Exhibit 99.1
NEWS RELEASE
CONTACT:
Gary S. Maier
(310) 972-5124
MOTORCAR PARTS OF AMERICA REPORTS FISCAL 2020
FOURTH QUARTER AND YEAR-END RESULTS
-- Sales up 13.3 Percent for Record Year; Positive Annual Cash Flow Reflecting Strong Second Half --
LOS ANGELES, CA – June 15, 2020 – Motorcar Parts of America, Inc. (Nasdaq: MPAA) today reported results for its fiscal 2020 fourth quarter and
year ended March 31, 2020 -- reflecting generation of cash flow from operations of $18.8 million for the fiscal year and gross margin improvement.
Net sales for the fiscal 2020 fourth quarter increased 16.8 percent to a record $150.7 million from $129.1 million for the same period a year earlier.
Net loss for the fiscal 2020 fourth quarter was $8.2 million, or $0.43 per share, compared with a net loss of $2.8 million, or $0.15 per share, a year ago. Results for the fiscal 2020 fourth quarter were impacted by
items totaling approximately $25.8 million on a pre-tax basis, or $1.02 per share on a tax-effected basis, as detailed in Exhibit 1. The $25.8 million includes non-cash items of $23.0 million, primarily consisting of the re-measurement of the company’s
Mexico lease liabilities and its forward foreign exchange contracts due to the significant devaluation in the Mexican Peso, and transition expenses of $2.8 million related to the expansion of the company’s footprint in Mexico.
The net loss for the prior-year period was impacted by items totaling approximately $17.2 million on a pre-tax basis, or $0.70 per share on a tax-effected basis, as detailed in Exhibit 1. The
company has decided to eliminate its reporting of certain non-GAAP financial measures. For information about items that impacted the results, see Exhibits 1 through 5.
“Notwithstanding the global pandemic, which began to impact the automotive aftermarket in mid-March, we achieved record sales and generated strong cash flow from operations. While the sharp decline in the value of the
Mexican peso US dollar exchange rate resulted in large non-cash expenses, the underlying operating results for the company are strong,” said Selwyn Joffe, chairman, president and chief executive officer of Motorcar Parts of America.
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Motorcar Parts of America, Inc.
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Joffe noted the facilities expansion in Mexico and the company’s brake caliper launch are rapidly nearing completion, and as such the transition costs will be substantially eliminated by the end of this fiscal year.
Gross profit for the fiscal 2020 fourth quarter was $36.6 million compared with $26.0 million a year earlier. Gross profit as a percentage of net sales for the fiscal 2020 fourth quarter was 24.3 percent compared
with 20.1 percent a year earlier.
Adjusted gross profit for the fiscal 2020 fourth quarter was $40.2 million compared with $36.6 million a year ago. Adjusted gross profit as a percentage of net sales for the three months was 26.7 percent compared
with 28.3 percent a year earlier, as detailed in Exhibit 3.
Gross profit and adjusted gross profit for the fiscal 2020 fourth quarter were negatively impacted by 0.6 percent due to core buyback premium amortization. Gross profit and adjusted gross profit for the
prior-year period were also impacted by several items as detailed in Exhibit 3, totaling 2.4 percent.
Twelve-Month Results
Net sales for fiscal 2020 increased 13.3 percent to a record $535.8 million from $472.8 million a year
earlier.
Net loss for fiscal 2020 was $7.3 million, or $0.39 per share, compared with a net loss of $7.8 million, or $0.42 per share, a year ago. Results for fiscal 2020 were impacted by approximately $50.0 million on a
pre-tax basis, or $1.99 per share on a tax-effected basis, as detailed in Exhibit 2. The $50.0 million includes non-cash items of $37.7 million -- consisting of non-cash, mark-to-market expenses related to the significant devaluation in the Mexican
Peso and revaluation of cores on customers’ shelves. In addition, the items totaling $50.0 million include $12.3 million primarily due to transition expenses related to the expansion of the company’s footprint in Mexico.
