Motorcar Parts of America Reports Strong Fiscal Second Quarter Results

Motorcar Parts of America Reports Strong Fiscal Second Quarter Results November 10, 2025 - Record Gross Profits with Continued Strong Cash Flow, Debt Reduction and Liquidity - Motorcar Parts of America, Inc. (Nasdaq: MPAA) today reported results for its fiscal 2026 second quarter -- reflecting record sales and record gross profit for a fiscal second quarter with strong cash flow generation. Key highlights for the quarter: Net sales increased 6.4 percent to $221.5 million.Gross profit increased 3.5 percent to a second quarter record of $42.7 million.Generated $21.9 million of cash from operating activities and reduced net bank debt by $17.7 million to $56.7 million.Repurchased 90,114 shares for $1.4 million at an average price of $15.41. Fiscal 2026 Second Quarter Results Net sales for the fiscal 2026 second quarter increased $13.3 million, or 6.4 percent, to $221.5 million from $208.2 million in the prior year. Net sales for the quarter reflect $14.8 million of core revenue in connection with the realignment of inventory at certain customer distribution centers offset by the timing of purchases by one of our largest customers. Gross profit was a second quarter record of $42.7 million compared with $41.3 million a year earlier. Gross margin for the same period was 19.3 percent compared with 19.8 percent a year earlier -- impacted by non-cash expenses of $3.6 million, or 3.0 percent, and one-time cash expenses of $698,000, or 0.3 percent, as detailed in Exhibit 2. Operating income for the fiscal 2026 second quarter increased 30.8 percent to $16.4 million from $12.5 million in the prior year. Interest expense for the fiscal 2026 second quarter decreased by $1.5 million to $12.7 million from $14.2 million a year ago, reflecting lower average outstanding balances under the company’s credit facility and lower interest rates compared with a year ago. Net loss for the fiscal 2026 second quarter was $2.1 million, or $0.11 per share, compared with a net loss of $3.0 million, or $0.15 per share, for the prior year. Net loss was impacted by non-cash expenses of $4.8 million, or $0.25 per share, and one-time cash expenses of $523,000, or $0.03 per share, as detailed in Exhibit 1. “Results for the fiscal second quarter reflect continued success at leveraging the company’s prominent position within the non-discretionary automotive aftermarket and North American footprint,” said Selwyn Joffe, chairman, president, and chief executive officer. He noted favorable industry dynamics remain catalysts for automotive aftermarket growth -- which include an increasing number of vehicles on the road and an aging car parc climbing to a current 12.8 years in the United States. “The company’s solid financial position, cash flow generation and continued net debt reduction should continue to enhance our competitive position and support opportunities in a rapidly changing industry environment,” Joffe said. Joffe highlighted that the company generated cash of approximately $21.9 million from operating activities during the fiscal 2026 second quarter and reduced net bank debt by $17.7 million to $56.7 million from $74.4 million. He also highlighted that the company generated cash of approximately $31.9 million during the six-month period compared with $2.0 million for the prior year and reduced net bank debt by $24.6 million to $56.7 million from $81.4 million. Six-Month Results Net sales for the fiscal 2026 six-month period increased 31.8 million, or 8.4 percent, to a record $409.8 million from $378.1 million. Net sales for the six-month period reflect $14.8 million of core revenue in connection with the realignment of inventory at certain customer distribution centers offset by the timing of purchases by one of our largest customers. Gross profit for the fiscal 2026 six-month period increased to a record $76.6 million from $70.5 million a year earlier. Gross margin