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): June 14, 2022
Motorcar Parts of America, Inc.
(Exact name of registrant as specified in its charter)
| New York | 001-33861 | 11-2153962 |
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| (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) |
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| ☐ | Soliciting material pursuant to Rule l4a-12 under the Exchange Act (17 CFR 240.l4a-12) |
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| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR<br> 240.14d-2(b)) |
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| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR<br> 240.13e-4(c)) |
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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 |
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On June 14, 2022, Motorcar Parts of America, Inc. (the “Company”) issued a press release announcing its earnings for the fiscal quarter and year ended March 31, 2022 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. |
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The following exhibit is furnished with this Current Report pursuant to Item 2.02:
| (d) | Exhibits |
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| Exhibit No. | Description |
| --- | --- |
| 99.1 | Press Release, dated June 14, 2022 |
| 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: June 14, 2022 | /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 20.3 PERCENT SALES INCREASE FOR FISCAL 2022
— Company Resumes Annual Guidance with Top-Range Sales Target Reaching $700 Million, a year-over- year increase of approximately $50 million —
LOS ANGELES, CA – June 14, 2022 – Motorcar Parts of America, Inc. (Nasdaq: MPAA) today reported results for its fourth quarter and 2022 fiscal year ended March 31, 2022 – reflecting record annual sales with strong demand for non-discretionary aftermarket parts and the completion of a multi-year build-out program for the company’s brake-related manufacturing operations.
Fiscal 2022 Highlights
| • | Net sales reached a record $650.3 million, an increase of $109.5 million, or 20.3 percent year-over-year. |
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| • | Gross profit was $117.9 million, an increase of $8.4 million, or 7.7 percent year-over-year. Gross profit for fiscal 2022 was impacted by $16.6 million of non-cash items and $15.8 million of other items,<br> primarily due to transitory cost pressures from supply chain disruptions. |
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| • | Net income was $7.4 million, or $0.38 per diluted share, compared with $21.5 million, or $1.11 per diluted share a year ago. Net income for fiscal 2022 was impacted by $0.86 per diluted share of non-cash<br> items, and $0.72 per diluted share of other items, primarily due to transitory cost pressures related to supply chain disruptions. Net income for fiscal 2021 was impacted by $0.00 per diluted share of non-cash items, and $0.77 per diluted<br> share of other items, primarily due to transitory costs related to the Mexico expansion. |
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| • | EBITDA (defined below) was $41.6 million, which was impacted by $22.3 million of non-cash items and $18.5 million of other items, primarily due to transitory cost pressures, versus $57.8 million a year earlier,<br> which was impacted by $107,000 of non-cash gains and $19.4 million of other items, primarily due to transitory cost pressures. |
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| Motorcar Parts of America, Inc. |
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Fiscal 2022 Considerations
| • | Global supply chain challenges and inflationary costs impacted margins. |
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| • | Future margin expansion expected from additional price increases and operating efficiencies as the new fiscal year progresses. |
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| • | Strategic inventory investments to support growth and mitigate supply chain logistics impacted cash flow for fiscal year. |
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“We reported record sales for fiscal 2022, despite continued global supply chain constraints and fluctuations from historical customer order patterns during the fiscal fourth quarter. Demand for replacement parts remains strong, and we are confident in the long-term demand dynamics given tailwinds from an aging car fleet. Additionally, we anticipate accelerating momentum from our emerging brake-related products -- including brake calipers and in particular pads and rotors, which were formally launched subsequent to year end and are experiencing strong demand. This highlights the success of our investments in the brake-related categories that we have made over the past several years to tap into the large market for both internal combustion engines and emerging electrical vehicles. We are optimistic as we start a new fiscal year and resume financial guidance, as discussed below,” said Selwyn Joffe, chairman, president, and chief executive officer.
Joffe emphasized the company is keenly focused on gross profit growth. Upside opportunities are expected to be realized by increasing sales through product-line growth in each category, including the recently announced brake line expansion. In addition, the company expects to benefit from leveraging the company’s cost discipline, and mitigating increases in freight rates, freight surcharges, wage increases and other inflationary costs with operational efficiencies. As noted last quarter, price increases are also being implemented and continuously assessed.