The net loss for the prior-year period was impacted by items totaling approximately $51.9 million on a pre-tax basis, or $2.08 per share on a tax-effected basis, detailed in Exhibit 2.
Gross profit for fiscal 2020 was $118.4 million compared with $89.2 million a year earlier.
Gross profit as a percentage of net sales for fiscal 2020 was 22.1 percent compared with 18.9 percent a year earlier.
Adjusted gross profit for fiscal 2020 was $135.9 million compared with $117.2 million a year
ago. Adjusted gross profit as a percentage of net sales for fiscal 2020 was 25.4 percent compared with 24.8 percent a year earlier, as detailed in Exhibit 4.
Gross profit and adjusted gross profit for fiscal 2020 were negatively impacted by core buyback premium amortization, customer allowances and return accruals related to new business, and the impact of
tariff costs before being passed through to customers. This negatively affected adjusted gross margins by a combined 1.2 percent.
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Gross profit and adjusted gross profit for the prior fiscal year were negatively impacted by several items detailed in Exhibit 4, totaling 2.7 percent.
Joffe emphasized the company’s ongoing commitment to being socially responsible, particularly during this challenging period. He highlighted that one of the company’s many initiatives includes its food programs for
employees and members of the community. “We should never lose sight of our individual and collective responsibilities, particularly in times of crisis, and we always strive to nurture this spirit in our day-to-day activities,” Joffe said.
FISCAL 2021 OUTLOOK
After record sales and a strong end to fiscal 2020, April brought a sharp decrease in demand, as home sheltering took effect across the country. The company implemented a variety of safety and cost-savings initiatives to
proactively address the crisis, while at the same time remained prepared for an anticipated resumption of demand. Industry reports indicate that sales of hard parts have increased substantially over the past 45 days, indicating that we may have
experienced the low point.
Joffe noted it is encouraging that the company’s sales improved significantly in May, and June is trending nicely.
“Our industry has proven to be resilient and we remain committed to our strategic plans for growth and profitability focusing on excellent returns to our
shareholders. However, the company believes it is prudent at this time to not provide annual sales and gross margin guidance.
“Clearly the past few months have been a challenging period for our company, our employees and their families. We are tremendously appreciative of everyone’s contributions and the dedicated focus on providing essential
automotive aftermarket products under extraordinary circumstances. Our employees have exhibited enormous bravery, commitment, and innovation to ensure the safety of our entire team. They have accomplished this without compromising our commitment to
our customers that they receive their orders with the quality and promptness they expect from MPA. These people are true heroes and we will continue with our utmost commitment and social responsibility to this team, their families, and our customers.
“We are an essential supplier in the $125 billion hard parts industry and well-positioned for growth in the aftermarket industry, and especially proud to play an important role in keeping vehicles of all kinds on the
road,” said Selwyn Joffe, chairman, president and chief executive officer of Motorcar Parts of America.
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Use of Non-GAAP Measures
This press release includes the following non-GAAP measures - adjusted gross profit, adjusted gross margin and EBITDA, which are not measures of financial performance under GAAP, and should not be considered as
alternatives to gross profit, gross profit margin or net loss as a measure of financial performance. The company has decided to eliminate its reporting of other non-GAAP financial measures and instead provide additional information about items that
impact its results. The company believes these non-GAAP measures, when considered together with the corresponding GAAP measures, provide useful information to investors and management regarding financial and business trends relating to the company’s
results of operations. However, these non-GAAP measures have significant limitations in that they do 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 adjusted gross profit, adjusted gross margin and EBITDA to their 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 June 15, 2020 through 8:59 p.m. Pacific time on June 23, 2020 by calling
(800)-585-8367 (domestic) or (416)-621-4642 (international) and using access code: 2892708.