for the fiscal 2026 six-month period was 18.7 percent compared with 18.6 percent a year earlier. Gross margin for the fiscal 2026 six-month period was impacted by non-cash expenses of $7.4 million, or 2.5 percent, and one-time cash expenses of $2.1 million, or 0.5 percent, as detailed in Exhibit 4. Interest expense decreased by $3.1 million for the six months to $25.5 million from $28.6 million a year ago, reflecting lower average outstanding balances under the company’s credit facility and lower interest rates compared with a year ago. Net income for the fiscal 2026 six-month period was $893,000, or $0.04 per diluted share, impacted by non-cash expenses of $3.5 million, or $0.17 per diluted share, and one-time cash expenses of $1.6 million, or $0.08 per diluted share, compared with a net loss of $21.0 million, or $1.07 per share, a year ago, impacted by various items detailed in Exhibit 2. Share Repurchase During the fiscal 2026 second quarter, the company repurchased 90,114 shares for $1.4 million at an average share price of $15.41 under its current authorization program, supported by solid cash generation from operating activities. For the six-month period, the company repurchased 287,910 shares for $3.4 million at an average share price of $11.65. The company anticipates further opportunities to build shareholder value through enhanced profitability and strong cash generation. 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. 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 November 10, 2025 through 8:59 p.m. Pacific time on November 17, 2025 by calling (800) 770-2030 (domestic) or (609) 800-9909 (toll) 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 2025 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. MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited) Three Months Ended Six Months Ended September 30, September 30, 2025 2024 2025 2024 Net sales $ 221,470,000 $ 208,186,000 $ 409,834,000 $ 378,073,000 Cost of goods sold 178,743,000 166,909,000 333,190,000 307,622,000 Gross profit 42,727,000 41,277,000 76,644,000 70,451,000 Operating expenses:General and administrative 17,086,000 15,052,000 29,766,000 31,722,000 Sales and marketing 6,811,000 5,834,000 13,021,000 11,283,000 Research and development 3,928,000 2,443,000 7,234,000 4,876,000 Foreign exchange impact of lease liabilities and forward contracts (1,469,000 ) 5,428,000 (9,817,000 ) 16,506,000 Total operating expenses 26,356,000 28,757,000 40,204,000 64,387,000 Operating income 16,371,000 12,520,000 36,440,000 6,064,000 Other expenses:Interest expense, net 12,699,000 14,182,000 25,511,000 28,569,000 Change in fair value of compound net derivative liability 2,260,000 380,000 4,050,000 (2,200,000 ) Total other expenses 14,959,000 14,562,000 29,561,000 26,369,000 Income (loss) before income tax expense 1,412,000 (2,042,000 ) 6,879,000 (20,305,000 ) Income tax expense 3,561,000 912,000 5,986,000 734,000 Net (loss) income $ (2,149,000 ) $ (2,954,000 ) $ 893,000 $ (21,039,000 ) Basic net (loss) income per share $ (0.11 ) $ (0.15 ) $ 0.05 $ (1.07 ) Diluted net (loss) income per share $ (0.11 ) $ (0.15 ) $ 0.04 $ (1.07 ) Weighted average number of shares outstanding:Basic 19,366,633 19,760,028 19,367,840 19,717,517 Diluted 19,366,633 19,760,028 20,194,954 19,717,517 MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES Consolidated Balance Sheets September 30, 2025 March 31, 2025 ASSETS (Unaudited) Current assets:Cash and cash equivalents $ 15,710,000 $ 9,429,000 Short-term investments 2,025,000 1,881,000 Accounts receivable — net 104,010,000 91,064,000 Inventory — net 372,590,000 359,669,000 Contract assets 30,306,000 29,606,000 Prepaid expenses and other current assets 22,091,000 19,822,000 Total current assets 546,732,000 511,471,000 Plant and equipment — net 32,292,000 31,990,000 Operating lease assets 67,208,000 66,603,000 Long-term deferred income taxes 5,897,000 4,569,000 Long-term contract assets 331,344,000 