“We built higher than normal overall inventory levels during fiscal 2022 to meet expected demand and address an unstable supply chain. These levels should stabilize as fiscal 2023 evolves and customer order patterns are realigned, which should contribute to positive annual cash flow targets,” Joffe said.
Joffe noted that after a multi-year period of elevated capital expenditures to fund expansion, with the formal launch of brake-related products, he expects a return to more normalized ranges.
Net sales for the fiscal 2022 fourth quarter were $163.9 million compared with $168.1 million in the prior-year period -- impacted by softness in January and February offset by strength in the last month of the quarter.
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Net loss for the same period was $332,000, or $0.02 per share, compared with net income of $835,000, or $0.04 per diluted share, a year ago -- impacted by approximately $1.9 million, or $0.10 per share, of non-cash items as detailed in Exhibit 1. The company also was impacted by approximately $3.2 million, or $0.17 per share, of other costs, primarily due to increased shipping rates, higher tariffs, and other transitory cost pressures related to supply chain disruptions due to COVID-19.
Net income for the prior-year fourth quarter was impacted by $6.9 million of non-cash items, or $0.35 per diluted share. Net income for the prior-year fourth quarter was also impacted by $6.8 million, or $0.35 per diluted share, of other costs, primarily due to brake caliper start-up costs, product relocation expenses related to the expansion in Mexico, and other costs associated with COVID-19.
Gross profit for the fiscal 2022 fourth quarter was $25.8 million compared with $32.1 million a year earlier. Gross profit as a percentage of net sales for the fiscal 2022 fourth quarter was 15.7 percent compared with 19.1 percent a year earlier. Gross margin for the fiscal 2022 fourth quarter was impacted by 2.5 percent by the aforementioned non-cash items and 2.0 percent by the transitory supply chain disruptions that affected net loss, as detailed in Exhibit 3. In addition to the items mentioned above, gross margin for the fourth quarter was further impacted by inflationary costs and new product line growth initiatives.
Fiscal 2022 Twelve-Month Results
Net sales increased 20.3 percent to a record $650.3 million from $540.8 million a year earlier. Net sales included $13.3 million in core revenue compared with $12.8 million in the prior-year period, due to a realignment of inventory at customer distribution centers with expected future sales benefits as product mix changes.
Net income for fiscal 2022 was $7.4 million, or $0.38 per diluted share, compared with net income of $21.5 million, or $1.11 per diluted share, a year ago. Net income was impacted by approximately $16.8 million, or $0.86 per diluted share, of non-cash items compared with only $80,000 in non-cash gains for the prior year, as detailed in Exhibit 2. The company also incurred approximately $14.1 million, or $0.72 per diluted share, of costs from supply chain disruptions, brake caliper start-up costs, and other product relocation expenses related to the expansion in Mexico. The start-up costs primarily related to the brake calipers expansion in Mexico during the first half of fiscal 2022, with no costs incurred during the second half of fiscal 2022. In addition, results for the twelve-month period were impacted by other transitory cost pressures related to supply chain disruptions due to COVID-19.
Net income for the prior-year period was impacted by other costs totaling $15.0 million, or $0.77 per diluted share, primarily due to brake caliper start-up costs, product relocation expenses related to the expansion in Mexico, and other costs associated with COVID-19.
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| Motorcar Parts of America, Inc. |
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Gross Profit for fiscal 2022 was $117.9 million compared with $109.5 million a year earlier. Gross profit as a percentage of net sales for fiscal 2022 was 18.1 percent compared with 20.2 percent a year earlier. Gross margin for fiscal 2022 was impacted by 2.6 percent of non-cash items and 2.8 percent for other costs, primarily by the transitory supply chain disruptions that affected net income, as detailed in Exhibit 4
Net cash used in operating activities was $44.9 million during the twelve months ended March 31, 2022 -- reflecting changes in working capital, including inventory increases to support business growth and strategic investments designed to address potential supply chain disruptions.