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 bearing and hub
assemblies, brake calipers, brake master cylinders, brake power boosters, rotors, brake pads and turbochargers utilized in imported and domestic passenger vehicles, light trucks and heavy-duty applications. In addition, the company designs and
manufactures test solutions for performance, endurance and production testing of electric motors, inverters, alternators, starters, and belt starter generators for the OE, aerospace, and aftermarket. Motorcar Parts of America’s products are sold to
automotive retail outlets and the professional repair market throughout the United States and Canada, with facilities located in New York, California, Mexico, Malaysia, China and India, and administrative offices located in California, Tennessee,
Mexico, Singapore, Malaysia and Canada. Additional information is available at www.motorcarparts.com.
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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
2020 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)
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MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
|
Three Months Ended March 31,
|
Twelve Months Ended March 31,
|
|||||||||||||||
|
2020
|
2019
|
2020
|
2019
|
|||||||||||||
|
(Unaudited)
|
||||||||||||||||
|
Net sales
|
$
|
150,735,000
|
$
|
129,077,000
|
$
|
535,831,000
|
$
|
472,797,000
|
||||||||
|
Cost of goods sold
|
114,152,000
|
103,127,000
|
417,431,000
|
383,623,000
|
||||||||||||
|
Gross profit
|
36,583,000
|
25,950,000
|
118,400,000
|
89,174,000
|
||||||||||||
|
Operating expenses:
|
||||||||||||||||
|
General and administrative
|
34,522,000
|
12,553,000
|
71,425,000
|
45,972,000
|
||||||||||||
|
Sales and marketing
|
5,047,000
|
5,464,000
|
21,037,000
|
19,542,000
|
||||||||||||
|
Research and development
|
2,506,000
|
2,440,000
|
9,200,000
|
8,014,000
|
||||||||||||
|
Total operating expenses
|
42,075,000
|
20,457,000
|
101,662,000
|
73,528,000
|
||||||||||||
|
Operating (loss) income
|
(5,492,000
|
)
|
5,493,000
|
16,738,000
|
15,646,000
|
|||||||||||
|
Interest expense, net
|
5,464,000
|
6,689,000
|
25,039,000
|
23,227,000
|
||||||||||||
|
Loss before income tax (benefit) expense
|
(10,956,000
|
)
|
(1,196,000
|
)
|
(8,301,000
|
)
|
(7,581,000
|
)
|
||||||||
|
Income tax (benefit) expense
|
(2,763,000
|
)
|
1,569,000
|
(1,011,000
|
)
|
268,000
|
||||||||||
|
Net loss
|
$
|
(8,193,000
|
)
|
$
|
(2,765,000
|
)
|
$
|
(7,290,000
|
)
|
$
|
(7,849,000
|
)
|
||||
|
Basic net loss per share
|
$
|
(0.43
|
)
|
$
|
(0.15
|
)
|
$
|
(0.39
|
)
|
$
|
(0.42
|
)
|
||||
|
Diluted net loss per share
|
$
|
(0.43
|
)
|
$
|
(0.15
|
)
|
$
|
(0.39
|
)
|
$
|
(0.42
|
)
|
||||
|
Weighted average number of shares outstanding:
|
||||||||||||||||
|
Basic
|
18,967,865
|
18,814,133
|
18,913,788
|
18,849,909
|
||||||||||||
|
Diluted
|
18,967,865
|
18,814,133
|
18,913,788
|
18,849,909
|
||||||||||||
MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
|
March 31, 2020
|