336,268,000 Goodwill and intangible assets — net 3,603,000 3,757,000 Other assets 2,892,000 2,978,000 TOTAL ASSETS $ 989,968,000 $ 957,636,000 LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities:Accounts payable and accrued liabilities $ 196,245,000 $ 172,117,000 Customer finished goods returns accrual 38,058,000 34,411,000 Contract liabilities 52,588,000 38,158,000 Revolving loan 72,419,000 90,787,000 Other current liabilities 5,709,000 5,570,000 Operating lease liabilities 9,763,000 9,982,000 Total current liabilities 374,782,000 351,025,000 Convertible notes, related party 43,444,000 35,207,000 Long-term contract liabilities 243,582,000 241,404,000 Long-term deferred income taxes 640,000 362,000 Long-term operating lease liabilities 61,031,000 65,308,000 Other liabilities 7,953,000 6,631,000 Total liabilities 731,432,000 699,937,000 Commitments and contingenciesShareholders' 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; 19,547,144 and 19,435,706 shares issued and outstanding at September 30, 2025 and March 31, 2025, respectively 195,000 194,000 Additional paid-in capital 232,182,000 234,413,000 Retained earnings 20,926,000 20,033,000 Accumulated other comprehensive income 5,233,000 3,059,000 Total shareholders' equity 258,536,000 257,699,000 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 989,968,000 $ 957,636,000 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 six months ended September 30, 2025 and 2024. 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. Exhibit 1 Items Impacting Net Income for the Three Months Ended September 30, 2025 and 2024 Three Months Ended September 30, 2025 2024 $ Per Diluted Share $ Per Diluted Share GAAP net loss $ (2,149,000 ) $ (0.11 ) $ (2,954,000 ) $ (0.15 ) Non-cash items impacting net incomeCore and finished goods premium amortization $ 2,988,000 $ 0.15 $ 2,621,000 $ 0.13 Revaluation - cores on customers' shelves 1,225,000 0.06 1,164,000 0.06 Share-based compensation expenses 1,984,000 0.10 1,016,000 0.05 Foreign exchange impact of lease liabilities and forward contracts (1,469,000 ) (0.08 ) 5,428,000 0.27 Gain due to realignment of inventory at customer distribution centers (643,000 ) (0.03 ) - - Change in fair value of compound net derivative liability 2,260,000 0.12 380,000 0.02 Tax effect (a) (1,586,000 ) (0.08 ) (2,652,000 ) (0.13 ) Total non-cash items impacting net income $ 4,759,000 $ 0.25 $ 7,957,000 $ 0.40 Cash items impacting net incomeNew product line start-up costs and transition expenses, and severance and other (b) - - 1,498,000 0.08 Net tariff costs paid for products sold before price increases were effective 698,000 0.04 - - Tax effect (a) (175,000 ) (0.01 ) (375,000 ) (0.02 ) Total cash items impacting net income $ 523,000 $ 0.03 $ 1,123,000 $ 0.06 (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. (b) For the three months ended September 30, 2024, consists of $1,298,000 impacting gross profit and $200,000 included in operating expenses. Exhibit 2 Items Impacting Net Income for the Six Months Ended September 30, 2025 and 2024 Six Months Ended September 30, 2025 2024 $ Per Diluted Share $ Per Diluted Share GAAP net income (loss) $ 893,000 $ 0.04 $ (21,039,000 ) $ (1.07 ) Non-cash items impacting net incomeCore and finished goods premium amortization $ 5,835,000 $ 0.29 $ 5,349,000 $ 0.27 Revaluation - cores on customers' shelves 2,251,000 0.11 1,558,000 0.08 Share-based compensation expenses 2,930,000 0.15 2,016,000 0.10 Foreign exchange impact of lease liabilities and forward contracts (9,817,000 ) (0.49 ) 16,506,000 0.84 Gain due to realignment of inventory at customer distribution centers (643,000 ) (0.03 ) - - Change in fair value of compound net derivative liability 4,050,000 0.20 (2,200,000 ) (0.11 ) Tax effect (a) (1,152,000 ) (0.06 ) (5,807,000 ) (0.29 ) Total non-cash items impacting net income $ 3,454,000 $ 0.17 $ 17,422,000 $ 0.88 Cash items impacting net incomeNew product line start-up costs and transition