Fiscal 2023 Guidance
Motorcar Parts of America expects net sales for its fiscal year ending March 31, 2023 to be between $680 million and $700 million, representing between 4.6 and 7.6 percent year-over-year growth -- ramping up throughout the year. Excluding $13.3 million of core revenue realized in fiscal year 2022 (which the company does not expect in fiscal 2023), net sales are expected to increase between 6.8 and 9.9 percent in fiscal year 2023. Operating income is expected to be between $57 million and $61 million, before the non-cash foreign exchange impact of lease liabilities and forward contracts, the non-cash impact of revaluation of cores on customers’ shelves, and supply chain disruptions and costs related to COVID-19. The company estimates other non-cash items will be approximately $21 million, including core and finished goods premium amortization and share-based compensation, and cash expenses will be approximately $2 million for special EV-related research and development expenses, impacting operating income. The company estimates depreciation and amortization will be approximately $13 million.
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 definition and reconciliation of EBITDA to net income, its corresponding GAAP measure, 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 this measure.
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Earnings Conference Call and Webcast
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 webcast at www.motorcarparts.com or live by calling (888)-440-5584 (domestic) or (646)-960-0457 (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 14, 2022 through 8:59 p.m. Pacific time on June 21, 2022 by calling (800)-770-2030 (domestic) or (647)-362-9199 (international) and using access code: 1545314.
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 pads, brake rotors, 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 2022 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
| Three Months Ended March 31, | Year Ended March 31, | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | ||||||||
| (Unaudited) | |||||||||||
| Net sales | $ | 163,916,000 | $ | 168,128,000 | $ | 650,308,000 | $ | 540,782,000 | |||
| Cost of goods sold | 138,148,000 | 136,021,000 | 532,443,000 | 431,321,000 | |||||||
| Gross profit | 25,768,000 | 32,107,000 | 117,865,000 | 109,461,000 | |||||||
| Operating expenses: | |||||||||||
| General and administrative | 15,943,000 | 15,637,000 | 57,499,000 | 53,847,000 | |||||||
| Sales and marketing | 5,671,000 | 4,800,000 | 22,833,000 | 18,024,000 | |||||||
| Research and development | 2,871,000 | 2,549,000 | 10,502,000 | 8,563,000 | |||||||
| Foreign exchange impact of lease liabilities and forward contracts | (3,442,000 | ) | 3,651,000 | (1,673,000 | ) | (17,606,000 | ) | ||||
| Total operating expenses | 21,043,000 | 26,637,000 | 89,161,000 | 62,828,000 | |||||||
| Operating income | 4,725,000 | 5,470,000 | 28,704,000 | 46,633,000 | |||||||
| Interest expense, net | 4,045,000 | 3,696,000 | 15,555,000 | 15,770,000 | |||||||
| Income before income tax expense | 680,000 | 1,774,000 | 13,149,000 | 30,863,000 | |||||||
| Income tax expense | 1,002,000 | 939,000 | 5,788,000 | 9,387,000 | |||||||
| Net (loss) income | $ | (322,000 | ) | $ | 835,000 | $ | 7,361,000 | $ | 21,476,000 | ||
| Basic net (loss) income per share | $ | (0.02 | ) | $ | 0.04 | $ | 0.38 | $ | 1.13 | ||
| Diluted net (loss) income per share | $ | (0.02 | ) | $ | 0.04 | $ | 0.38 | $ | 1.11 | ||
| Weighted average number of shares outstanding: | |||||||||||
| Basic | 19,104,198 | 19,044,407 | 19,119,727 | 19,023,145 | |||||||
| Diluted | 19,104,198 | 19,585,638 | 19,559,646 | 19,387,555 |
MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
| March 31, 2021 | |||||
|---|---|---|---|---|---|
| ASSETS | |||||
| Current assets: | |||||
| Cash and cash equivalents | 23,016,000 | $ | 15,523,000 | ||