March 31, 2019
|
|||||||
|
ASSETS
|
||||||||
|
Current assets:
|
||||||||
|
Cash and cash equivalents
|
$
|
49,616,000
|
$
|
9,911,000
|
||||
|
Short-term investments
|
850,000
|
3,273,000
|
||||||
|
Accounts receivable — net
|
91,748,000
|
56,015,000
|
||||||
|
Inventory — net
|
225,659,000
|
233,726,000
|
||||||
|
Inventory unreturned
|
9,021,000
|
8,469,000
|
||||||
|
Contract assets
|
20,332,000
|
22,183,000
|
||||||
|
Income tax receivable
|
3,282,000
|
10,009,000
|
||||||
|
Prepaid expenses and other current assets
|
8,608,000
|
9,296,000
|
||||||
|
Total current assets
|
409,116,000
|
352,882,000
|
||||||
|
Plant and equipment — net
|
44,957,000
|
35,151,000
|
||||||
|
Operating lease assets
|
53,029,000
|
-
|
||||||
|
Long-term deferred income taxes
|
18,950,000
|
9,746,000
|
||||||
|
Long-term contract assets
|
239,540,000
|
221,876,000
|
||||||
|
Goodwill
|
3,205,000
|
3,205,000
|
||||||
|
Intangible assets — net
|
6,393,000
|
8,431,000
|
||||||
|
Other assets
|
1,839,000
|
1,071,000
|
||||||
|
TOTAL ASSETS
|
$
|
777,029,000
|
$
|
632,362,000
|
||||
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
|
Current liabilities:
|
||||||||
|
Accounts payable
|
$
|
78,664,000
|
$
|
92,461,000
|
||||
|
Accrued liabilities
|
16,419,000
|
14,604,000
|
||||||
|
Customer finished goods returns accrual
|
25,326,000
|
22,615,000
|
||||||
|
Contract liabilities
|
27,911,000 |
30,599,000
|
||||||
|
Revolving loan
|
152,000,000
|
110,400,000
|
||||||
|
Other current liabilities
|
9,390,000
|
4,990,000
|
||||||
|
Operating lease liabilities
|
5,104,000
|
-
|
||||||
|
Current portion of term loan
|
3,678,000
|
3,685,000
|
||||||
|
Total current liabilities
|
318,492,000 |
279,354,000
|
||||||
|
Term loan, less current portion
|
20,462,000
|
24,187,000
|
||||||
|
Long-term contract liabilities
|
92,101,000 |
40,889,000
|
||||||
|
Long-term deferred income taxes
|
79,000
|
257,000
|
||||||
|
Long-term operating lease liabilities
|
61,425,000
|
-
|
||||||
|
Other liabilities
|
8,950,000
|
7,920,000
|
||||||
|
Total liabilities
|
501,509,000
|
352,607,000
|
||||||
|
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; 18,969,380 and 18,817,400 shares issued and outstanding at March 31, 2020 and 2019, respectively
|
190,000
|
188,000
|
||||||
|
Additional paid-in capital
|
218,581,000
|
215,047,000
|
||||||
|
Retained earnings
|
64,117,000
|
71,407,000
|
||||||
|
Accumulated other comprehensive loss
|
(7,368,000
|
)
|
(6,887,000
|
)
|
||||
|
Total shareholders' equity
|
275,520,000
|
279,755,000
|
||||||
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
777,029,000
|
$
|
632,362,000
|
||||
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
twelve months ended March 31, 2020 and 2019. 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. The Company is no longer disclosing an Adjusted EBITDA financial measure and is instead providing information about items that could affect EBITDA. A
reconciliation of EBITDA to net loss is provided below along with information regarding such items.
