Motorcar Parts of America (MPAA) investor relations material

Executive summary

• Net sales for Q3 were $167.7M, down 9.9% year-over-year, mainly due to a major customer's reduced orders and store closures, but sales are rebounding in Q4.

• Gross profit margin declined to 19.6% from 24.1% year-over-year, reflecting lower sales and continued amortization/write-downs.

• Net income for Q3 was $1.8M ($0.09 per diluted share), compared to $2.3M ($0.11 per diluted share) last year, impacted by non-cash and one-time expenses.

• For the nine months ended December 31, 2025, net sales increased 2.4% to $577.5M, with gross margin at 19.0%.

• The outlook remains positive, with new business commitments, operational efficiencies, and a recovery in customer orders underway.

Financial highlights

• Fiscal 2026 sales guidance revised to $750–$760M, reflecting a $50M impact from customer store closures and distribution consolidation.

• Q3 gross profit was $32.9M (19.6% margin), down from $44.9M (24.1%) year-over-year, but improved sequentially from 18.0% in Q1 and 19.3% in Q2.

• Q3 operating income was $8.3M, down from $17.6M year-over-year; nine-month operating income was $44.8M.

• Cash from operations for the nine months was $23.7M; net bank debt reduced by $10.9M to $70.5M.

• Liquidity remains strong with $146M in cash and availability as of December 31, 2025.

Outlook and guidance

• Sales guidance lowered due to a 15% reduction in customer store count; outlook remains conservative but optimistic for a rebound.

• Gross margin expected to improve in Q4, supported by increased customer orders and cost reduction initiatives.

• Guidance for fiscal 2027 will be provided at year-end.

• Management expects sufficient liquidity for the next 12 months, supported by cash, receivable discount programs, and credit facility availability.

• Capital expenditures for fiscal 2026 are expected to be approximately $5M, focused on global growth and maintenance.