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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Motorcar Parts and Associates Inc | NASDAQ:MPAA | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 4.86 | 4.50 | 5.61 | 0 | 12:47:34 |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
|
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Title of each class
|
Trading symbol(s)
|
Name of each exchange on which registered
|
|
|
|
Large accelerated filer ☐
|
|
Non-accelerated filer ☐
|
Smaller reporting company
|
|
Emerging growth company
|
PART I — FINANCIAL INFORMATION
|
|
|
|
4
|
|
|
4
|
|
|
5
|
|
|
6
|
|
|
7
|
|
|
8
|
|
|
9
|
|
|
25
|
|
|
34
|
|
|
34
|
|
PART II — OTHER INFORMATION
|
|
|
|
36
|
|
|
36
|
|
|
36
|
|
|
36
|
|
|
36
|
|
|
37 |
|
|
40
|
Item 1. |
Financial Statements
|
September 30, 2023
|
March 31, 2023
|
|||||||
ASSETS
|
(Unaudited)
|
|||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Short-term investments
|
|
|
||||||
Accounts receivable — net
|
|
|
||||||
Inventory
|
|
|
||||||
Contract assets
|
|
|
||||||
Prepaid expenses and other current assets
|
|
|
||||||
Total current assets
|
|
|
||||||
Plant and equipment — net
|
|
|
||||||
Operating lease assets
|
|
|
||||||
Long-term deferred income taxes
|
|
|
||||||
Long-term contract assets
|
|
|
||||||
Goodwill and intangible assets — net
|
|
|
||||||
Other assets
|
|
|
||||||
TOTAL ASSETS
|
$
|
|
$
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable and accrued liabilities
|
$
|
|
$
|
|
||||
Customer finished goods returns accrual
|
|
|
||||||
Contract liabilities
|
|
|
||||||
Revolving loan
|
|
|
||||||
Other current liabilities
|
|
|
||||||
Operating lease liabilities
|
|
|
||||||
Current portion of term loan
|
|
|
||||||
Total current liabilities
|
|
|
||||||
Term loan, less current portion
|
|
|
||||||
|
||||||||
Long-term contract liabilities
|
|
|
||||||
Long-term deferred income taxes
|
|
|
||||||
Long-term operating lease liabilities
|
|
|
||||||
Other liabilities
|
|
|
||||||
Total liabilities
|
|
|
||||||
Commitments and contingencies
|
||||||||
Shareholders’ equity:
|
||||||||
Preferred stock; par value $ per share,
|
|
|
||||||
Series A junior participating preferred stock; par value $
|
|
|
||||||
Common stock; par value $
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Retained earnings
|
|
|
||||||
Accumulated other comprehensive income (loss)
|
|
(
|
)
|
|||||
Total shareholders’ equity
|
|
|
||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
|
$
|
|
Three Months Ended | Six Months Ended | |||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Net sales
|
$
|
|
$
|
|
$ | $ | ||||||||||
Cost of goods sold
|
|
|
||||||||||||||
Gross profit
|
||||||||||||||||
Operating expenses:
|
||||||||||||||||
General and administrative
|
|
|
||||||||||||||
Sales and marketing
|
|
|
||||||||||||||
Research and development
|
|
|
||||||||||||||
Foreign exchange impact of lease liabilities and forward contracts
|
|
|
||||||||||||||
Total operating expenses
|
|
|
||||||||||||||
Operating income
|
|
|
||||||||||||||
Other expenses: |
||||||||||||||||
Interest expense, net
|
|
|
||||||||||||||
Change in fair value of compound net derivative liability
|
||||||||||||||||
Loss on extinguishment of debt
|
||||||||||||||||
Total other expenses |
||||||||||||||||
Loss before income tax benefit
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
Income tax benefit
|
(
|
)
|
(
|
)
|
( |
) | ( |
) | ||||||||
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
$ | ( |
) | $ | ( |
) | ||||
Basic net loss per share
|
$
|
(
|
)
|
$
|
(
|
)
|
$ | ( |
) | $ | ( |
) | ||||
Diluted net loss per share
|
$
|
(
|
)
|
$
|
(
|
)
|
$ | ( |
) | $ | ( |
) | ||||
Weighted average number of shares outstanding:
|
||||||||||||||||
Basic
|
|
|
||||||||||||||
Diluted
|
|
|
Three Months Ended | Six Months Ended | |||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
$ | ( |
) | $ | ( |
) | ||||
Other comprehensive income (loss), net of tax:
|
||||||||||||||||
Foreign currency translation gain (loss)
