Motorcar Parts of America Reports Fiscal Third Quarter Results

Motorcar Parts of America Reports Fiscal Third Quarter Results February 9, 2026 - Sales Impacted by Reduced Ordering Activity by a Large Customer, Now Rebounding; Net Sales Up with Cash Generation for Nine-Month Period - Motorcar Parts of America, Inc. (Nasdaq: MPAA) today reported results for its fiscal 2026 third quarter -- reflecting a large customer ordering reduction in the quarter, primarily due to its closure of stores and consolidation of distribution centers, with sales to this customer now increasing in the current fiscal fourth quarter. Positive Drivers and Initiatives Include: Significant new business commitments from changing competitive landscape and industry dynamics -- including bankruptcy of a competitor, growth in demand for replacement parts with aging vehicles and increasing miles drivenMargin accretion due to strong momentum in the utilization of brake-related capacityOverall margin accretion from continued improvements in operating efficienciesPursuing strategic alternatives for EV technology Three-Month Results Net sales for the fiscal 2026 third quarter were $167.7 million compared with $186.2 million in the prior year – reflecting an approximately $17 million sales decrease to one of the company’s large customers as explained previously, with sales to this customer now increasing in the current fiscal fourth quarter. Gross profit for the fiscal 2026 third quarter was $32.9 million compared with $44.9 million a year earlier, impacted by the sales decrease previously discussed. Gross margin for the same period was 19.6 percent compared with 24.1 percent a year earlier, impacted by this large sales decrease. Gross margin on a sequential basis increased to 19.6 percent for the quarter compared with 18.0 percent for the fiscal first quarter and 19.3 percent for the fiscal second quarter. Gross margin is expected to continue to improve in the current fiscal fourth quarter, benefiting from increased ordering activity from this large customer on a sequential basis and related increased sales. Operating income for the fiscal 2026 third quarter was $8.3 million compared with $17.6 million in the prior year, impacted by lower sales. Interest expense for the fiscal 2026 third quarter decreased by $3.5 million to $10.9 million from $14.4 million a year ago, reflecting lower average outstanding balances under the company’s credit facility, lower utilization of accounts receivable discount programs, and lower interest rates. Net income for the fiscal 2026 third quarter was $1.8 million, or $0.09 per diluted share, compared with net income of $2.3 million, or $0.11 per diluted share, for the prior year. Net income was impacted by non-cash and one-time expenses of $611,000, or $0.03 per diluted share, as detailed in Exhibit 1, as well as the factors previously noted. “Notwithstanding our short-term revised guidance, our outlook remains positive and ordering activity by a large customer is beginning to return to more normalized levels. Equally important, we anticipate favorable benefits due to the changing competitive landscape, as evidenced by our new business commitments and opportunities,” said Selwyn Joffe, chairman, president and chief executive officer. He noted the company’s accelerated brake-related sales momentum, which will benefit overall gross profits. Joffe also highlighted the company’s commitment to enhancing shareholder value through opportunities to divest non-strategic assets, expanding its business in Latin America, and leveraging the company’s solid financial position, cash flow generation and continued year-to-date net bank debt reduction. Joffe added that for the nine-month period the company generated cash of approximately $23.7 million and net bank debt decreased by $10.9 million, after share repurchases of $8.4 million, to $70.5 million from $81.4 million. The company currently has $25.1 million remaining available to repurchase shares under its authorized share repurchase program. The company used cash of approximately $8.2 million from