Motorcar Parts of America (MPAA) 8 Aug 242025 Q1 Earnings call transcript

Thank you for standing by. My name is Kayla, and I will be your conference operator today. At this time, I would like to welcome everyone to the Motorcar Parts of America Inc. Fiscal 2025 First Quarter Conference Call and Webcast. [Operator Instructions]. I would now like to turn the call over to Gary Maier, Vice President of Corporate Communications and Investor Relations.

begin. may You

and call. Kayla, for us joining Thank thanks, our for you, everyone,

Before Selwyn Chief over and call in of I the turn statement harbor to like remind Officer; included David the safe I'd press Chief and Joffe, Lee, Officer, company's release. Financial today's to everyone Executive President Chairman,

current forward-looking concerning are Reform effects today's call. during developments Litigation Securities provides based Private made the of XXXX beliefs a forward-looking statements statements expectations safe and their The Act harbor future on company's for and certain that These on in projected Motorcar may company those the no potential results company. There those by future will the be can forward-looking anticipated Parts assurance Actual from the of statements. America. developments affecting differ be

significant with to beyond of company future not and which anticipated opportunities and risks a of various based company result or the be about new involve the of and or subject in may some statements, are to as are change future factors, The upon forward-looking otherwise. revise uncertainties, any forward-looking These publicly events achieved. expectations customers whether control particular, growth obligation information, no undertakes update statements

detailed company's various Securities risks the some of uncertainties of Commission. to and Exchange and the For of filings more business, a you discussion refer the I ongoing the with

today's would now I like to over to call. turn to begin call Selwyn the

everyone ahead for appreciate us We by and today. I full-year Gary. joining and about our targets. quarter the performance you, remain the record achieving Thank sales were encouraged optimistic our quarters

solid more and enhance realize expect detail, initiatives with David quarter, improved, discuss gross further sales in which operations. ongoing combined to profit further the strategic metrics we margin performance to our For improvements through gross and will

lease sharply peso. fiscal dollar and were the the liabilities versus strong loss for unfavorable forward the from first a quarter results mark-to-market due contracts a foreign our to exchange non-cash by impacted Unfortunately,

annualized the cost part generate relocation will new operating This cost, an From operating and expenses cost initiative and was utilizing of related were reduce strategic severance a This expected impacted multiyear sold these footprint global action savings further $X savings XX% expenses. goods million. facilitate low-cost standpoint, remainder onetime efficiencies. Approximately of reduce to reductions. process to our of results operational reduce approximately of will by will

are further cost additional exploring We actively reduce goods initiatives of to sold.

for month which I first some quarter, of the our momentum. should quarter. the industry bodes for note with results than stronger well reflected quarter is June the the regaining choppiness fiscal This current some second historically

operate is certainly will with at where to We July. are viable can't We we other all quarter a hasten too option electrical, parts failure for long, the strong which that second you than off in deferring market all. Hot of offer. rotating defer an the a excellent repairs start not a for weather

initiatives a a moment take me strategic Let near-term few support to our key that favorable outlook. highlight

volume As I our in in overhead, to will overall accretion noted during our program turn year-end will brake increases in absorb call, margins. result which help

more brake-related of lead both purchasing expect production. advantage We and opportunities from efficiencies to to sales accelerating product will take

today, Brake XXXX. one our greenfield as Caliper we of business operation of many As started in category. we leading you the August And this in know, a suppliers of are

to gain turns we efficient support expect brake further to capital. traction, lines newer our more initiatives As product inventory working neutralize

and year-over-year upon Second, accounts we basis, focused expand cash shortly. working payable, on with to generating will a which respect capital David from are inventory on

however, outstanding benefits, processes recognizing their we and early inventory days on implemented particular with Finance program. stages, still meaningful to to These extend have We our enhance are are processes efficiencies. payable in Supply in accounts Chain

maximize value. shareholder evaluate continue allocation to to We of capital

are were direction, capital the as in David discuss negative, though right ratios The confident first will working we quarter further. move that ratios somewhat capital working will