| Short-term investments | 2,202,000 | 1,652,000 | |||
| Accounts receivable — net | 85,075,000 | 63,122,000 | |||
| Inventory — net | 370,503,000 | 288,361,000 | |||
| Inventory unreturned | 15,001,000 | 14,552,000 | |||
| Contract assets | 27,500,000 | 26,940,000 | |||
| Income tax receivable | 301,000 | 405,000 | |||
| Prepaid expenses and other current assets | 13,387,000 | 12,301,000 | |||
| Total current assets | 536,985,000 | 422,856,000 | |||
| Plant and equipment — net | 51,062,000 | 53,854,000 | |||
| Operating lease assets | 81,997,000 | 71,513,000 | |||
| Deferred income taxes | 26,982,000 | 19,381,000 | |||
| Long-term contract assets | 310,255,000 | 270,213,000 | |||
| Goodwill | 3,205,000 | 3,205,000 | |||
| Intangible assets — net | 3,799,000 | 5,329,000 | |||
| Other assets | 1,413,000 | 1,531,000 | |||
| TOTAL ASSETS | 1,015,698,000 | $ | 847,882,000 | ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||
| Current liabilities: | |||||
| Accounts payable | 147,469,000 | $ | 129,331,000 | ||
| Accrued liabilities | 20,966,000 | 23,404,000 | |||
| Customer finished goods returns accrual | 38,086,000 | 31,524,000 | |||
| Contract liabilities | 42,496,000 | 41,072,000 | |||
| Revolving loan | 155,000,000 | 84,000,000 | |||
| Other current liabilities | 11,930,000 | 6,683,000 | |||
| Operating lease liabilities | 6,788,000 | 6,439,000 | |||
| Current portion of term loan | 3,670,000 | 3,678,000 | |||
| Total current liabilities | 426,405,000 | 326,131,000 | |||
| Term loan, less current portion | 13,024,000 | 16,786,000 | |||
| Contract liabilities, less current portion | 172,764,000 | 125,223,000 | |||
| Deferred income taxes | 126,000 | 73,000 | |||
| Operating lease liabilities, less current portion | 80,803,000 | 70,551,000 | |||
| Other liabilities | 7,313,000 | 7,973,000 | |||
| Total liabilities | 700,435,000 | 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; | - | - | |||
| 19,104,751 and 19,045,386 shares issued and outstanding at March 31, 2022 and 2021, respectively | 191,000 | 190,000 | |||
| Additional paid-in capital | 227,184,000 | 223,058,000 | |||
| Retained earnings | 92,954,000 | 85,593,000 | |||
| Accumulated other comprehensive loss | (5,066,000 | ) | (7,696,000 | ) | |
| Total shareholders’ equity | 315,263,000 | 301,145,000 | |||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 1,015,698,000 | $ | 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 twelve months ended March 31, 2022 and 2021. 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 (Loss) Income for the Three Months Ended March 31, 2022 and 2021 | Exhibit 1 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended March 31, | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2022 | 2021 | |||||||||
| Per Share | Per Share | |||||||||
| GAAP net (loss) income | ) | $ | (0.02 | ) | $ | 0.04 | ||||
| Non-cash items impacting net (loss) income | ||||||||||
| Core and finished goods premium amortization and new business return accruals | $ | 0.15 | $ | 0.12 | ||||||
| Revaluation - cores on customers’ shelves | 0.06 | 0.05 | ||||||||
| Share-based compensation expenses and earn-out accruals | 0.10 | 0.11 | ||||||||
| Foreign exchange impact of lease liabilities and forward contracts | ) | (0.18 | ) | 0.19 | ||||||
| Tax effect (a) | ) | (0.03 | ) | ) | (0.12 | ) | ||||
| Total non-cash items impacting net (loss) income | $ | 0.10 | $ | 0.35 | ||||||
| Cash items impacting net (loss) income | ||||||||||
| Supply chain disruptions and costs related to COVID-19 (b) | $ | 0.21 | $ | 0.14 | ||||||
| New product line start-up costs and transition expenses, and severance (c) | 0.02 | 0.30 | ||||||||
| Impact of tariffs | - | 0.02 | ||||||||
| Tax effect (a) | ) | (0.06 | ) | ) | (0.12 | ) | ||||
| Total cash items impacting net (loss) income | $ | 0.17 | $ | 0.35 |
All values are in US Dollars.