|
|
|
( |
) | ||||||||||||
Total other comprehensive income (loss), net of tax
|
|
|
( |
) | ||||||||||||
Comprehensive income (loss)
|
$
|
|
$
|
(
|
)
|
$ | $ | ( |
) |
Common Stock
|
||||||||||||||||||||||||
Shares
|
Amount
|
Additional
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Total
|
|||||||||||||||||||
Balance at March 31, 2023
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||
Compensation recognized under employee stock plans
|
-
|
|
|
|
|
|
||||||||||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes
|
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||
Foreign currency translation
|
-
|
|
|
|
|
|
||||||||||||||||||
Net loss
|
-
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||
Balance at June 30, 2023
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||||
Compensation recognized under employee stock plans
|
-
|
|||||||||||||||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes
|
||||||||||||||||||||||||
Foreign currency translation
|
- |
|||||||||||||||||||||||
Net loss
|
- |
( |
) | ( |
) | |||||||||||||||||||
Balance at September 30, 2023
|
$ | $ | $ | $ | $ |
Common Stock
|
||||||||||||||||||||||||
Shares
|
Amount
|
Additional
Paid-in
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Total
|
|||||||||||||||||||
Balance at March 31,2022
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||
Compensation recognized under employee stock plans
|
-
|
|
|
|
|
|
||||||||||||||||||
Exercise of stock options, net of shares withheld for employee taxes
|
||||||||||||||||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes
|
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||
Foreign currency translation
|
-
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||
Net loss
|
-
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||
Balance at June 30, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||
Compensation recognized under employee stock plans
|
- | |||||||||||||||||||||||
Exercise of stock options, net of shares withheld for employee taxes
|
||||||||||||||||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes
|
( |
) | ( |
) | ||||||||||||||||||||
Foreign currency translation
|
-
|
|||||||||||||||||||||||
Net loss
|
- |
( |
) | ( |
) | |||||||||||||||||||
Balance at September 30, 2022
|
$ | $ | $ | $ | ( |
) | $ |
Six Months Ended | ||||||||
September 30,
|
||||||||
2023
|
2022
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation and amortization
|
|
|
||||||
Amortization of interest and loss on extinguishment of debt
|
||||||||
Accrued interest on convertible notes, related party
|
||||||||
Amortization of core premiums paid to customers
|
|
|
||||||
Amortization of finished goods premiums paid to customers
|
|
|
||||||
Noncash lease expense
|
|
|
||||||
Foreign exchange impact of lease liabilities and forward contracts
|
|
|
||||||
Change in fair value of compound net derivative liability
|
||||||||
(Gain) loss on short -term investments
|
(
|
)
|
|
|||||
Net provision for inventory reserves
|
|
|
||||||
Net provision for customer payment discrepancies and credit losses
|
|
|
||||||
Deferred income taxes
|
(
|
)
|
(
|
)
|
||||
Share-based compensation expense
|
|
|
||||||
Loss on disposal of plant and equipment
|
|
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(
|
)
|
|
|||||
Inventory
|
(
|
)
|
(
|
)
|
||||
Prepaid expenses and other current assets
|
|
(
|
)
|
|||||
Other assets
|
(
|
)
|
(
|
)
|
||||
Accounts payable and accrued liabilities
|
|
|
||||||
Customer finished goods returns accrual
|
(
|
)
|
(
|
)
|
||||
Contract assets
|
(
|
)
|
(
|
)
|
||||
Contract liabilities
|
|
|
||||||
Operating lease liabilities
|
(
|
)
|
(
|
)
|
||||
Other liabilities
|
|
(
|
)
|
|||||
Net cash used in operating activities
|
(
|
)
|
(
|
)
|
||||
Cash flows from investing activities:
|
||||||||
Purchase of plant and equipment
|
(
|
)
|
(
|
)
|
||||
Purchase of short -term investments
|
|
(
|
)
|
|||||
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Borrowings under revolving loan