targeting at new per million part covering introductions, adds the is additional on initiative the year, of part than supported vehicles by as acceleration month, our least road. ongoing an last introduction the This XXX to growth meaningful positive sales XXX Another numbers we maintains the our are our growing of business XX product number Not base. more new lines. of new leadership position only but we in across and consumer we organically, supply, the organic our all have categories meets secured commitments need

previously [ within to business, our respect to the diagnostic with million equipment next Diagnostic sell opportunities more expect X With I've of pending as ]. mentioned, $XXX than years we further

revenue testers more are service as deployed. additional expect We

America expect opportunities business the We evolves. more North as outside

market, alternators industry With who regard with the and to starters our leaders supplying in are regard our leverage this particularly reputation segment. our partners in to Heavy-Duty position and business, Heavy-Duty to to aftermarket we continue channel

across platforms, growth construction, multiple trucks, momentum as continue refrigeration, opportunities to X Class transit/motor agriculture, material coaches. such handling gain and Our

is Dixie heavy-duty an as the to supplier evolving equipment manufacturers. also important original

profitability new sales, on evolves, As the fiscal neutralizing remain year and focused we capital. working

new We profitability I business commitments, improve initiatives, numerous and as with enhance strong are with sales along This, mentioned flow confident will profitability organically and our that earlier. cash our efficiency will and generation. grow

our From SKU manufactured mention great customer not a are coverage, we facilities, to at including to continuing our merchandising value-added state-of-the-art strategic marketing solid strengths, standpoint, support. leverage and products industry-leading relationships,

of enhance that hubs shipment to is position. I which our should customers, new mention to competitive in expected XXXX facility Malaysia a for opened to manufacturing our in wheel we support direct

demand continue of we utilize and Mexico to momentum we to to well are our for this demand. Part meet is The in as Our growth increased exciting, our footprint experienced in positioned parts. growing sales aftermarket the market Hard rate gain

focused are share increasing We in this region. on

presence are with U.S.-based benefit We who gaining our market. continue to and via grow emerging sales a in this relationships retailers

are dynamics well as continue top- business, Hard Solutions and bottom-line extremely for for our the sustainable as and Parts we well Testing in growth company, our bode to positioned well industry long-term business. Favorable

accretion. In across the capacity the most gaining support reiterate, on quality our This installer brake grow to we within our overall focused capabilities are share I and rotors. short, pads gross lines, to have as product our across customers' these calipers, brand, portfolio lines. multiple which we brake of we build recent and increasing demand brake margin We expect market. is the includes including growth lines, market product professional all our additions

Our expected will related further other basis positive flexibility pay to us pursue value. enable cash down on to enhance the an opportunities debt shareholder annualized and flow

In is car that conclusion, is here highlighting engine market decades, will internal an the of vehicles. combustion recently of internal average parts of and hybrid comprised the outlook be aftermarket non-discretionary combustion is data the vehicles by It for that showing industry years. age U.S. updated park of worth now XX.X% XX.X supported

of a focused makes demand to One of replacement our market. model key and range competitive applications broad and our newer enter ability expected all our these ability vehicles applications to We offer remain as meet for advantages, on is the models.

recent our and month. regarding I Anil Jack detailed releases are the Their company's call annual before turn backgrounds statement. and standing like at in election to for Liebau the impressive Finally, Shrivastava, meeting to to comment David, who I'd the qualifications our press next over announcements on proxy Board are and

the both to indicative These offer Let candidates me will shareholder candidates that two to of encourage program. commitment say everyone insights read complement company's driving in particularly Board commitment perspectives are refreshment and fine just support to of nominees. our value, the our history. our unique biographies exciting a and these their I point at

review call turn greater over now in results to to David detail. the I'll our

that morning everyone the Thank everyone. be as you, today. earnings Selwyn, the this XX-Q filed as and release to issued encourage well will read good press I morning, later