|
Items Impacting Net Loss for the Three Months Ended March 31, 2020
|
Exhibit 1 |
|
Three Months Ended March 31,
|
||||||||||||||||
|
2020
|
2019
|
|||||||||||||||
| $ |
Per Share
|
$ |
Per Share
|
|||||||||||||
|
GAAP net loss
|
$
|
(8,193,000
|
)
|
$
|
(0.43
|
)
|
$
|
(2,765,000
|
)
|
$
|
(0.15
|
)
|
||||
|
Items impacting net loss
|
||||||||||||||||
|
Customer allowances, return accruals and changeover costs (a) related to new business and product line expansion, net of costs
|
(54,000
|
)
|
(0.00
|
)
|
2,260,000
|
0.12
|
||||||||||
|
Core buy-back premium amortization
|
958,000
|
0.05
|
1,093,000
|
0.06
|
||||||||||||
|
New product line start-up costs and transition expenses (b)
|
2,816,000
|
0.15
|
3,384,000
|
0.18
|
||||||||||||
|
Revaluation - cores on customers' shelves
|
932,000
|
0.05
|
7,377,000
|
0.39
|
||||||||||||
|
Inventory step-up amortization
|
-
|
-
|
104,000
|
0.01
|
||||||||||||
|
Acquisition costs and earn-out accruals, financing, severance, and restatement-related fees
|
(553,000
|
)
|
(0.03
|
)
|
1,253,000
|
0.07
|
||||||||||
|
Share-based compensation expenses
|
1,029,000
|
0.05
|
2,413,000
|
0.13
|
||||||||||||
|
Mark-to-market losses (gains)
|
20,708,000
|
1.09
|
(656,000
|
)
|
(0.03
|
)
|
||||||||||
|
Tax effect (c)
|
(6,459,000
|
)
|
(0.34
|
)
|
(4,307,000
|
)
|
(0.23
|
)
|
||||||||
(a) Includes changeover costs related to new business of $301,000 recorded in operating expenses for the three months ended March 31, 2019.
(b) Consists of $2,508,000 included in cost of goods sold and $308,000 included in operating expenses for the three months ended March 31, 2020 and $2,512,000 included in cost of goods sold and $872,000 included in operating expenses for the three
months ended March 31, 2019.
(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. Historically, the company calculated the tax impact by applying an income tax rate of 25.0% to
adjusted pre-tax income; if calculated on that basis, the tax effect would have been ($6,483,000) or ($0.34) per share and ($2,439,000) or ($0.13) per share for three months ended March 31, 2020 and 2019, respectively.
| Items Impacting Net Loss for the Twelve Months Ended March 31, 2020 | Exhibit 2 |
|
Twelve Months Ended March 31,
|
||||||||||||||||
|
2020
|
2019
|
|||||||||||||||
| $ |
Per Share
|
$ |
Per Share
|
|||||||||||||
|
GAAP net loss
|
$
|
(7,290,000
|
)
|
$
|
(0.39
|
)
|
$
|
(7,849,000
|
)
|
$
|
(0.42
|
)
|
||||
|
Items impacting net loss
|
||||||||||||||||
|
Customer allowances, return accruals and changeover costs (a) related to new business and product line expansion, net of costs
|
1,177,000
|
0.06
|
6,907,000
|
0.37
|
||||||||||||
|
Core buy-back premium amortization
|
4,501,000
|
0.24
|
4,126,000
|
0.22
|
||||||||||||
|
Impact of tariff costs before being passed through to customers
|
1,067,000
|
0.06
|
1,526,000
|
0.08
|
||||||||||||
|
Loss in connection with a cancelled contract
|
133,000
|
0.01
|
764,000
|
0.04
|
||||||||||||
|
New product line start-up costs and transition expenses (b)
|
10,281,000
|
0.54
|
10,528,000
|
0.56
|
||||||||||||
|
Revaluation - cores on customers' shelves
|
10,799,000
|
0.57
|
18,843,000
|
1.00
|
||||||||||||
|
Inventory step-up amortization
|
-
|
-
|
104,000
|
0.01
|
||||||||||||
|
Acquisition costs and earn-out accruals, financing, severance, and restatement-related fees
|
(261,000
|
)
|
(0.01
|
)
|
2,296,000
|
0.12
|
||||||||||
|
Share-based compensation expenses
|
4,141,000
|
0.22
|
5,564,000
|
0.30
|
||||||||||||
|
Mark-to-market losses (gains)
|
18,201,000
|
0.96
|
972,000
|
0.05
|
||||||||||||
|
Write-off of debt issuance costs
|
-
|
-
|
303,000
|
0.02
|
||||||||||||
|
Tax effect (c)
|
(12,510,000
|
)
|
(0.66
|
)
|
(12,983,000
|
)
|
(0.69
|
)
|
||||||||
(a) Includes changeover costs related to new business of $112,000 and $865,000 recorded in operating expenses for the twelve months ended March 31, 2020 and 2019, respectively.
