second quarter period, due to a realignment of inventory at customer distribution centers with expected future sales benefits as product mix changes.
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Motorcar Parts of America, Inc.
2-2-2
Net income for the fiscal 2022 second quarter was $3.7 million, or $0.19 per diluted share, compared with $15.2 million, or $0.78 per diluted share, a year ago. Details of items impacting net income totaling $0.49 per diluted share are shown in Exhibit 1.
“Net sales and profitability for the fiscal second quarter benefitted from continued strong demand for non-discretionary aftermarket parts, notwithstanding global supply chain challenges and disruptions that restrained our record sales performance. The company’s ongoing success continues to benefit from our multi-year strategic footprint expansion, with additional efficiencies expected to be realized moving forward,” said Selwyn Joffe, chairman, president and chief executive officer of Motorcar Parts of America.
He emphasized that the company has instituted price increases to mitigate ongoing freight and supply chain cost increases, and that the demand outlook continues to be strong. Joffe noted that the gross margins for the quarter only reflect a small portion of the price increases.
“In addition, our presence in the electric vehicle market is continuing to gain momentum -- driven by increasing demand for battery power emulation, testing and development of inverters, electric motors, and high-speed battery-charging station applications offered by our wholly owned D&V subsidiary,” Joffe added.
Gross profit and operating expenses for the fiscal second quarter continued to be impacted by COVID-19 expenses related to safety, health initiatives, inefficiencies in the supply chain and incrementally higher freight costs totaling approximately $6.0 million on a pre-tax basis, or $0.23 per share on a tax-effected basis.
Net cash used in operating activities was $19.6 million for the fiscal 2022 second quarter and net debt was $120.6 million at September 30, 2021 compared with $97.6 million at June 30, 2021, reflecting working capital requirements to support the record sales for the quarter and inventory increases for anticipated business growth.
Gross profit for the fiscal 2022 second quarter was $36.0 million compared with $39.7 million a year earlier. Gross profit as a percentage of net sales for the fiscal 2022 second quarter was 20.5 percent compared with 25.7 percent a year earlier. Gross margin was primarily impacted by higher costs related to COVID-19; brake caliper start-up costs and other product relocation expenses related to the expansion in Mexico; and other items, including non-cash and non-economic expenses totaling 5.1 percent, as detailed in Exhibit 3 of the press release. In addition to the above items, gross profit was further impacted by growth initiatives in connection with the expansion of the company’s new product lines, and inflationary costs related to the global pandemic, especially disruptions with worldwide supply chain and logistics services.
Six-Month Results
Net sales for the fiscal 2022 six-month period increased 29.8 percent to $324.6 million from $250.1 million a year earlier, and 25.1 percent from the pre-COVID-19 fiscal six-month period two years ago. Net sales for the six months ended September 30, 2021 included $13.7 million in core revenue compared with $12.8 million in the prior-year period, as discussed above.
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Motorcar Parts of America, Inc.
3-3-3
Net income for the fiscal 2022 six-month period was $4.5 million, or $0.23 per diluted share, compared with net income of $12.2 million, or $0.63 per diluted share, a year ago. Details of items impacting net income totaling $0.88 per diluted share are shown in Exhibit 2.
Net cash used in operating activities was $24.3 million during the six months ended September 30, 2021, and net debt was $120.6 million at September 30, 2021 compared with $88.9 million at March 31, 2021, reflecting working capital requirements to support the record sales for the six-month period and inventory increases for anticipated business growth.
Gross profit for the fiscal 2022 six-month period was $59.5 million compared with $53.1 million a year earlier. Gross profit as a percentage of net sales for the fiscal 2022 six-month period was 18.3 percent compared with 21.2 percent a year earlier. Details of items impacting gross profit as a percentage of net sales totaling 5.9 percent are shown in Exhibit 4.
Use of Non-GAAP Measure
This press release includes the following non-GAAP measure - EBITDA, which is not a measure of financial performance under GAAP and should not be considered as an alternative to net income as a measure of financial performance. The company believes this non-GAAP measure, when considered together with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to the company’s results of operations. However, this non-GAAP measure has significant limitations in that it does not reflect all the costs and other items associated with the operation of the company’s business as determined in accordance with GAAP. In addition, the company’s non-GAAP measures may be calculated differently and are therefore not comparable to similar measures by other companies. Therefore, investors should consider non-GAAP measures in addition to, and not as a substitute for, or superior to, measures of financial performance in accordance with GAAP. For a reconciliation of EBITDA to its corresponding GAAP measures, see the financial tables included in this press release. Also, refer to our Form 8-K to which this release is attached, and other filings we make with the SEC, for further information regarding these measures.