|
|
|
||||||
Repayments of revolving loan
|
(
|
)
|
(
|
)
|
||||
Repayments of term loan
|
(
|
)
|
(
|
)
|
||||
Payments for debt issuance costs
|
(
|
)
|
(
|
)
|
||||
Payments on finance lease obligations
|
(
|
)
|
(
|
)
|
||||
Exercise of stock options, net of cash used to pay employee taxes
|
|
|
||||||
Cash used to net share settle equity awards
|
(
|
)
|
(
|
)
|
||||
Net cash provided by financing activities
|
|
|
||||||
Effect of exchange rate changes on cash and cash equivalents
|
(
|
)
|
(
|
)
|
||||
Net decrease in cash and cash equivalents
|
(
|
)
|
(
|
)
|
||||
Cash and cash equivalents — Beginning of period
|
|
|
||||||
Cash and cash equivalents — End of period
|
$
|
|
$
|
|
||||
Supplemental disclosures of cash flow information:
|
||||||||
Cash paid for interest, net
|
$
|
|
$
|
|
||||
Cash paid for income taxes, net of refunds
|
|
|
||||||
Cash paid for operating leases
|
|
|
||||||
Cash paid for finance leases
|
|
|
||||||
Plant and equipment acquired under finance leases
|
|
|
||||||
Assets acquired under operating leases
|
|
|
||||||
Non-cash capital expenditures
|
|
|
||||||
Debt issuance costs included in accounts payable and accrued liabilities
|
|
September 30, 2023
|
March 31, 2023
|
||||||
Accounts receivable — trade
|
$
|
|
$
|
|
||||
Allowance for credit losses
|
(
|
)
|
(
|
)
|
||||
Customer payment discrepancies
|
(
|
)
|
(
|
)
|
||||
Customer returns RGA issued
|
(
|
)
|
(
|
)
|
||||
Total accounts receivable — net
|
$
|
|
$
|
|
|
September 30, 2023
|
March 31, 2023
|
||||||
Inventory
|
||||||||
Raw materials
|
$
|
|
$
|
|
||||
Work-in-process
|
|
|
||||||
Finished goods
|
|
|
||||||
|
|
|
||||||
Less allowance for excess and obsolete inventory
|
(
|
)
|
(
|
)
|
||||
Inventory — net
|
|
|
||||||
Inventory unreturned
|
|
|
||||||
Total inventory
|
$
|
|
$
|
|
|
September 30, 2023
|
March 31, 2023
|
||||||
Short-term contract assets
|
||||||||
Cores expected to be returned by customers
|
$
|
|
$
|
|
||||
Core premiums paid to customers | ||||||||
Upfront payments to customers
|
|
|
||||||
Finished goods premiums paid to customers
|
|
|
||||||
Total short-term contract assets
|
$
|
|
$
|
|
||||
Long-term contract assets |
||||||||
Remanufactured cores held at customers’ locations
|
$
|
|
$
|
|
||||
Core premiums paid to customers | ||||||||
Long-term core inventory deposits | ||||||||
Finished goods premiums paid to customers | ||||||||
Upfront payments to customers
|
|
|
||||||
Total long-term contract assets
|
$
|
|
$
|
|
|
Three Months Ended
September 30,
|
Six Months Ended
September 30,
|
||||||||||||||
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Net sales
|
||||||||||||||||
Customer A
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||
Customer C
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||
Customer B
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||
Customer D |
% | % | % | % |
|
September 30, 2023
|
March 31, 2023
|
||||||
Accounts receivable - trade
|
||||||||
Customer A
|
|
%
|
|
%
|
||||
Customer C
|
|
%
|
|
%
|
||||
Customer B |
% | % | ||||||
Customer D |
% | % |
|
Three Months Ended
September 30,
|
Six Months Ended
September 30,
|
||||||||||||||
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Product line |
||||||||||||||||
Rotating electrical products
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||
Brake-related products
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||
Wheel hub products
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||
Other products
|
|
%
|
|
%
|
|
%
|
|
%
|
||||||||
|
|
%
|
|
%
|
|
%
|
|
%
|
September 30, 2023
|
March 31, 2023
|
|||||||
Principal amount of Convertible Notes
|
$
|
|
$
|
|
||||
Less: unamortized debt discount attributed to Compound Net Derivative
Liability
|
(
|
)
|
(
|
)
|
||||
Less: unamortized debt discount attributed to debt issuance costs
|
(
|
)
|
(
|
)
|
||||
Carrying amount of the Convertible Notes
|
|
|
||||||
Plus: Compound Net Derivative Liability
|
|
|
||||||
Net carrying amount of Convertible Notes, related
party
|
$
|