| (a) | 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. |
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| (b) | For the three-months ended March 31, 2022, consists of $3,337,000 impacting gross profit and $601,000 included in operating expenses. For the three-months ended March 31, 2021, consists of of $2,305,000<br> impacting gross profit and $520,000 included in operating expenses. |
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| (c) | For the three-months ended March 31, 2022, consists of $358,000 included in operating expenses. For the three-months ended March 31, 2021, consists of $4,781,000 included in cost of goods sold and $1,159,000<br> included in operating expenses. |
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| Items Impacting Net Income for the Twelve Months Ended March 31, 2022 and 2021 | Exhibit 2 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Twelve Months Ended March 31, | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2022 | 2021 | |||||||||
| Per Share | Per Share | |||||||||
| GAAP net income | $ | 0.38 | $ | 1.11 | ||||||
| Non-cash items impacting net income | ||||||||||
| Core and finished goods premium amortization and new business return accruals | $ | 0.61 | $ | 0.36 | ||||||
| Revaluation - cores on customers’ shelves | 0.24 | 0.24 | ||||||||
| Share-based compensation expenses and earn-out accruals | 0.38 | 0.30 | ||||||||
| Foreign exchange impact of lease liabilities and forward contracts | ) | (0.09 | ) | ) | (0.91 | ) | ||||
| Tax effect (a) | ) | (0.29 | ) | 0.00 | ||||||
| Total non-cash items impacting net income | $ | 0.86 | ) | $ | (0.00 | ) | ||||
| Cash items impacting net income | ||||||||||
| Supply chain disruptions and costs related to COVID-19 (b) | $ | 1.03 | $ | 0.47 | ||||||
| New product line start-up costs and transition expenses, and severance (c) | 0.18 | 0.95 | ||||||||
| Gain due to realignment of inventory at customer distribution centers | ) | (0.25 | ) | ) | (0.23 | ) | ||||
| Impact of tariffs | - | ) | (0.17 | ) | ||||||
| Tax effect (a) | ) | (0.24 | ) | ) | (0.26 | ) | ||||
| Total cash items impacting net income | $ | 0.72 | $ | 0.77 |
All values are in US Dollars.
| (a) | 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. |
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| (b) | For the twelve-months ended March 31, 2022, consists of $17,894,000 impacting gross profit and $2,301,000 included in operating expenses. For the twelve-months ended March 31, 2021, consists of $7,053,000<br> impacting gross profit and $2,048,000 included in operating expenses. |
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| (c) | For the twelve-months ended March 31, 2022, consists of $2,744,000 included in cost of goods sold and $681,000 included in operating expenses. For the twelve-months ended March 31, 2021, consists of $16,353,000<br> included in cost of goods sold and $2,151,000 included in operating expenses. |
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| Items Impacting Gross Profit for the Three Months Ended March 31, 2022 and 2021 | Exhibit 3 | |||||||
|---|---|---|---|---|---|---|---|---|
| Three Months Ended March 31, | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2022 | 2021 | |||||||
| Gross<br><br> <br>Margin | Gross <br><br> Margin | |||||||
| GAAP gross profit | 15.7 | % | 19.1 | % | ||||
| Non-cash items impacting gross profit | ||||||||
| Core and finished goods premium amortization and new business return accruals | 1.8 | % | 1.4 | % | ||||
| Revaluation - cores on customers’ shelves | 0.7 | % | 0.6 | % | ||||
| Total non-cash items impacting gross profit | 2.5 | % | 2.0 | % | ||||
| Cash items impacting gross profit | ||||||||
| Supply chain disruptions and costs related to COVID-19 | 2.0 | % | 1.4 | % | ||||
| New product line start-up costs and transition expenses | - | 2.8 | % | |||||
| Impact of tariffs | - | 0.2 | % | |||||
| Total cash items impacting gross profit | 2.0 | % | 4.4 | % |
All values are in US Dollars.