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 (833)-968-1924 (domestic) or (825)-312-2355 (international). For those who are not available to listen to the live broadcast, the call will be archived 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 on November 9, 2021 through 8:59 p.m. Pacific time on November 16, 2021 by calling (800)-585-8367 (domestic) or (416)-621-4642 (international) and using access code: 9954318.
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Motorcar Parts of America, Inc.
4-4-4
About Motorcar Parts of America, Inc.
Motorcar Parts of America, Inc. is a remanufacturer, manufacturer, and distributor of automotive aftermarket parts -- including alternators, starters, wheel bearings and hub assemblies, brake calipers, brake master cylinders, brake power boosters, turbochargers, and diagnostic testing equipment utilized in imported and domestic passenger vehicles, light trucks, and heavy-duty applications. Its products are sold to automotive retail outlets and the professional repair market throughout the United States, Canada, and Mexico, with facilities located in California, New York, Mexico, Malaysia, China and India, and administrative offices located in California, Tennessee, Mexico, Singapore, Malaysia, and Canada. In addition, the company’s electrical vehicle subsidiary designs and manufactures testing solutions for performance, endurance, and production of multiple components in the electric power train – providing simulation, emulation, and production applications for the electrification of both automotive and aerospace industries, including electric vehicle charging systems. 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 2021 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.
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(Financial tables follow)
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MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
| Three Months Ended<br><br> <br>September 30, | Six Months Ended<br><br> <br>September 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||||
| Net sales | $ | 175,548,000 | $ | 154,730,000 | $ | 324,582,000 | $ | 250,086,000 | ||
| Cost of goods sold | 139,597,000 | 115,004,000 | 265,060,000 | 196,973,000 | ||||||
| Gross profit | 35,951,000 | 39,726,000 | 59,522,000 | 53,113,000 | ||||||
| Operating expenses: | ||||||||||
| General and administrative | 14,465,000 | 12,518,000 | 26,951,000 | 24,205,000 | ||||||
| Sales and marketing | 5,520,000 | 4,326,000 | 10,888,000 | 8,526,000 | ||||||
| Research and development | 2,495,000 | 1,972,000 | 4,996,000 | 3,914,000 | ||||||
| Foreign exchange impact of lease liabilities and forward contracts | 3,917,000 | (3,985,000 | ) | 1,384,000 | (8,802,000 | ) | ||||
| Total operating expenses | 26,397,000 | 14,831,000 | 44,219,000 | 27,843,000 | ||||||
| Operating income | 9,554,000 | 24,895,000 | 15,303,000 | 25,270,000 | ||||||
| Interest expense, net | 3,620,000 | 3,614,000 | 7,561,000 | 8,023,000 | ||||||
| Income before income tax expense | 5,934,000 | 21,281,000 | 7,742,000 | 17,247,000 | ||||||
| Income tax expense | 2,251,000 | 6,097,000 | 3,198,000 | 5,075,000 | ||||||
| Net income | $ | 3,683,000 | $ | 15,184,000 | $ | 4,544,000 | $ | 12,172,000 | ||
| Basic net income per share | $ | 0.19 | $ | 0.80 | $ | 0.24 | $ | 0.64 | ||
| Diluted net income per share | $ | 0.19 | $ | 0.78 | $ | 0.23 | $ | 0.63 | ||
| Weighted average number of shares outstanding: | ||||||||||
| Basic | 19,135,356 | 19,022,414 | 19,094,904 | 18,999,461 | ||||||
| Diluted | 19,619,774 | 19,345,311 | 19,638,045 | 19,289,765 |
MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
| March 31, 2021 | |||||
|---|---|---|---|---|---|
| ASSETS | |||||
| Current assets: | |||||
| Cash and cash equivalents | 17,911,000 | $ | 15,523,000 | ||
| Short-term investments | 2,072,000 | 1,652,000 | |||
| Accounts receivable — net | 60,663,000 | 63,122,000 | |||
| Inventory | 330,494,000 | 302,913,000 | |||
| Contract assets | 32,329,000 | 26,940,000 | |||
| Prepaid expenses and other current assets | 12,952,000 | 12,706,000 | |||
| Total current assets | 456,421,000 | 422,856,000 | |||
| Plant and equipment — net | 51,236,000 | 53,854,000 | |||
| Operating lease assets | 84,576,000 | 71,513,000 | |||
| Long-term deferred income taxes | 19,861,000 | 19,381,000 | |||