|
$
|
|
Three Months Ended
|
Six Months Ended
|
|||||||
September 30,
|
September 30,
|
|||||||
2023
|
2023
|
|||||||
Contractual interest expense
|
$
|
|
$
|
|
||||
Accretion of debt discount
|
|
|
||||||
Amortization of debt issuance costs
|
|
|
||||||
Total interest expense
|
$
|
|
$
|
|
|
September 30, 2023
|
March 31, 2023
|
||||||
Short-term contract liabilities
|
||||||||
Customer allowances earned
|
$
|
|
$
|
|
||||
Customer core returns accruals
|
|
|
||||||
Accrued core payment
|
|
|
||||||
Customer deposits
|
|
|
||||||
Core bank liability
|
|
|
||||||
Finished goods liabilities
|
|
|
||||||
Total short-term contract liabilities
|
$
|
|
$
|
|
||||
Long-term contract liabilities
|
||||||||
Customer core returns accruals
|
$
|
|
$
|
|
||||
Core bank liability
|
|
|
||||||
Accrued core payment
|
|
|
||||||
Finished goods liabilities
|
|
|
||||||
Total long-term contract liabilities
|
$
|
|
$
|
|
Leases
|
Classification
|
September 30, 2023
|
March 31, 2023
|
|||||||
Assets:
|
|
|||||||||
Operating
|
|
$
|
|
$
|
|
|||||
Finance
|
|
|
|
|||||||
Total leased assets
|
|
$
|
|
$
|
|
|||||
|
|
|||||||||
Liabilities:
|
|
|||||||||
Current
|
|
|||||||||
Operating
|
|
$
|
|
$
|
|
|||||
Finance
|
|
|
|
|||||||
Long-term
|
|
|||||||||
Operating
|
|
|
|
|||||||
Finance
|
|
|
|
|||||||
Total lease liabilities
|
|
$
|
|
$
|
|
Three Months Ended
|
Six Months Ended |
|||||||||||||||
|
September 30,
|
September 30, |
||||||||||||||
|
2023
|
2022
|
2023 |
2022 |
||||||||||||
Lease cost
|
||||||||||||||||
Operating lease cost
|
$
|
|
$
|
|
$ |
$ |
||||||||||
Short-term lease cost
|
|
|
||||||||||||||
Variable lease cost
|
|
|
||||||||||||||
Finance lease cost:
|
||||||||||||||||
Amortization of finance lease assets
|
|
|
||||||||||||||
Interest on finance lease liabilities
|
|
|
||||||||||||||
Total lease cost
|
$
|
|
$
|
|
$ |
$ |
Maturity of lease liabilities
|
Operating Leases
|
Finance Leases
|
Total
|
|||||||||
2024 -
remaining six months
|
$
|
|
$
|
|
$
|
|
||||||
2025
|
|
|
|
|||||||||
2026
|
|
|
|
|||||||||
2027
|
|
|
|
|||||||||
2028
|
|
|
|
|||||||||
Thereafter
|
|
|
|
|||||||||
Total lease payments
|
|
|
|
|||||||||
Less amount representing interest
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Present value of lease liabilities
|
$
|
|
$
|
|
$
|
|
|
September 30, 2023
|
March 31, 2023
|
||||||
Lease term and discount rate
|
||||||||
Weighted-average remaining lease term (years):
|
||||||||
Finance leases
|
|
|
||||||
Operating leases
|
|
|
||||||
Weighted-average discount rate:
|
||||||||
Finance leases
|
|
%
|
|
%
|
||||
Operating leases
|
|
%
|
|
%
|
Six Months Ended
|
||||||||
|
September 30,
|
|||||||
|
2023
|
2022
|
||||||
Receivables discounted
|
$
|
|
$
|
|
||||
Weighted average number of days collection was accelerated
|
|
|
||||||
Annualized weighted average discount rate
|
|
%
|
|
%
|
||||
Amount of discount recognized as interest expense
|
$
|
|
$
|
|
Three Months Ended | Six
Months Ended |
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
Basic shares
|
|
|
|
|
||||||||||||
Effect of potentially dilutive securities
|
|
|
|
|
||||||||||||
Diluted shares
|
|
|
|
|
||||||||||||
Net loss per share:
|
||||||||||||||||
Basic net loss per
share
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
Diluted net loss per
share
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
Loss Recognized as Foreign Exchange Impact of Lease Liabilities and Forward
Contracts
|
||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
Derivatives Not Designated as
|
September 30,
|
September 30,
|
||||||||||||||
Hedging Instruments
|
2023
|
2022
|
2023 |
2022
|
||||||||||||
Forward foreign currency exchange contracts
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
September 30, 2023
|
March 31, 2023
|
|||||||||||||||||||||||||||||||
Fair Value Measurements
|
Fair Value Measurements
|
|||||||||||||||||||||||||||||||
Using Inputs Considered as
|
Using Inputs Considered as
|
|||||||||||||||||||||||||||||||
Fair Value
|
Level 1
|
Level 2
|
Level 3
|
Fair Value