Let first our performance me 'XX that we financial news in reiterate quarter highlighted for metrics release. first fiscal morning's key this

forward non-cash million. million. $XX.X first profit Gross Net quarter margin first for liabilities cost savings of Net quarter of to increased annualized fiscal record $XXX.X from increased prior million X.X% 'XX $XX.X year. modestly loss X.X% million to reduction and expected to an results exchange $XXX.X contracts, provide increased in unfavorable X.X% initiatives sales to implemented from $X Gross the record, a million XX.X%. foreign Operating first by quarter increased approximately million. the $XXX.X sales lease impacted to a

was website. Gross margin Gross but we company's year XX.X% percentage quarter by and return Gross the these accounting of by items explanation impacted more core earlier. to million should to premium quarter million. profit margin profit 'XX from finished year good forward. for to X.X% are cores and first products that customer for core our earlier. The of was A levels certain negatively the fiscal non-cash on normalized detailed a of reflect expect $X.X required a the available increased increased items mention the quarter going in on to higher the sales, million was return I which shelves, amortization by non-cash GAAP. for the first total XX.X% first approximately as unique non-cash quarter revaluation returns $XX.X for 'XX gross impacted items. of is for The video fiscal posted from a in to $XX.X a quarter fiscal

mark-to-market enhance effect with prices and margin, increased exchange to $XX.X year. gross due million increased prior excluding severance were and to $XX.X items currency $XXX,XXX will note Additional million $XX.X primarily in the non-cash year million exchange a expenses from these compared expenses, compared loss a expense the as million rates operating foreign million million decreased with prior a should $X.X increases $XX.X with expenses compared year earlier. as by resulting I compared well $X.X efficiencies operating above, with $XX.X last that year operating million

earlier. forward contracts non-cash compared impact $X.X gain liabilities million the for a and year exchange of a loss Non-cash million foreign of lease was with $XX.X

company infrastructure efficiencies $X global to In million our of addition, other annualized head with a includes reductions approximately utilize count and to strategy incurred related $X.X enhance to with footprint salary, expected the operating connection due expenses expenses. reductions cost severance which our million, in operating

sales. primarily increased for receivables, accounts facility. $XX.X were is fiscal the company's partially to expense was discount higher million discount interest under to primarily related on collection of for higher programs Results $XX.X offset outstanding with receivable million which accounts compared receivable million balances expenses the credit by by utilizing of impacted Interest first year, last quarter average programs. $X.X lower due

accounts to with receivable expense million $X.X $X.X was year. prior discount the related Interest million for programs compared

particularly can to diligently are that interest We higher areas address the control. working we environment,

mitigate addition, rates. our In we customers to with continue to interest work higher

income first compared in the inability the was income tax first benefit The effective for was for fiscal of the quarter $X,XXX to specific the to the quarter, due low $XXX,XXX at part year. rate benefit with tax recognize losses For prior benefit jurisdictions. tax benefit

profits, future Obviously, will rates. these which against are the tax utilized will we However, losses tax impacting there expect future various effect. benefit factors be

a for fiscal volume results 'XX of are quarter million $XX.X impact net As a expected discussed the sales With certain items the with $X.X year already effect expected full as forward above, moving well was ago. to million, and efficiencies, the result loss further operating price increases higher of of in compared net loss first as a improve.

reflecting items million, impact impact Due primarily I $X.X non-cash negative first EBITDA for items items previously, $XX.X cash this before morning's non-cash discussed Exhibit fiscal $X.X million first the in release. mentioned of and EBITDA and million earnings of quarter cash for million $XX.X items, negative the the was the the quarter. above, in to X was press of

used and business inventory company we in $XX.X to fiscal 'XX Now corporate of move the cash on to accounts quarter, cash activities, related increases year second The a of seasonal the key during of fiscal fiscal approximately support will XXXX. reduction first the impacted growth year items. during for flow expected half operating payable XXXX by to million

operating global in 'XX the year, and for positive growth organic operating flow supported basis by fiscal the increase for a customer our generation profit cash efficiencies from an expansion. anticipate year-over-year demand footprint on of from We and

generating In further capital, payment planning, we're including profits, terms. to to on customer of inventory working operating our enhanced opportunities neutralize goal demand, and focused extending diligently vendor management, addition our increased

product categories. brake expect lines, performance including increasing our financial and emerging from existing both We new