| Long-term contract assets | 305,991,000 | 270,213,000 | |||
| Goodwill and intangible assets — net | 7,713,000 | 8,534,000 | |||
| Other assets | 1,414,000 | 1,531,000 | |||
| TOTAL ASSETS | 927,212,000 | $ | 847,882,000 | ||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
| Current liabilities: | |||||
| Accounts payable and accrued liabilities | 127,991,000 | $ | 152,735,000 | ||
| Customer finished goods returns accrual | 34,539,000 | 31,524,000 | |||
| Contract liabilities | 49,843,000 | 41,072,000 | |||
| Revolving loan | 120,000,000 | 84,000,000 | |||
| Other current liabilities | 6,638,000 | 6,683,000 | |||
| Operating lease liabilities | 6,033,000 | 6,439,000 | |||
| Current portion of term loan | 3,670,000 | 3,678,000 | |||
| Total current liabilities | 348,714,000 | 326,131,000 | |||
| Term loan, less current portion | 14,877,000 | 16,786,000 | |||
| Long-term contract liabilities | 162,007,000 | 125,223,000 | |||
| Long-term deferred income taxes | 74,000 | 73,000 | |||
| Long-term operating lease liabilities | 83,998,000 | 70,551,000 | |||
| Other liabilities | 7,295,000 | 7,973,000 | |||
| Total liabilities | 616,965,000 | 546,737,000 | |||
| 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 shares authorized; 19,172,755 and 19,045,386 shares issued and outstanding at September 30, 2021 and March 31, 2021,<br> respectively | 192,000 | 190,000 | |||
| Additional paid-in capital | 225,170,000 | 223,058,000 | |||
| Retained earnings | 90,137,000 | 85,593,000 | |||
| Accumulated other comprehensive loss | (5,252,000 | ) | (7,696,000 | ) | |
| Total shareholders' equity | 310,247,000 | 301,145,000 | |||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 927,212,000 | $ | 847,882,000 |
All values are in US Dollars.
Additional Information and 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 additional information and non-GAAP financial measures for the three and six months ended September 30, 2021 and 2020. Among other things, the company uses such additional information and non-GAAP adjusted financial measures in addition to and together with corresponding GAAP measures to help analyze the performance of its business.
The company believes this information helps provide a more complete understanding of the company's results of operations and the factors and trends affecting the company's business. However, this information should be considered as a supplement to, and not as a substitute for, or superior to, information contained in the company’s financial statements prepared in accordance with GAAP. In addition, the company’s non-GAAP measures may be calculated differently and are therefore not comparable to similar measures by other companies.
The company defines EBITDA as earnings before interest, taxes, depreciation, and amortization. A reconciliation of EBITDA to net income is provided below along with information regarding such items.
| Items Impacting Net Income for the Three Months Ended September 30, 2021 and 2020 | Exhibit 1 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended September 30, | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2021 | 2020 | |||||||||
| Per Share | Per Share | |||||||||
| GAAP net income | $ | 3,683,000 | $ | 0.19 | $ | 15,184,000 | $ | 0.78 | ||
| Items impacting net income | ||||||||||
| Core and finished goods premium amortization and new business return accruals | $ | 3,190,000 | $ | 0.16 | $ | 1,518,000 | $ | 0.08 | ||
| Impact of tariffs | - | - | (2,847,000 | (0.15 | ) | |||||
| New product line start-up costs and transition expenses (a) | 884,000 | 0.05 | 4,428,000 | 0.23 | ||||||
| Revaluation - cores on customers' shelves, and gain due to realignment of inventory at customer distribution centers | (3,175,000 | (0.16 | ) | (3,499,000 | (0.18 | ) | ||||
| Increased expenses related to COVID-19 (b) | 6,025,000 | 0.31 | 2,048,000 | 0.11 | ||||||
| Share-based compensation expenses and earn-out accruals | 1,981,000 | 0.10 | 1,200,000 | 0.06 | ||||||
| Foreign exchange impact of lease liabilities and forward contracts | 3,917,000 | 0.20 | (3,985,000 | (0.21 | ) | |||||
| Tax effect (c) | (3,206,000 | (0.16 | ) | 284,000 | 0.01 | |||||
| Total items impacting net income | $ | 9,616,000 | $ | 0.49 | $ | (853,000 | $ | (0.04 | ) |
All values are in US Dollars.