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||||||||||||||
Assets
|
||||||||||||||||||||||||||||||||
Short-term investments |
||||||||||||||||||||||||||||||||
Mutual funds
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||||
Prepaid expenses and other current assets |
||||||||||||||||||||||||||||||||
Forward foreign currency exchange contracts
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Liabilities
|
||||||||||||||||||||||||||||||||
Other current liabilities
|
||||||||||||||||||||||||||||||||
Deferred compensation
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Convertible notes, related party |
||||||||||||||||||||||||||||||||
Compound Net Derivative Liability
|
September 30, 2023
|
March 31, 2023
|
|||||||
Risk free interest rate
|
|
%
|
|
%
|
||||
Cost of equity
|
|
%
|
|
%
|
||||
Weighted average cost of capital | % | % | ||||||
Expected volatility of MPA common stock | % | % | ||||||
EBITDA volatility | % | % |
Three Months Ended
|
Six Months Ended
|
|||||||
September 30, | September 30, | |||||||
2023
|
2023
|
|||||||
Beginning balance
|
$
|
|
$
|
|
||||
Changes in fair value of Compound Net Derivative Liability included in earnings
|
|
|
||||||
Ending balance
|
$
|
|
$ |
|
Six Months Ended
|
|||
|
September 30,
|
|||
|
2023
|
|||
Weighted average risk free interest rate
|
|
%
|
||
Weighted average expected holding period (years)
|
|
|||
Weighted average expected volatility
|
|
%
|
||
Weighted average expected dividend yield
|
|
|||
Weighted average fair value of options granted
|
$
|
|
|
Number of
Shares
|
Weighted Average
Exercise Price
|
||||||
Outstanding at March 31, 2023
|
|
$
|
|
|||||
Granted
|
|
$
|
|
|||||
Exercised
|
|
$
|
|
|||||
Forfeited/Cancelled
|
(
|
)
|
$
|
|
||||
Expired
|
( |
) | $ | |||||
Outstanding at September 30, 2023
|
|
$
|
|
|
Number of
Shares
|
Weighted Average
Grant Date Fair
Value
|
||||||
Outstanding at March 31, 2023
|
|
$
|
|
|||||
Granted
|
|
$
|
|
|||||
Vested
|
(
|
)
|
$
|
|
||||
Forfeited/Cancelled
|
(
|
)
|
$
|
|
||||
Outstanding at September 30, 2023
|
|
$
|
|
Six Months Ended
September 30,
|
||||||||
|
2023
|
2022 |
||||||
Risk free interest rate
|
|
%
|
% | |||||
Expected life in years
|
|
|||||||
Expected volatility of MPA common stock
|
|
%
|
% | |||||
Expected average volatility of peer companies
|
|
% |
% | |||||
Average correlation coefficient of peer companies
|
|
% |
% | |||||
Expected dividend yield
|
|
|||||||
Grant date fair value
|
$
|
|
$ |
|
Number of
Shares
|
Weighted Average
Grant Date Fair
Value
|
||||||
Outstanding at March 31, 2023
|
|
$
|
|
|||||
Granted
|
|
$
|
|
|||||
Vested
|
$
|
|
||||||
Forfeited
|
(
|
)
|
$
|
|
||||
Outstanding at September 30, 2023
|
|
$
|
|
|
Three Months Ended
September 30,
|
Six Months
Ended
September 30,
|
||||||||||||||
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Balance at beginning of period
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Charged to expense
|
|
|
|
|
||||||||||||
Amounts processed
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Balance at end of period
|
$
|
|
$
|
|
$
|
|
$
|
|
• |
Hard Parts, including (i) light duty rotating electric products such as alternators
and starters, (ii) wheel hub products, (iii) brake-related products, including brake calipers, brake boosters, brake rotors, brake pads and brake master cylinders, and (iv) turbochargers,
|
• |
Test Solutions and Diagnostic Equipment, including (i) applications for combustion
engine vehicles, including bench top testers for alternators and starters, (ii) equipment for the pre- and post-production of electric vehicles, and (iii) software
emulation of power system applications for the electrification of all forms of transportation (including automobiles, trucks, the emerging electrification of systems within the aerospace industry, and electric vehicle charging stations),
and
|
• |
Heavy Duty, including non-discretionary automotive aftermarket replacement hard parts
for heavy-duty truck, industrial, marine, and agricultural applications.