(b) Consists of $8,337,000 included in cost of goods sold and $1,944,000 included in operating expenses for the twelve months ended March 31, 2020 and $8,178,000 included in cost of goods sold and $2,350,000 included in operating expenses for the
twelve months ended March 31, 2019.
(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. Historically, the company calculated the tax impact by applying an income tax rate of 25.0% to
adjusted pre-tax income; if calculated on that basis, the tax effect would have been ($11,446,000) or ($0.59) per share and ($10,821,000) or ($0.56) per share for twelve months ended March 31, 2020 and 2019, respectively.
| Items Impacting Gross Profit for the Three Months Ended March 31, 2020 | Exhibit 3 |
|
Three Months Ended March 31,
|
||||||||||||||||
|
2020
|
2019
|
|||||||||||||||
| $ |
Gross Margin
|
$ |
Gross Margin
|
|||||||||||||
|
GAAP gross profit
|
$
|
36,583,000
|
24.3
|
%
|
$
|
25,950,000
|
20.1
|
%
|
||||||||
|
Adjustments:
|
||||||||||||||||
|
New product line start-up costs and transition expenses
|
2,508,000
|
1.7
|
%
|
2,512,000
|
1.9
|
%
|
||||||||||
|
Revaluation - cores on customers' shelves
|
932,000
|
0.6
|
%
|
7,377,000
|
5.7
|
%
|
||||||||||
|
Loss related to under return of cores
|
215,000
|
0.1
|
%
|
716,000
|
0.6
|
%
|
||||||||||
|
Total adjustments
|
3,655,000
|
2.4
|
%
|
10,605,000
|
8.2
|
%
|
||||||||||
|
Adjusted gross profit (a)
|
$
|
40,238,000
|
26.7
|
%
|
$
|
36,555,000
|
28.3
|
%
|
||||||||
|
Other items not adjusted
|
||||||||||||||||
|
Customer allowances and return accruals related to new business and product line expansion, net of costs
|
(54,000
|
)
|
0.0
|
%
|
1,959,000
|
1.5
|
%
|
|||||||||
|
Core buy-back premium amortization
|
958,000
|
0.6
|
%
|
1,093,000
|
0.8
|
%
|
||||||||||
|
Inventory step-up amortization
|
-
|
-
|
104,000
|
0.1
|
%
|
|||||||||||
(a) Adjusted gross margin is based on GAAP net sales; historically, the company calculated the adjusted gross margin percentage based on adjusted net sales, which it no longer utilize.
