Critical Shifts:
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Reaffirmed Full-Year Guidance: Despite early headwinds, Motorcar Parts of America expects to hit its full-year targets, citing that the Q1 sales decline aligns with internal projections.
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Q1 Top-Line Shift: Net sales dropped 10.8% year-over-year to $168.0 million (down from $188.4 million), driven primarily by customer order timing.
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Temporary Market Distortions: Sales were constrained by customers buying up liquidated inventory from a bankrupt competitor—a trend management notes is starting to reverse—and temporary delays from moving Canadian heavy-duty operations to Mexico.
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Margin Pressures & Exclusions: Reported gross margin contracted to 16.2% (down from 18.0%). However, adjusted gross margin reached 20.2% when excluding non-cash expenses, one-time items, and a 2% ($3.5 million) hit from foreign exchange fluctuations.
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Operating Income Impact: Operating income fell sharply to $3.5 million (down from $20.1 million). Adjusted for non-cash and one-time items in both periods, operating income stood at $11.2 million compared to $18.0 million in the prior-year quarter.
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Motorcar Parts of America, Inc. reported financial results for its fiscal 2027 first quarter ended June 30, reflecting timing of orders, with the company still on target to meet its expectations for the full year.
Net sales for the first quarter of fiscal 2027 were $168.0 million, compared with $188.4 million in the prior-year period, consistent with the company’s expectations. The company is reaffirming its fiscal 2027 guidance. The year-over-year decline in net sales was primarily attributable to the anticipated timing of customer orders. In addition, certain new business opportunities were temporarily impacted as customers took advantage of inventory liquidations associated with the bankruptcy of a competitor. The company believes this dynamic has begun to reverse. Net sales during the quarter were also delayed by the planned strategic relocation of the company’s Canadian heavy-duty operations to its manufacturing facilities in Mexico.
Gross profit for the fiscal 2027 first quarter was $27.2 million compared with $33.9 million a year earlier. Gross margin for the same period was 16.2 percent compared with 18.0 percent a year ago. Gross margin was impacted by non-cash expenses of 2.4 percent and one-time items of 1.6 percent as detailed in Exhibit 2. Excluding these non-cash expenses and certain one-time cash items, gross margin was 20.2 percent. In addition, the company noted that gross margin was negatively impacted by approximately 2 percent, or $3.5 million, due to foreign currency fluctuations.
Operating income for the fiscal 2027 first quarter was $3.5 million compared with $20.1 million in the prior year. Operating income was impacted by non-cash expenses of $4.7 million, and one-time items of $3.0 million as detailed in Exhibit 4. Operating income for the prior year benefited from non-cash items of $3.5 million, and partially offset by one-time cash expenses of $1.4 million, as detailed in Exhibit 4. Excluding these non-cash and certain one-time cash items, operating income was $11.2 million, which includes the $3.5 million unfavorable impact due to foreign currency fluctuations noted above, compared with $18.0 million in the prior year period.
“We remain confident about our ability to achieve our annual guidance, notwithstanding some expected sales head winds that we and the industry experienced in the first quarter,” said Selwyn Joffe, chairman, president and chief executive officer.