|
Three Months Ended September 30, 2023
|
||||||||||||
Hard Parts
|
All Other
|
Total
|
||||||||||
Net sales to external customers
|
$
|
|
$
|
|
$
|
|
||||||
Intersegment sales
|
|
|
|
|||||||||
Operating income (loss)
|
|
(
|
)
|
|
||||||||
Depreciation and amortization
|
|
|
|
|||||||||
Segment assets
|
|
|
|
|||||||||
Capital expenditures
|
|
|
|
Three Months Ended September 30, 2022
|
||||||||||||
Hard Parts
|
All Other
|
Total
|
||||||||||
Net sales to external customers
|
$
|
|
$
|
|
$
|
|
||||||
Intersegment sales
|
|
|
|
|||||||||
Operating income (loss)
|
|
(
|
)
|
|
||||||||
Depreciation and amortization
|
|
|
|
|||||||||
Segment assets
|
|
|
|
|||||||||
Capital expenditures
|
|
|
|
Six Months Ended September 30, 2023
|
||||||||||||
Hard Parts
|
All Other
|
Total
|
||||||||||
Net sales to external customers
|
$
|
|
$
|
|
$
|
|
||||||
Intersegment sales
|
|
|
|
|||||||||
Operating income (loss)
|
|
(
|
)
|
|
||||||||
Depreciation and amortization
|
|
|
|
|||||||||
Capital expenditures
|
|
|
|
Six Months Ended September 30, 2022
|
||||||||||||
Hard Parts
|
All Other
|
Total
|
||||||||||
Net sales to external customers
|
$
|
|
$
|
|
$
|
|
||||||
Intersegment sales
|
|
|
|
|||||||||
Operating income (loss)
|
|
(
|
)
|
|
||||||||
Depreciation and amortization
|
|
|
|
|||||||||
Capital expenditures
|
|
|
|
Three Months Ended
|
Six Months
Ended
|
|||||||||||||||
|
September 30,
|
September 30,
|
||||||||||||||
Net sales
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Total net sales for reportable segment
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Other net sales
|
||||||||||||||||
Elimination of intersegment net sales
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Total consolidated net sales
|
$
|
|
$
|
|
$
|
|
$
|
|
Three Months Ended
|
Six Months
Ended
|
|||||||||||||||
|
September 30,
|
September 30,
|
||||||||||||||
Profit or loss
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Total operating income for reportable segment
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Other operating loss
|
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Elimination of intersegment operating income
|
|
(
|
)
|
|
(
|
)
|
||||||||||
Interest expense, net
|
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Change in fair value of compound net derivative liability
|
(
|
)
|
|
(
|
)
|
|
||||||||||
Loss on extinguishment of debt | ( |
) | ( |
) | ||||||||||||
Total consolidated loss before income tax benefit
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
Assets
|
September 30, 2023
|
March 31, 2023
|
||||||
Total assets for reportable segment
|
$
|
|
$
|
|
||||
Other assets
|
|
|
||||||
Elimination of intersegment assets
|
(
|
)
|
(
|
)
|
||||
Total consolidated assets
|
$
|
|
$
|
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
• |
Hard Parts, including (i) light duty rotating electric products such as alternators and starters, (ii) wheel hub products, (iii) brake-related products, including brake calipers, brake boosters,
brake rotors, brake pads and brake master cylinders, and (iv) turbochargers,
|
• |
Test Solutions and Diagnostic Equipment, including (i) applications for combustion engine vehicles, including bench top testers for alternators and starters, (ii) equipment for the pre- and
post-production of electric vehicles, and (iii) software emulation of power system applications for the electrification of all forms of transportation (including automobiles, trucks, the emerging electrification of systems within the
aerospace industry, and electric vehicle charging stations), and
|
• |
Heavy Duty, including non-discretionary automotive aftermarket replacement hard parts for heavy-duty truck, industrial, marine, and agricultural applications.