operating activities for the fiscal 2026 third quarter, primarily attributable to the build-up of inventory for new business. The company’s net bank debt was $70.5 million as of December 31, 2025. Cash and revolver availability was approximately $146 million as of December 31, 2025 which supports new business opportunities, share repurchases and related initiatives to enhance shareholder value. Nine-Month Results Net sales for the fiscal 2026 nine-month period increased $13.3 million, or 2.4 percent, to $577.5 million from $564.2 million, despite a decrease of approximately $40 million from the previously noted customer. Gross profit for the fiscal nine-month period was $109.5 million compared with $115.3 million a year earlier and gross margin for the nine months was 19.0 percent compared with 20.4 percent a year earlier, impacted by the sales decrease from the large customer previously referenced. Operating income for the fiscal nine-month period was $44.8 million compared with $23.6 million in the prior year, reflecting the foreign exchange impact of lease liabilities and forward contracts. Interest expense decreased by $6.6 million for the nine months to $36.4 million from $43.0 million a year ago, reflecting lower average outstanding balances under the company’s credit facility and lower interest rates. Net income for the fiscal 2026 nine-month period was $2.7 million, or $0.13 per diluted share, impacted by non-cash expenses of $3.8 million, or $0.19 per diluted share, and one-time cash expenses of $1.9 million, or $0.09 per diluted share, compared with a net loss of $18.7 million, or $0.95 per share, a year ago, impacted by various items detailed in Exhibit 2. Net income for the nine-month period reflects the items impacting the fiscal 2026 third quarter explained above. Share Repurchase For the fiscal 2026 nine-month period, the company repurchased 669,472 shares for $8.4 million at an average share price of $12.47. During the fiscal 2026 third quarter, the company repurchased 381,562 shares for $5.0 million at an average share price of $13.10 under its current authorization program. The company anticipates further opportunities to build shareholder value through enhanced profitability and strong cash generation, supported by an anticipated return to more normal ordering activity and sales growth. Revised Fiscal 2026 Guidance The company is revising its fiscal 2026 sales guidance to between $750 million and $760 million, impacted by the previously noted reduced ordering by a large customer, due to its closure of stores and consolidation of distribution centers. Operating income is expected to be between $72 million and $79 million, with depreciation and amortization of approximately $10 million. These estimates reflect the expected impact of tariffs enacted as of February 9, 2026, and do not include certain non-cash items and one-time expenses. 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 February 9, 2026 through 8:59 p.m. Pacific time on February 16, 2026 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. (Financial tables follow) MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited) Three Months EndedNine Months EndedDecember 31,December 31, 2025 2024 2025 2024 Net sales $ 167,697,000 $ 186,176,000 $ 577,531,000 $ 564,249,000 Cost of goods sold 134,819,000 141,294,000 468,009,000 448,916,000 Gross profit 32,878,000 44,882,000 109,522,000 115,333,000 Operating expenses:General and administrative 15,328,000 16,212,000 45,094,000 47,934,000 Sales and marketing 6,350,000 5,621,000 19,371,000 16,904,000 Research and development 3,460,000 3,008,000 10,694,000 7,884,000 Foreign exchange impact of lease liabilities and forward contracts (594,000 ) 2,460,000 (10,411,000 ) 18,966,000 Total operating expenses 24,544,000 27,301,000 64,748,000 91,688,000 Operating income 8,334,000 17,581,000 44,774,000 23,645,000 Other expenses:Interest expense, net 10,901,000 14,435,000 36,412,000 43,004,000 Change in fair value of compound net derivative liability (3,910,000 ) (260,000 ) 140,000 (2,460,000 ) Total other expenses 