Net of debt the compared of million million bank March $XXX.X XX, was $XXX the as quarter, XXXX. end at with

availability debt Total compared However, June million lower million. year $XXX.X XXXX. and at was approximately XX, net prior $XX was with cash

our range year-over-year previously provided, to is expectation in $XXX million representing X.X% respectively. fiscal and growth As of [ achieve X.X% ], million, and the $XXX for 'XX sales between

margin price and from initiatives. see to related accretion to expect cost-cutting volume, higher efficiencies We increases,

of exchange to for also impact on before income severance previously expected is lease the expectation impact highlighted. million expenses. respect cash and $XX of revaluation full positive cash fiscal the onetime before Operating to With and million and I our of liabilities and non-cash the be between year forward as flow foreign customer shelf generate flow, non-cash contracts, cores $XX to is

and approximately core company amortization approximately other The items company finished depreciation including non-cash be estimates million, will and estimates compensation. The premium $XX amortization million. good $XX will and share-based be

be before and summary, before In expected previously, of operating between million. amortization, items and to mentioned is impact the $XX million income depreciation $XX the non-cash and cash and

release. Exhibits reconciliation this measures, please impact to morning's further and X, X the For financial that non-GAAP earnings refer on press explanation of X, items in results

I line the would now like for to open questions.

with from Instructions] first Capital line comes ROTH [Operator question Our Koranda Partners. Matt the of

I in sell-in XQ? quarter-to-date? guys Joseph XQ a can could breakdown This if dynamics wanted and guys during retail of provide inventory -- in is on for by product Matt in line revenue product ask product today. categories And versus on to comment and key by sell-through through you at if your you customers

Okay. I could start.

For the and first others mix wheel the brakes X%, were hubs electrical, product XX% rotating was XX% was quarter, X%. was

Yes.

I had there's is the that we're wherever for we're just seeing business. July and and we're -- ever what in hot general, mean, retailers it highest I sales think weather the inventory been think the deferral. the company. softness, our I history pickup frankly, to possibility been that forward was they've certainly in think -- moving the I there's the mean, maintenance, about in the had of But in In I July, but we've a -- and talking terms of defer the there's -- seeing I consumer levels, had some think we've that a

progress bring by mean, again, as there customers an income expectation think inventory totally seeing but but to, the disposable with don't we're way, we're the encouraged we I due and of extremely I pickup. think our we're now. and on in consumer, So industry, of certainly, are but, our some right yet, I

excited the initiatives, we've savings one, significant conjunction, in to. We're where still that others I cost with think are completed process. and the we're way, about by moving in that

for could rates are expense, about see interest down? cash I if interest come there. potentially year? thinking savings And more to just on the of squeeze should in wanted one rest we your coming to We given what the How latest the think

factoring reduction on supply interest Well, the I in mean worth every just million us. point $X chain is to

that's by tremendous certainly interest. in reduction us. mean, headwind I encouraged So the we're for been a

we're and We are the to lean rates about -- we're lean we're every that. eliminated. are stopping that. use bit that of excited waste or at manufacturing not concept when has but operations, of be the what -- encouraged we down, coming and I mean taking And waste

-- take hate And with waste art that can -- we a efficiencies the up of new take for it's now, pretty and dramatically. -- is our of use but bit, volumes and we to our some getting that new word the we're But lines, not our a can product I sort manufacturer. the of little term

we of the think we're forward. So mean, for on lot I that there's us moving tailwinds side excited. a earnings

next Capital. your Dezellem line of with Bill the from question comes Tieton And

why Would with ago and saw year a level? you that versus you discuss start kind of please inventory increase

So -- primarily expecting. inventory the growth inventory, in was quarter, ] increases there the update we're a first sales the upcoming for small [

growth for So we year. are is guidance, a ramping again, strong fiscal the up our full

So supply demand. we our to inventory need the

mean, our quarter. season, second we're pretty you'll as think first that coming I dramatically. than is much our stronger quarter I our moderate And Yes. see into

as significant capital So quarter. in this see progress get we you'll through working

does then revenues? Brake of on And the note, that next your business when come tranche into

and piece Let -- in but business between and starts me then. other biggest January, starting we try new have now that's the

and business then We X few starting business Hubs additional a operating and in business Rotating significant now, Diagnostic -- next Electrical additional X Parts that's certainly and the we starting have year. and mean of profit months we business better with we've seeing, categories we and new have that's but and getting in that of our efficiencies, amount the to Wheel business driving opportunities to got starting guidance, additional Brake this Hard correct our some the new in our and get skis. through in we're see ahead are correct metrics don't get again, pricing have as to this I the want

that? the And something And David, dynamics mentioned I happen through again? returns had think the may behind you of normal. is versus opening than you that walk remarks, that Could aspect unique naturally in what higher that were