| Items Impacting Gross Profit for the Twelve Months Ended March 31, 2020 | Exhibit 4 |
|
Twelve Months Ended March 31,
|
||||||||||||||||
|
2020
|
2019
|
|||||||||||||||
| $ |
Gross Margin
|
$ |
Gross Margin
|
|||||||||||||
|
GAAP gross profit
|
$
|
118,400,000
|
22.1
|
%
|
$
|
89,174,000
|
18.9
|
%
|
||||||||
|
Adjustments:
|
||||||||||||||||
|
New product line start-up costs and transition expenses
|
8,337,000
|
1.6
|
%
|
8,178,000
|
1.7
|
%
|
||||||||||
|
Revaluation - cores on customers' shelves
|
10,799,000
|
2.0
|
%
|
18,843,000
|
4.0
|
%
|
||||||||||
|
(Income) loss related to under return of cores
|
(1,609,000
|
)
|
-0.3
|
%
|
962,000
|
0.2
|
%
|
|||||||||
|
Total adjustments
|
17,527,000
|
3.3
|
%
|
27,983,000
|
5.9
|
%
|
||||||||||
|
Adjusted gross profit (a)
|
$
|
135,927,000
|
25.4
|
%
|
$
|
117,157,000
|
24.8
|
%
|
||||||||
|
Other items not adjusted
|
||||||||||||||||
|
Customer allowances and return accruals related to new business and product line expansion, net of costs
|
1,065,000
|
0.2
|
%
|
6,042,000
|
1.3
|
%
|
||||||||||
|
Core buy-back premium amortization
|
4,501,000
|
0.8
|
%
|
4,126,000
|
0.9
|
%
|
||||||||||
|
Impact of tariff costs before being passed through to customers
|
1,067,000
|
0.2
|
%
|
1,526,000
|
0.3
|
%
|
||||||||||
|
Loss in connection with a cancelled contract
|
133,000
|
0.0
|
%
|
764,000
|
0.2
|
%
|
||||||||||
|
Inventory step-up amortization
|
-
|
104,000
|
0.0
|
%
|
||||||||||||
(a) Adjusted gross margin is based on GAAP net sales; historically, the company calculated the adjusted gross margin percentage based on adjusted net sales, which it no longer utilize.
|
Items Impacting EBITDA for the Three and Twelve Months Ended March 31, 2020
|
Exhibit 5
|
|
Three Months Ended March 31,
|
Twelve Months Ended March 31,
|
|||||||||||||||
|
2020
|
2019
|
2020
|
2019
|
|||||||||||||
|
GAAP net loss
|
$
|
(8,193,000
|
)
|
$
|
(2,765,000
|
)
|
$
|
(7,290,000
|
)
|
$
|
(7,849,000
|
)
|
||||
|
Interest expense, net
|
5,464,000
|
6,689,000
|
25,039,000
|
23,227,000
|
||||||||||||
|
Income tax (benefit) expense
|
(2,763,000
|
)
|
1,569,000
|
(1,011,000
|
)
|
268,000
|
||||||||||
|
Depreciation and amortization
|
2,542,000
|
2,396,000
|
9,561,000
|
7,329,000
|
||||||||||||
|
EBITDA
|
$
|
(2,950,000
|
)
|
$
|
7,889,000
|
$
|
26,299,000
|
$
|
22,975,000
|
|||||||
|
Items impacting EBITDA
|
||||||||||||||||
|
Customer allowances, return accruals and changeover costs related to new business and product line expansion, net of costs
|
(54,000
|
)
|
2,260,000
|
1,177,000
|
6,907,000
|
|||||||||||
|
Core buy-back premium amortization
|
958,000
|
1,093,000
|
4,501,000
|
4,126,000
|
||||||||||||
|
Impact of tariff costs before being passed through to customers
|
-
|
-
|
1,067,000
|
1,526,000
|
||||||||||||
|
Loss in connection with a cancelled contract
|
-
|
-
|
133,000
|
764,000
|
||||||||||||
|
New product line start-up costs and transition expenses (a)
|
2,752,000
|
3,095,000
|
9,998,000
|
9,712,000
|
||||||||||||
|
Revaluation - cores on customers' shelves
|
932,000
|
7,377,000
|
10,799,000
|
18,843,000
|
||||||||||||
|
Inventory step-up amortization
|
-
|
104,000
|
-
|
104,000
|
||||||||||||
|
Acquisition costs and earn-out accruals, financing, severance, and restatement-related fees
|
(553,000
|
)
|
1,253,000
|
(261,000
|
)
|
2,296,000
|
||||||||||
|
Share-based compensation expenses
|
1,029,000
|
2,413,000
|
4,141,000
|
5,564,000
|
||||||||||||
|
Mark-to-market losses (gains)
|
20,708,000
|
(656,000
|
)
|
18,201,000
|
972,000
|
|||||||||||
(a) Excludes depreciation, which is included in the depreciation and amortization line item.