6,991,000 14,175,000 36,552,000 40,544,000 Income (loss) before income tax (benefit) expense 1,343,000 3,406,000 8,222,000 (16,899,000 ) Income tax (benefit) expense (434,000 ) 1,115,000 5,552,000 1,849,000 Net income (loss) $ 1,777,000 $ 2,291,000 $ 2,670,000 $ (18,748,000 ) Basic net income (loss) per share $ 0.09 $ 0.12 $ 0.14 $ (0.95 ) Diluted net income (loss) per share $ 0.09 $ 0.11 $ 0.13 $ (0.95 ) Weighted average number of shares outstanding:Basic 19,393,228 19,783,170 19,377,401 19,739,481 Diluted 20,139,201 20,416,958 20,146,118 19,739,481 MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES Consolidated Balance Sheets December 31, 2025March 31, 2025ASSETS(Unaudited)Current assets:Cash and cash equivalents $ 17,511,000 $ 9,429,000 Short-term investments 2,060,000 1,881,000 Accounts receivable — net 80,730,000 91,064,000 Inventory — net 398,980,000 359,669,000 Contract assets 33,327,000 29,606,000 Prepaid expenses and other current assets 25,153,000 19,822,000 Total current assets 557,761,000 511,471,000 Plant and equipment — net 30,681,000 31,990,000 Operating lease assets 65,852,000 66,603,000 Long-term deferred income taxes 5,850,000 4,569,000 Long-term contract assets 325,044,000 336,268,000 Goodwill and intangible assets — net 3,527,000 3,757,000 Other assets 2,595,000 2,978,000 TOTAL ASSETS $ 991,310,000 $ 957,636,000 LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities:Accounts payable and accrued liabilities $ 187,829,000 $ 172,117,000 Customer finished goods returns accrual 37,856,000 34,411,000 Contract liabilities 60,323,000 38,158,000 Revolving loan 88,010,000 90,787,000 Other current liabilities 7,411,000 5,570,000 Operating lease liabilities 9,357,000 9,982,000 Total current liabilities 390,786,000 351,025,000 Convertible notes, related party 39,890,000 35,207,000 Long-term contract liabilities 234,789,000 241,404,000 Long-term deferred income taxes 563,000 362,000 Long-term operating lease liabilities 58,973,000 65,308,000 Other liabilities 7,762,000 6,631,000 Total liabilities 732,763,000 699,937,000 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; 19,208,710 and 19,435,706 shares issued and outstanding at December 31, 2025 and March 31, 2025, respectively 192,000 194,000 Additional paid-in capital 228,388,000 234,413,000 Retained earnings 22,703,000 20,033,000 Accumulated other comprehensive income 7,264,000 3,059,000 Total shareholders' equity 258,547,000 257,699,000 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 991,310,000 $ 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 nine months ended December 31, 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. Items Impacting Net Income for the Three Months Ended December 31, 2025 and 2024 Exhibit 1 Three Months Ended December 31, 2025 2024 $Per Diluted Share$Per Diluted ShareGAAP net income $ 1,777,000 $ 0.09 $ 2,291,000 $ 0.11 Non-cash items impacting net incomeCore and finished goods premium amortization $ 2,980,000 $ 0.15 $ 2,664,000 $ 0.13 Revaluation - cores on customers' shelves 554,000 0.03 758,000 0.04 Share-based compensation expenses 1,388,000 0.07 993,000 0.05 Foreign exchange impact of lease liabilities and forward contracts (594,000 ) (0.03 ) 2,460,000 0.12 Change in fair value of compound net derivative liability (3,910,000 ) (0.19 ) (260,000 ) (0.01 ) Tax effect (a) (105,000 ) (0.01 ) (1,654,000 ) (0.08 ) Total non-cash items impacting net income $ 313,000 $ 0.02 $ 4,961,000 $ 0.24 Cash items impacting net incomeNew product line start-up costs and transition expenses, and severance and other 397,000 0.02 - - Tax effect (a) (99,000 ) (0.00 ) - - Total cash items impacting net income $ 298,000 $ 0.01 $ - $ - (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. Items Impacting Net Income for the Nine Months Ended December 31, 2025 and 2024 Exhibit 2 Nine Months Ended December 31, 2025 2024 $Per Diluted Share$Per Diluted ShareGAAP net income (loss) $ 2,670,000 $ 0.13 $ (18,748,000 ) $ (0.95 ) Non-cash items impacting net incomeCore and finished goods premium amortization $ 8,815,000 $ 0.44 $ 8,013,000 $ 0.41 Revaluation - cores on customers' shelves 2,805,000 0.14 2,316,000 0.12 Share-based compensation expenses 4,318,000 0.21 3,009,000 0.15 Foreign exchange impact of lease liabilities and forward contracts (10,411,000 ) (0.52 ) 18,966,000 0.96 Gain due to realignment of inventory at customer distribution centers (643,000 ) (0.03 ) - - Change in fair value of compound net derivative liability 140,000 0.01 (2,460,000 ) (0.12 ) Tax effect (a) (1,256,000 ) (0.06 ) (7,461,000 ) (0.38 ) Total non-cash items impacting net income $ 3,768,000 $ 0.19 $ 22,383,000 $ 1.13 Cash items impacting net incomeNew product line start-up costs and transition expenses, and severance and other (b) 397,000 0.02 4,438,000 0.22 Net tariff costs paid for products sold before price increases were effective 2,124,000 0.11 - - Tax effect (a) (630,000 ) (0.03 ) (1,110,000 ) (0.06 ) Total cash items impacting net income $ 1,891,000 $ 0.09 $ 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 nine months ended December 31, 2024, consists of $1,298,000 impacting gross profit and $3,140,000 included in operating expenses. Items Impacting Gross Profit for the Three Months Ended December 31, 2025 and 2024 Exhibit 3 Three Months Ended December 31, 2025 2024 $Gross Margin$Gross MarginGAAP gross profit $ 32,878,000 19.6 % $ 44,882,000 24.1 % Non-cash items impacting gross profitCore and finished goods premium amortization $ 2,980,000 1.8 % $ 2,664,000 1.4 % Revaluation - cores on customers' shelves 554,000 0.3 % 758,000 0.4 % Total non-cash items impacting gross profit $ 3,534,000 2.1 % $ 3,422,000 1.8 % Items Impacting Gross Profit for the Nine Months Ended December 31, 2025 and 2024 Exhibit 4 Nine Months Ended December 31, 2025 2024 $Gross Margin$Gross MarginGAAP gross profit $ 109,522,000 19.0 % $ 115,333,000 20.4 % Non-cash items impacting gross profitCore and finished goods premium amortization $ 8,815,000 1.5 % $ 8,013,000 1.4 % Revaluation - cores on customers' shelves 2,805,000 0.5 % 2,316,000 0.4 % Gain due to realignment of inventory at customer distribution centers (a) (643,000 ) 0.4 % - - Total non-cash items impacting gross profit $ 10,977,000 2.4 % $ 10,329,000 1.8 % Cash items impacting gross profitNew product line start-up costs and transition expenses - - 1,298,000 0.2 % Net tariff costs paid for products sold before price increases were effective 2,124,000 0.4 % - - Total cash items impacting gross profit $ 2,124,000 0.4 % $ 1,298,000 0.2 % (a) gross margin reflecting impact to net sales and cost of goods sold Items Impacting EBITDA for the Three and Nine Months Ended December 31, 2025 and 2024 Exhibit 5 Three Months Ended December 31,Nine Months Ended December 31, 2025 2024 2025 2024 GAAP net income (loss) $ 1,777,000 $ 2,291,000 $ 2,670,000 $ (18,748,000 ) Interest expense, net 10,901,000 14,435,000 36,412,000 43,004,000 Income tax expense (434,000 ) 1,115,000 5,552,000 1,849,000 Depreciation and amortization 2,359,000 2,532,000 7,181,000 7,862,000 EBITDA $ 14,603,000 $ 20,373,000 $ 51,815,000 $ 33,967,000 Non-cash items impacting EBITDACore and finished goods premium amortization $ 2,980,000 $ 2,664,000 $ 8,815,000 $ 8,013,000 Revaluation - cores on customers' shelves 554,000 758,000 2,805,000 2,316,000 Share-based compensation expenses 1,388,000 993,000 4,318,000 3,009,000 Foreign exchange impact of lease liabilities and forward contracts (594,000 ) 2,460,000 (10,411,000 ) 18,966,000 Gain due to realignment of inventory at customer distribution centers - - (643,000 ) - Change in fair value of compound net derivative liability (3,910,000 ) (260,000 ) 140,000 (2,460,000 ) Total non-cash items impacting EBITDA $ 418,000 $ 6,615,000 $ 5,024,000 $ 29,844,000 Cash items impacting EBITDANew product line start-up costs and transition expenses, and severance and other 397,000 - 397,000 4,438,000 Net tariff costs paid for products sold before price increases were effective - - 2,124,000 - Total cash items impacting EBITDA $ 397,000 $ - $ 2,521,000 $ 4,438,000 Gary S. Maier Vice President, Corporate Communications & IR (310) 972-5124 Source: Motorcar Parts of America, Inc.