Yes.

customers. happens not every and call I'm And out going it it's and to Bill. So now again, --

were very general -- large customer, have level returns rate customer, a whose a a We lower are of one there's but return. purchases at

regardless you purchases. And get back the so of the same returns

a as higher. this returns customer, percentage purchases, the were So of for particular

has has out reversed that It this changed. Now quarter. already in

not of early renewal far, we're taken will result little maintain very to quarter, -- again, won't other so itself. -- program contract. very, and They levels come So that large one the a normalized a we was but a one return that but those it's And back of and hopefully, then at as come levels had very, early now, in had other strong, that normalized levels. incentive back, we should are

So I positive well in little again, that's behind the particular that for -- mean, bit But we but sales that in those more -- we've quarter. and both energy -- it's now. event, right a time again, and us significantly as seen affected one are us

that the dollar What -- to I income? missed was opening remarks, the impact in of the

We but did well have the did a impact on the gross disclose as not sales. percentage as margin dollar it amount, small

not And market one Or side that additional the for any question rotating in then the an from a relative professional seeing there benefit? Quality-Built of different business? are brand's enough spillover side are electrical to Great. the that the opportunity brake those you on success the for really brand, is

Yes.

background, going answer you feedback You to great open little -- we're I'm question. I'm and and try your some that open a getting, going to of more to some then give

I our using that that customer think particularly I've you good. large got that is acceptance we've And the customers extraordinarily hear installers side, field, how -- renewal extremely something that's and rate special. pretty a customer rate saying, when they And from the from exciting. the from the On product mean, had one that brake unusual calls of are that particular very is unique saying, call

it So has is name and spilling when great the will sees spill that over. a on it, over, and installer experience

so continue, think, we'll I And strong to sales. see

I see all one of of strong we're all our clearly certainly, going and to portfolio across And on will product help we products. professional excellent a across from of market the think sales leads, have depending which installer Quality-Built lines. that

me go should with just appreciate here other the the in a add So I say, while is to for Quality-Built get Mexican brand got we business and I later the growth a experience we'll be us Diagnostic significant very, year. very much experience the the for us big opportunity think is, there. brand. And growth pretty we product more out giving more I Bill, as continues and proving floor you, Quality-Built any to opportunity last, but also by now granular bit, little into chain want in major every for there to the being but be And lines then not you the there's things couple the But a embraced exciting. to there. And is

out to we're and And -- really, really growth I that it's I coming And our business, at it's so and going Heavy-Duty is mean that Diagnostic the further in Electrical embracing that's it's -- Rotating outlook business. and that momentum of amount see that's and high then [depend] just positive. opportunity embraced mean, really of we're on margin also the

slower what through it's [ the business, and strategically to tailwinds a pretty all just everything it -- and are way, the electric, Vehicle look business, an through news, do we business, but we're part good a electric news would see -- those whatever Electric -- ] for So that space [indiscernible]. not electric small, Very, think, people I of and on vehicle but instant the with the and bit unfolding the immediate, slower and many thought very is going be at the and it's system to Testing side, little that's vehicle small lot is this just our negative is that the our bad the going us. -- but

them the car rethinking and actually how to put and about this Wall now Street combustion revamp Journal engine had in place. reading, companies articles week are trying I back them lines You scrapping start and these think automotive major their magazine and

arena technology lot seems seems hybrid engine, gaining far more momentum to the of and be be vehicle combustion arena the to so a momentum. And losing electric

And day. at the so for of the that bodes end us well

of Sorry on an a I some bit on things, all answer. your for run opportunity it of I a me myself but to hope gave these express hit items.