expenses, and severance and other (b) - - 4,438,000 0.23 Net tariff costs paid for products sold before price increases were effective 2,124,000 0.11 - - Tax effect (a) (531,000 ) (0.03 ) (1,110,000 ) (0.06 ) Total cash items impacting net income $ 1,593,000 $ 0.08 $ 3,328,000 $ 0.17 (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. (b) For the six months ended September 30, 2024, consists of $1,298,000 impacting gross profit and $3,140,000 included in operating expenses. Exhibit 3 Items Impacting Gross Profit for the Three Months Ended September 30, 2025 and 2024 Three Months Ended September 30, 2025 2024 $ Gross Margin $ Gross Margin GAAP gross profit $ 42,727,000 19.3 % $ 41,277,000 19.8 % Non-cash items impacting gross profitCore and finished goods premium amortization $ 2,988,000 1.3 % $ 2,621,000 1.3 % Revaluation - cores on customers' shelves 1,225,000 0.6 % 1,164,000 0.6 % Gain due to realignment of inventory at customer distribution centers (a) (643,000 ) 1.1 % - - Total non-cash items impacting gross profit $ 3,570,000 3.0 % $ 3,785,000 1.8 % Cash items impacting gross profitNew product line start-up costs and transition expenses - - 1,298,000 0.6 % Net tariff costs paid for products sold before price increases were effective 698,000 0.3 % - - Total cash items impacting gross profit $ 698,000 0.3 % $ 1,298,000 0.6 % (a) gross margin reflecting impact to net sales and cost of goods sold Exhibit 4 Items Impacting Gross Profit for the Six Months Ended September 30, 2025 and 2024 Six Months Ended September 30, 2025 2024 $ Gross Margin $ Gross Margin GAAP gross profit $ 76,644,000 18.7 % $ 70,451,000 18.6 % Non-cash items impacting gross profitCore and finished goods premium amortization $ 5,835,000 1.4 % $ 5,349,000 1.4 % Revaluation - cores on customers' shelves 2,251,000 0.5 % 1,558,000 0.4 % Gain due to realignment of inventory at customer distribution centers (a) (643,000 ) 0.5 % - - Total non-cash items impacting gross profit $ 7,443,000 2.5 % $ 6,907,000 1.8 % Cash items impacting gross profitNew product line start-up costs and transition expenses - - 1,298,000 0.3 % Net tariff costs paid for products sold before price increases were effective 2,124,000 0.5 % - - Total cash items impacting gross profit $ 2,124,000 0.5 % $ 1,298,000 0.3 % (a) gross margin reflecting impact to net sales and cost of goods sold Exhibit 5 Items Impacting EBITDA for the Three and Six Months Ended September 30, 2025 and 2024 Three Months Ended September 30, Six Months Ended September 30, 2025 2024 2025 2024 GAAP net (loss) income $ (2,149,000 ) $ (2,954,000 ) $ 893,000 $ (21,039,000 ) Interest expense, net 12,699,000 14,182,000 25,511,000 28,569,000 Income tax expense 3,561,000 912,000 5,986,000 734,000 Depreciation and amortization 2,373,000 2,601,000 4,822,000 5,330,000 EBITDA $ 16,484,000 $ 14,741,000 $ 37,212,000 $ 13,594,000 Non-cash items impacting EBITDACore and finished goods premium amortization $ 2,988,000 $ 2,621,000 $ 5,835,000 $ 5,349,000 Revaluation - cores on customers' shelves 1,225,000 1,164,000 2,251,000 1,558,000 Share-based compensation expenses 1,984,000 1,016,000 2,930,000 2,016,000 Foreign exchange impact of lease liabilities and forward contracts (1,469,000 ) 5,428,000 (9,817,000 ) 16,506,000 Gain due to realignment of inventory at customer distribution centers (643,000 ) - (643,000 ) - Change in fair value of compound net derivative liability 2,260,000 380,000 4,050,000 (2,200,000 ) Total non-cash items impacting EBITDA $ 6,345,000 $ 10,609,000 $ 4,606,000 $ 23,229,000 Cash items impacting EBITDANew product line start-up costs and transition expenses, and severance and other - 1,498,000 - 4,438,000 Net tariff costs paid for products sold before price increases were effective 698,000 - 2,124,000 - Total cash items impacting EBITDA $ 698,000 $ 1,498,000 $ 2,124,000 $ 4,438,000 Gary S. Maier Vice President, Corporate Communications & IR (310) 972-5124 Source: Motorcar Parts of America, Inc.