|
Three Months Ended
September 30,
|
||||||||
2023
|
2022
|
|||||||
Cash flow provided by (used in) operations
|
$
|
15,300,000
|
$
|
(15,972,000
|
)
|
|||
Finished goods turnover (annualized) (1)
|
4.1
|
3.3
|
(1) |
Annualized finished goods turnover for the fiscal quarter is calculated by multiplying cost of goods sold for the quarter by 4 and dividing the result by the average between beginning and ending non-core finished goods inventory values
for the fiscal quarter. We believe this provides a useful measure of our ability to turn our inventory into revenues.
|
Three Months Ended
September 30,
|
||||||||
2023
|
2022
|
|||||||
Net sales
|
$
|
196,639,000
|
$
|
172,543,000
|
||||
Cost of goods sold
|
155,491,000
|
146,027,000
|
||||||
Gross profit
|
41,148,000
|
26,516,000
|
||||||
Gross profit percentage
|
20.9
|
%
|
15.4
|
%
|
Three Months Ended
September 30,
|
||||||||
2023
|
2022
|
|||||||
General and administrative
|
$
|
14,325,000
|
$
|
14,846,000
|
||||
Sales and marketing
|
5,688,000
|
6,066,000
|
||||||
Research and development
|
2,438,000
|
2,670,000
|
||||||
Foreign exchange impact of lease liabilities and forward contracts
|
4,760,000
|
1,082,000
|
||||||
Percent of net sales
|
||||||||
General and administrative
|
7.3
|
%
|
8.6
|
%
|
||||
Sales and marketing
|
2.9
|
%
|
3.5
|
%
|
||||
Research and development
|
1.2
|
%
|
1.5
|
%
|
||||
Foreign exchange impact of lease liabilities and forward contracts
|
2.4
|
%
|
0.6
|
%
|
Six Months Ended
September 30,
|
||||||||
2023
|
2022
|
|||||||
Cash flow used in operations
|
$
|
(5,170,000
|
)
|
$
|
(16,954,000
|
)
|
||
Finished goods turnover (annualized) (1)
|
3.8
|
3.3
|
(1) |
Annualized finished goods turnover for the fiscal period is calculated by multiplying cost of goods sold for the period by 2 and dividing the result by the average between beginning and ending non-core finished goods inventory values
for the fiscal period. We believe this provides a useful measure of our ability to turn our inventory into revenues.