(a) For the three-months ended September 30, 2021, consists of $797,000 included in cost of goods sold and $87,000 included in operating expenses.
For the three-months ended September 30, 2020, consists of $4,054,000 included in cost of goods sold and $374,000 included in operating expenses.
(b) For the three-months ended September 30, 2021, consists of higher expenses due to COVID-19 of $5,452,000 impacting gross profit (primarily related to increased freight costs) and $573,000 included in operating expenses. For the three-months ended September 30, 2020,
consists of higher expenses due to COVID-19 of $1,533,000 impacting gross profit and $515,000 included in operating expenses.
(c) Tax effect is calculated by applying an income tax rate of 25.0% to items listed above; this rate may differ from the period's actual income tax rate.
| Items Impacting Net Income for the Six Months Ended September 30, 2021 and 2020 | Exhibit 2 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Six Months Ended September 30, | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2021 | 2020 | |||||||||
| Per Share | Per Share | |||||||||
| GAAP net income | $ | 4,544,000 | $ | 0.23 | $ | 12,172,000 | $ | 0.63 | ||
| Items impacting net income | ||||||||||
| Core and finished goods premium amortization and new business return accruals | $ | 5,867,000 | $ | 0.30 | $ | 3,048,000 | $ | 0.16 | ||
| Impact of tariffs | - | - | (2,847,000 | (0.15 | ) | |||||
| New product line start-up costs and transition expenses (a) | 3,067,000 | 0.16 | 8,014,000 | 0.42 | ||||||
| Revaluation - cores on customers' shelves, and gain due to realignment of inventory at customer distribution centers | (2,191,000 | (0.11 | ) | (2,115,000 | (0.11 | ) | ||||
| Increased expenses related to COVID-19 (b) | 11,322,000 | 0.58 | 4,343,000 | 0.23 | ||||||
| Share-based compensation expenses and earn-out accruals | 3,524,000 | 0.18 | 2,236,000 | 0.12 | ||||||
| Foreign exchange impact of lease liabilities and forward contracts | 1,384,000 | 0.07 | (8,802,000 | (0.46 | ) | |||||
| Tax effect (c) | (5,743,000 | (0.29 | ) | (969,000 | (0.05 | ) | ||||
| Total items impacting net income | $ | 17,230,000 | $ | 0.88 | $ | 2,908,000 | $ | 0.15 |
All values are in US Dollars.
(a) For the six-months ended September 30, 2021, consists of $2,744,000 included in cost of goods sold and $323,000 included in operating expenses.
For the six-months ended September 30, 2020, consists of $7,355,000 included in cost of goods sold and $659,000 included in operating expenses.
(b) For the six-months ended September 30, 2021, consists of higher expenses due to COVID-19 of $10,213,000 impacting gross profit (primarily related to increased freight costs) and $1,109,000 included in operating expenses. For the six-months ended September 30, 2020,
consists of higher expenses due to COVID-19 of $3,373,000 impacting gross profit and $970,000 included in operating expenses.
(c) Tax effect is calculated by applying an income tax rate of 25.0% to items listed above; this rate may differ from the period's actual income tax rate.