did Was product pad different with my break others. hit Selwyn, to questions, that the the specific rotors? on line? rate the high. built you've the that call was than that received that or Or to the it broader create X it did is brand Relative but and quality installers a renewal and very

program. to Specifically pad the and rotor

-- very pads hearing So a the the there. program. that very, that is X the what I that, tires there's and only tire is brake encouraging happening tire repair a with in the -- will And the installer significant little but the they electing of vehicle the industry. one need. say happens that around all softness happens bit is go industry soft. just consumer very whatever they getting that's to expensive cross-sell will the one better, still and the get is in routers is I'm replace it's least the things or What's usually general opportunity in repair to when happening

and much coming than those while. very in despite said off as is replace forever, a slower that headwind small grow continue on expect don't cross-selling the But a to has And going we some base. we're to that, these jobs in to And been consumer that. tires that well last so it is as categories. to brake opportunity Having need And change providing them. that's will

-- second go sorry, I'm ahead. the Selwyn, question And

program. the satisfaction About pads, the pad where as No. back, had just mentioned, extreme that's on summarizing you rotor

than vehicles U.S. this impression of is but than factually know not in Mexico opportunity older Mexico, I much is U.S. -- would the of opportunity smaller my base the impression, think be correct, be installed to don't about the little the this I've that relative unclear been to because the in a age My then how And Great. is that vehicles to average the

but If the age you is So repairs. correct way is right that my the Mexico? about more would which perception lead this? smaller, thinking fleet What's thinking higher, be how the to is about are to

Yes.

I correct. definitely I average get significant Mexico mean, wages age smaller still a It's mean and up. the income, us minimum keep disposable the there. you're evolving fleet, Disposable But the United fleet than continues So in States. is for to is pretty up thing -- the going income and Mexico bad a is is keeps in going market there. this and older

And I and went so would as it. classify rebuild it an went with would they you've wrong what R&R [ historically, in mechanic bad, had they off ] the tow market an that where would alternator componentry something the if or car, replace it

are and seeing who you're and and Today, leading so has charger pads vehicle. they U.S. AutoZones out, world, for of these point they're more to the price people that about fallen vehicles spending concerned are Mexico finished of O'Reillys goods, more the repair how average the selling the the the money

market penetration the as small defined penetration of been have there formal -- players many amount is There's the so market. -- other. that that And in

stores. O'Reilly listen big encourage just on got rolling AutoZone's significant that you've Now announcements I'd up into you are and opening Mexico. market to that public and to consolidators both

we're Mexico. for market. -- that, the only lineup And I we We're playing not a great -- in have we're and mean, product playing Mexican

us. great I opportunity a business. think well, doing in million a Mexico. I right going do a mean, lot of be capabilities there. for a and $XXX to better do to It's going we're have north turn out we're And We it's to state-of-the-art

turn no And questions to at time. Joffe, further over there you. call back this the I'll Selwyn are

so you Thank Okay. much.

I've and just benefiting laser-focused further So our laser-focused diagnostic efficiencies, further are and We're global a duplicated summarize, from products year. for begin capabilities. to bullish, testing well where meet accentuate on as fully demand platform, as from just we and as on can spoken, efficiencies our I as non-discretionary we new easily that, we we fiscal not are

customer in supplier program our These and benefits supplier partnerships. Chain We Vendor Supply launched significantly. leveraging are and include our expertise recently our solid that Finance

strong. is liquidity Our

and particularly contributions professional excess all the capitalize significant related the our members. recognize I've in all we to momentum. In opportunities closing, of $XX to on product our have resources, solid are team which have million, brake and We market capacity lines, businesses, gaining of of our of got expertise in

continuously the of are We outstanding. service. level are highest They on focused providing

the future. We industry best for and are to our today world retiring from are Rudy board. I of ] all to that being who extend committed [ to [ the move would [indiscernible]. appreciate Jamie wishes leader and also and the the great We contributions parts ], solutions our in like significantly

Thank We to speaking when I of and call. fall. and fiscal also the appreciate us meetings forward in which the with call, is at host second investor look our continued November shareholders. joining again thank we for on We you everyone our very this XXXX you various quarter much. conferences support

this And concludes today's conference call.

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