Motorcar Parts of America, Inc. (NASDAQ:MPAA) Files An 8-K Results of Operations and Financial ConditionItem 2.02.
Results of Operations and Financial Condition
Motorcar Parts of America, Inc. (NASDAQ:MPAA) Files An 8-K Results of Operations and Financial Condition
OnFebruary9,2018, Motorcar Parts of America, Inc. (the “Company”) issued a press release announcing its earnings for the fiscal quarterendedDecember 31, 2017which 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.
The attached exhibit includes non-GAAP Adjusted net sales, non-GAAP adjusted net income (loss), non-GAAP adjusted EBITDA, non-GAAP adjusted gross profit and non-GAAP adjusted gross margin. The Company believes that these supplemental non-GAAP financial measures, when presented together with the corresponding GAAP financial measures, provide useful information to investors and management regarding financial and business trends relating to its results of operations. However, non-GAAP financial measures have certain limitations in that they do not reflect all of the costs associated with the operations of the Company’s business as determined in accordance with GAAP. Therefore, investors should consider non-GAAP financial measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP.
The Company makes adjustments to the following items to calculate its non-GAAP financial measures:
Initial return and stock adjustment accruals related to new business. In connection with new business, the Company may establish initial return and stock adjustment accruals to account for the anticipated increased levels of business activity. The Company excluded these initial up-front accruals from net sales because they do not reflect the Company’s operations on an ongoing basis and excluding such accruals enables period-over-period comparability.
Customer allowances related to new business. In connection with new business, the Company may purchase cores from customers, may purchase the customer’s prior supplier’s inventory, or may provide certain customer allowances. The allowances are granted on a negotiated basis, and the Company excluded these allowances from net sales because they do not reflect ongoing product pricing or net sales and excluding such allowances enables period-over-period comparability.
New product line start-up and ramp-up costs, and transition expenses. These are start-up costs incurred prior to recognizing sales for the launch of new product lines and costs of ramping up production. Transition expenses are costs incurred in connection with the expansion of the Company's operations in Mexico. The Company excluded start-up and ramp-up costs, and transition expenses because they do not reflect the Company’s operations on an ongoing basis and excluding such costs enables period-over-period comparability.
Lower of cost or net realizable value revaluation- cores on customers' shelves and inventory step-up amortization. On a quarterly basis, the Company revalues long-term core inventory based on lower of cost or net realizable value in accordance with the Company’s accounting policies. The impact of this revaluation is reflected in cost of goods sold. The Company excluded the lower of cost or net realizable value revaluation for cores on customers’ shelves because the core inventory on the customers’ shelves is not consumed or realized in cash during the Company’s normal operating cycle. Additionally, amortization of inventory step-up relates to an acquisition and is excluded because it is not ongoing. Neither is used by management to assess the profitability of its business operations.
Cost of customer allowances and stock adjustment accruals related to new business. As described above for the adjustments to net sales, the Company also adds back the cost of customer allowances related to inventory purchases and stock adjustment accruals to cost of goods sold because they do not reflect the Company’s operations on an ongoing basis and excluding such costs enables period-over-period comparability.
Legal, severance, acquisition, financing, transitionand other costs. The Company has incurred legal costs related to discontinued subsidiaries and a settlement payment related to a claim by an investment bank. Additionally, the Company has incurred severance, acquisition, financing, transitionand other costs that are not related to current operations. The Company excluded these costs to enable period-over-period comparability.
Share-based compensation expenses. These expenses primarily consist of the cost to provide employee restricted stock and restricted stock units, and employee stock options. The Company excluded share-based compensation expense because it is not used by management to assess the profitability of its business operations.
Mark-to-market losses (gains). The Company excluded mark-to-market gains and losses because they are unrealized and are not reflective of actual current cash flows and operating results.
Write-off of debt issuance costs. The Company excludes the write-off of debt issuance costs because they are not related to the Company's ongoing business operations or financing arrangements.
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Item 9.01. |
Financial Statements and Exhibits. |
The following exhibit is furnished with this Current Report to Item 2.02:
(d) Exhibits
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Exhibit No. |
Description |
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Press Release, datedFebruary 9, 2018 |
MOTORCAR PARTS AMERICA INC ExhibitEX-99.1 2 ex99_1.htm EXHIBIT 99.1 Exhibit 99.1 NEWS RELEASE CONTACT: Gary S. Maier (310) 471-1288 MOTORCAR PARTS OF AMERICA REPORTS FISCAL 2018 THIRD QUARTER RESULTS –Current Fourth Quarter Sales Outlook Very Favorable– LOS ANGELES,…To view the full exhibit click here
About Motorcar Parts of America, Inc. (NASDAQ:MPAA)
Motorcar Parts of America, Inc. is a manufacturer, remanufacturer and distributor of automotive aftermarket parts, including alternators, starters, wheel hub assembly, brake master cylinders, brake power boosters and turbochargers utilized in imported and domestic passenger vehicles, light trucks and heavy-duty applications. The Company sells its products in North America to auto parts retail and traditional warehouse chains and to automobile manufacturers for both their aftermarket programs and their warranty replacement programs (OES). It recycles materials, including metal from the used cores and corrugated packaging. The Company carries over 13,000 stock keeping units (SKUs) for automotive parts that are sold under its customers’ recognized private label brand names and its Quality-Built, Pure Energy, Xtreme, Reliance and other brand names. It sells its products to automotive retail outlets and the professional repair market throughout the United States and Canada.