MOTORCAR PARTS OF AMERICA REPORTS FISCAL 2027 SECOND QUARTER RESULTS (Form 8-K)

MOTORCAR PARTS OF AMERICA REPORTS FISCAL 2027 SECOND QUARTER RESULTS

Approximately $60 Million in Annualized New Business Awarded;

Shipments Beginning with Further Launches Expected This Fiscal Year

LOS ANGELES, CA - November 9, 2026 - Motorcar Parts of America, Inc. (Nasdaq: MPAA) today reported financial results for its fiscal 2027 second quarter ended September 30, 2026. Results reflect delayed customer orders and launches of new business awards, requiring revised guidance for the fiscal year. The company expects increased sales for the second half of the current fiscal year compared with the same period a year ago.

Positive Drivers

Three-Month Results

Net sales for the fiscal second quarter were $169.2 million compared with net sales of $221.5 million in the prior-year quarter. Prior year net sales included $14.8 million of core revenue in connection with the realignment of inventory at certain customer distribution centers. The remaining $37.5 million decline primarily reflects delayed customer orders and lower tariff pass-throughs. As noted above, the company's guidance reflects increased sales for the second half of the current fiscal year compared with the same period a year ago.

Gross profit for the fiscal second quarter was $40.9 million compared with $42.7 million a year earlier, with gross margin of 24.2% compared with 19.3%. Gross margin was impacted by non-cash expenses equivalent to 2.8 percentage points and benefited from one-time items equivalent to net 5.7 percentage points, including approximately $11.1 million of IEEPA tariff refunds, as detailed in Exhibit 3. In addition, gross margin was negatively impacted by approximately $2.4 million (1.4 percentage points) of unfavorable foreign currency fluctuations.

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Operating income was $10.0 million compared with $16.4 million a year earlier. Operating income was impacted by $11.2 million of non-cash expenses and benefited from a net $9.1 million of one-time items as detailed in Exhibit 6.

Interest expense decreased to $11.3 million from $12.7 million, primarily due to lower sales which resulted in lower utilization of accounts receivable discount programs.

Net income for the fiscal second quarter was $1.4 million, or $0.07 basic net income per share, or ($0.03) diluted net loss per share, compared with a net loss of $2.1 million, or ($0.11) per share in the prior year. Net income was impacted by $6.0 million of non-cash expenses, or $0.27 per diluted share, and benefited from a net $6.9 million of one-time items, or $0.30 per diluted share, as detailed in Exhibit 1.

At September 30, 2026, revolver borrowings were $126.6 million and cash was $20.8 million. Revolver availability plus cash was approximately $104.8 million as of September 30, 2026.

Under its authorized share repurchase program, the company had approximately $20.1 million available to repurchase shares at September 30, 2026.

Strategic and Operating Highlights

Six-Month Results

Net sales for the six-month period were $337.2 million compared with net sales of $409.8 million in the prior-year six months. Prior year net sales included $14.8 million of core revenue in connection with the realignment of inventory at certain customer distribution centers. The remaining $57.8 million decline primarily reflects delayed customer orders and lower tariff pass-throughs.

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Gross profit for the six-month period was $68.1 million compared with $76.6 million a year earlier, with gross margin of 20.2% compared with 18.7%. Gross margin was impacted by non-cash expenses equivalent to 2.6 percentage points and benefited from one-time cash items equivalent to net 2.1 percentage points, including approximately $11.1 million of IEEPA tariff refunds, as detailed in Exhibit 4. In addition, gross margin was negatively impacted by approximately $5.9 million (1.8 percentage points) of unfavorable foreign currency fluctuations.

Operating income was $13.5 million compared with $36.4 million a year earlier. Operating income was impacted by $15.9 million of non-cash expenses and benefited from a net $6.1 million of one-time items as detailed in Exhibit 6.

Interest expense decreased to $23.3 million from $25.5 million for the prior year.

Net loss for the six-month period was $12.1 million, or $0.64 per share, compared with a net income of $893,000, or $0.04 per diluted share, a year earlier. Net loss was impacted by $10.6 million of non-cash expenses, or $0.56 per share, and benefited from a net $4.6 million of one-time cash items, or $0.24 per share, as detailed in Exhibit 2.

Management Commentary

"Although our second-quarter results reflect delayed customer orders and some industry softness, we remain confident in the underlying aftermarket and in the substantial opportunities we are creating through new customer awards, geographic expansion and improved operating competitiveness," said Selwyn Joffe, chairman, president and chief executive officer.

"We have secured approximately $60 million in annualized new business awards from existing and new customers. Initial shipments have commenced, and we expect the remaining awards to launch during the second half of fiscal 2027, positioning us for additional sales contributions as these awards ramp up. We are targeting approximately $25 million of additional annualized new business awards by fiscal year end," Joffe added.

The company has benefitted from the recent bankruptcy of First Brands, notwithstanding customers liquidating inventory previously purchased from First Brands. "This changing competitive landscape has created meaningful opportunities for Motorcar Parts of America to expand its presence in the braking business. While the liquidation of existing First Brands inventories has temporarily impacted the timing of certain new orders, we are now starting to see the benefits and we are well positioned for additional business, including the relaunch of Centric Parts," Joffe said.

He noted opportunities also extend beyond the United States, with large customers focused on expanding their operations in Mexico and Canada -- creating additional opportunities to support their growth.

The company also completed the relocation of its heavy-duty program into the company's existing manufacturing operations in Mexico, leveraging its established infrastructure and resources to reduce manufacturing costs. "We believe this will enhance our competitiveness and ability to pursue additional heavy-duty aftermarket business," Joffe said.

He added that the company's rotating electrical diagnostic testing equipment business continues to expand with existing and new customers, including new international markets.

"Our new business awards, the Centric Parts relaunch, expanding North American opportunities, diagnostic equipment growth and the benefits of manufacturing efficiency reinforce our confidence in Motorcar Parts of America's long-term prospects. We believe these initiatives position us to generate sales growth and improved profitability as the new programs mature," said Joffe.

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"I should emphasize that the relaunch of Centric represents a significant opportunity to expand our presence in the brake aftermarket," Joffe said. He emphasized that the Centric relaunch is not included in the company's current growth estimates.

Revised Fiscal 2027 Guidance

Reflecting delayed customer orders for existing and new business awards, the company is revising its guidance for the fiscal year ending March 31, 2027. Net sales are estimated to be between $715 million and $740 million (previously $780 million to $800 million).

Operating income for fiscal 2027 is estimated to be between $37 million and $44 million. Operating income includes estimated non-cash expenses of approximately $30 million and transition expenses for the relocation of heavy-duty operations to Mexico of approximately $5 million. IEEPA tariff refunds were approximately $11 million for the three months ended September 30, 2026. Depreciation and amortization expense is estimated to be approximately $9 million for fiscal 2027.

Based on the revised annual fiscal 2027 guidance and actual results through September 30, 2026, net sales for the six months ending March 31, 2027 are estimated to be between $378 million and $403 million -- representing between a 0.5 percent decline and a 6.1 percent increase compared with the prior year period of $380.0 million, which included $19.9 million of core revenue. Excluding the $19.9 million core revenue in the prior year period, six months ending March 31, 2027 net sales are estimated to increase between 5.0 percent and 11.9 percent.

Operating income for the six months ending March 31, 2027 is estimated to be between $23 million and $30 million. Operating income includes estimated non-cash expenses of approximately $14 million. Depreciation and amortization expense is estimated to be approximately $5 million.

Use of Non-GAAP Measure