| Items Impacting Gross Profit for the Twelve Months Ended March 31, 2022 and 2021 | Exhibit 4 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Twelve Months Ended March 31, | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2022 | 2021 | |||||||||
| Gross<br><br> <br>Margin | Gross<br><br> <br>Margin | |||||||||
| GAAP gross profit | 18.1 | % | 20.2 | % | ||||||
| Non-cash items impacting gross profit | ||||||||||
| Core and finished goods premium amortization and new business return accruals | 1.8 | % | 1.3 | % | ||||||
| Revaluation - cores on customers’ shelves | 0.7 | % | 0.9 | % | ||||||
| Total non-cash items impacting gross profit | 2.6 | % | 2.1 | % | ||||||
| Cash items impacting gross profit | ||||||||||
| Supply chain disruptions and costs related to COVID-19 | 2.8 | % | 1.3 | % | ||||||
| New product line start-up costs and transition expenses | 0.4 | % | 3.0 | % | ||||||
| Gain due to realignment of inventory at customer distribution centers (a) | ) | -0.4 | % | ) | -0.3 | % | ||||
| Impact of tariffs | - | ) | -0.6 | % | ||||||
| Total cash items impacting gross profit | 2.8 | % | 3.4 | % |
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 Twelve Months Ended March 31, 2022 and 2021 | Exhibit 5 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended March 31, | Twelve Months Ended March 31, | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2022 | 2021 | 2022 | 2021 | ||||||||
| GAAP net (loss) income | $ | (322,000 | ) | $ | 835,000 | $ | 7,361,000 | $ | 21,476,000 | ||
| Interest expense, net | 4,045,000 | 3,696,000 | 15,555,000 | 15,770,000 | |||||||
| Income tax expense | 1,002,000 | 939,000 | 5,788,000 | 9,387,000 | |||||||
| Depreciation and amortization | 3,295,000 | 3,054,000 | 12,886,000 | 11,144,000 | |||||||
| EBITDA | $ | 8,020,000 | $ | 8,524,000 | $ | 41,590,000 | $ | 57,777,000 | |||
| Non-cash items impacting EBITDA | |||||||||||
| Core and finished goods premium amortization and new business return accruals | $ | 2,947,000 | $ | 2,422,000 | $ | 11,960,000 | $ | 6,998,000 | |||
| Revaluation - cores on customers’ shelves | 1,154,000 | 1,020,000 | 4,671,000 | 4,600,000 | |||||||
| Share-based compensation expenses and earn-out accruals | 1,830,000 | 2,123,000 | 7,384,000 | 5,901,000 | |||||||
| Foreign exchange impact of lease liabilities and forward contracts | (3,442,000 | ) | 3,651,000 | (1,673,000 | ) | (17,606,000 | ) | ||||
| Total non-cash items impacting EBITDA | $ | 2,489,000 | $ | 9,216,000 | $ | 22,342,000 | $ | (107,000 | ) | ||
| Cash items impacting EBITDA | |||||||||||
| Supply chain disruptions and costs related to COVID-19 | $ | 3,938,000 | $ | 2,825,000 | $ | 20,195,000 | $ | 9,101,000 | |||
| New product line start-up costs and transition expenses, and severance (a) | 358,000 | 5,706,000 | 3,194,000 | 17,941,000 | |||||||
| Gain due to realignment of inventory at customer distribution centers | - | - | (4,862,000 | ) | (4,391,000 | ) | |||||
| Impact of tariffs | - | 306,000 | - | (3,229,000 | ) | ||||||
| Total cash items impacting EBITDA | $ | 4,296,000 | $ | 8,837,000 | $ | 18,527,000 | $ | 19,422,000 | |||
| (a) | Excludes depreciation, which is included in the depreciation and amortization line item. | ||||||||||
| --- | --- |