| Items Impacting Gross Profit for the Three Months Ended September 30, 2021 and 2020 | Exhibit 3 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended September 30, | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2021 | 2020 | |||||||||
| Gross Margin | Gross Margin | |||||||||
| GAAP gross profit | $ | 35,951,000 | 20.5 | % | $ | 39,726,000 | 25.7 | % | ||
| Items impacting gross profit | ||||||||||
| Core and finished goods premium amortization and new business return accruals | $ | 3,190,000 | 1.8 | % | $ | 1,518,000 | 1.0 | % | ||
| Impact of tariffs | - | - | (2,847,000 | -1.8 | % | |||||
| New product line start-up costs and transition expenses | 797,000 | 0.5 | % | 4,054,000 | 2.6 | % | ||||
| Revaluation - cores on customers' shelves, and gain due to realignment of inventory at customer distribution centers (a) | (3,175,000 | -0.3 | % | (3,499,000 | -0.2 | % | ||||
| Increased expenses related to COVID-19 | 5,452,000 | 3.1 | % | 1,533,000 | 1.0 | % | ||||
| Total items impacting gross profit | $ | 6,264,000 | 5.1 | % | $ | 759,000 | 2.5 | % |
All values are in US Dollars.
(a) gross margin reflecting impact to net sales and cost of goods sold
| Items Impacting Gross Profit for the Six Months Ended September 30, 2021 and 2020 | Exhibit 4 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Six Months Ended September 30, | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2021 | 2020 | |||||||||
| Gross Margin | Gross Margin | |||||||||
| GAAP gross profit | $ | 59,522,000 | 18.3 | % | $ | 53,113,000 | 21.2 | % | ||
| Items impacting gross profit | ||||||||||
| Core and finished goods premium amortization and new business return accruals | $ | 5,867,000 | 1.8 | % | $ | 3,048,000 | 1.2 | % | ||
| Impact of tariffs | - | - | (2,847,000 | -1.1 | % | |||||
| New product line start-up costs and transition expenses | 2,744,000 | 0.8 | % | 7,355,000 | 2.9 | % | ||||
| Revaluation - cores on customers' shelves, and gain due to realignment of inventory at customer distribution centers (a) | (2,191,000 | 0.1 | % | (2,115,000 | 0.2 | % | ||||
| Increased expenses related to COVID-19 | 10,213,000 | 3.1 | % | 3,373,000 | 1.3 | % | ||||
| Total items impacting gross profit | $ | 16,633,000 | 5.9 | % | $ | 8,814,000 | 4.6 | % |
All values are in US Dollars.
(a) gross margin reflecting impact to net sales and cost of goods sold
| Items Impacting EBITDA for the Three and Six Months Ended September 30, 2021 and 2020 | Exhibit 5 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2021 | 2020 | 2021 | 2020 | |||||||||
| GAAP net income | $ | 3,683,000 | $ | 15,184,000 | $ | 4,544,000 | $ | 12,172,000 | ||||
| Interest expense, net | 3,620,000 | 3,614,000 | 7,561,000 | 8,023,000 | ||||||||
| Income tax expense | 2,251,000 | 6,097,000 | 3,198,000 | 5,075,000 | ||||||||
| Depreciation and amortization | 3,219,000 | 2,682,000 | 6,364,000 | 5,233,000 | ||||||||
| EBITDA | $ | 12,773,000 | $ | 27,577,000 | $ | 21,667,000 | $ | 30,503,000 | ||||
| Items impacting EBITDA | ||||||||||||
| Core and finished goods premium amortization and new business return accruals | $ | 3,190,000 | $ | 1,518,000 | $ | 5,867,000 | $ | 3,048,000 | ||||
| Impact of tariffs | - | (2,847,000 | ) | - | (2,847,000 | ) | ||||||
| New product line start-up costs and transition expenses (a) | 820,000 | 4,318,000 | 2,836,000 | 7,814,000 | ||||||||
| Revaluation - cores on customers' shelves, and gain due to realignment of inventory at customer distribution centers | (3,175,000 | ) | (3,499,000 | ) | (2,191,000 | ) | (2,115,000 | ) | ||||
| Increased expenses related to COVID-19 | 6,025,000 | 2,048,000 | 11,322,000 | 4,343,000 | ||||||||
| Share-based compensation expenses and earn-out accruals | 1,981,000 | 1,200,000 | 3,524,000 | 2,236,000 | ||||||||
| Foreign exchange impact of lease liabilities and forward contracts | 3,917,000 | (3,985,000 | ) | 1,384,000 | (8,802,000 | ) | ||||||
| Total items impacting EBITDA | $ | 12,758,000 | $ | (1,247,000 | ) | $ | 22,742,000 | $ | 3,677,000 |
(a) Excludes depreciation, which is included in the depreciation and amortization line item.