|
Six Months Ended
September 30,
|
||||||||
2023
|
2022
|
|||||||
Net sales
|
$
|
356,344,000
|
$
|
336,528,000
|
||||
Cost of goods sold
|
288,629,000
|
279,710,000
|
||||||
Gross profit
|
67,715,000
|
56,818,000
|
||||||
Gross profit percentage
|
19.0
|
%
|
16.9
|
%
|
Six Months Ended
September 30,
|
||||||||
2023
|
2022
|
|||||||
General and administrative
|
$
|
26,927,000
|
$
|
28,480,000
|
||||
Sales and marketing
|
11,107,000
|
11,608,000
|
||||||
Research and development
|
4,813,000
|
5,783,000
|
||||||
Foreign exchange impact of lease liabilities and forward contracts
|
490,000
|
1,760,000
|
||||||
Percent of net sales
|
||||||||
General and administrative
|
7.6
|
%
|
8.5
|
%
|
||||
Sales and marketing
|
3.1
|
%
|
3.4
|
%
|
||||
Research and development
|
1.4
|
%
|
1.7
|
%
|
||||
Foreign exchange impact of lease liabilities and forward contracts
|
0.1
|
%
|
0.5
|
%
|
Six Months Ended
September 30,
|
||||||||
2023
|
2022
|
|||||||
Cash flows (used in) provided by:
|
||||||||
Operating activities
|
$
|
(5,170,000
|
)
|
$
|
(16,954,000
|
)
|
||
Investing activities
|
(108,000
|
)
|
(2,817,000
|
)
|
||||
Financing activities
|
4,008,000
|
4,689,000
|
||||||
Effect of exchange rates on cash and cash equivalents
|
(33,000
|
)
|
(323,000
|
)
|
||||
Net decrease in cash and cash equivalents
|
$
|
(1,303,000
|
)
|
$
|
(15,405,000
|
)
|
||
Additional selected cash flow data:
|
||||||||
Depreciation and amortization
|
$
|
5,966,000
|
$
|
6,214,000
|
||||
Capital expenditures
|
169,000
|
2,644,000
|
Six Months Ended
September 30,
|
||||||||
2023
|
2022
|
|||||||
Receivables discounted
|
$
|
255,303,000
|
$
|
283,359,000
|
||||
Weighted average number of days collection was accelerated
|
338
|
327
|
||||||
Annualized weighted average discount rate
|
6.6
|
%
|
4.4
|
%
|
||||
Amount of discount recognized as interest expense
|
$
|
15,940,000
|
$
|
11,293,000
|
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4. |
Controls and Procedures
|
Item 1. |
Legal Proceedings
|
Item 1A. |
Risk Factors
|
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds
|
Periods
|
Total Number of
Shares Purchased
|
Average Price
Paid Per Share
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
|
Approximate
Dollar Value of
Shares That May
Yet Be Purchased
Under the Plans
or Programs (1)
|
||||||||||||
July 1 - July 31, 2023:
|
||||||||||||||||
Open market and privately negotiated purchases
|
-
|
$
|
-
|
-
|
$
|
18,255,000
|
||||||||||
August 1 - August 31, 2023:
|
||||||||||||||||
Open market and privately negotiated purchases
|
-
|
$
|
-
|
-
|
18,255,000
|
|||||||||||
September 1 - September 30, 2023:
|
||||||||||||||||
Open market and privately negotiated purchases
|
-
|
$
|
-
|
-
|
18,255,000
|
|||||||||||
Total
|
0
|
0
|
$
|
18,255,000
|
(1) |
As of September 30, 2023, $18,745,000 had been utilized and $18,255,000 remains available to repurchase shares under the authorized share repurchase program, subject to the limit in our Credit Facility. We retired the 837,007 shares
repurchased under this program through September 30, 2023. Our share repurchase program does not obligate us to acquire any specific number of shares and shares may be repurchased in privately negotiated and/or open market transactions.
|
Item 3. |
Defaults Upon Senior Securities
|
Item 6. |
Exhibits
|
(a) |
Exhibits:
|
Number
|
Description of Exhibit
|
Method of Filing
|
||
3.1
|
Certificate of Incorporation of the Company
|
Incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form SB-2 declared effective on March 22, 1994 (the “1994 Registration Statement”).
|
||
3.2
|
Amendment to Certificate of Incorporation of the Company
|
Incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1 (No. 33-97498) declared effective on November 14, 1995.
|
||
Amendment to Certificate of Incorporation of the Company
|
Incorporated by reference to Exhibit 3.3 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 1997.
|
|||
Amendment to Certificate of Incorporation of the Company
|
Incorporated by reference to Exhibit 3.4 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 1998 (the “1998 Form 10-K”).
|
|||
Amendment to Certificate of Incorporation of the Company
|
Incorporated by reference to Exhibit C to the Company’s proxy statement on Schedule 14A filed with the SEC on November 25, 2003.
|
|||
Amended and Restated By-Laws of Motorcar Parts of America, Inc.
|
Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on August 24, 2010.
|
|||
Certificate of Amendment of the Certificate of Incorporation of the Company
|
Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on April 17, 2014.
|
|||
Amendment to the Amended and Restated By-Laws of Motorcar Parts of America, Inc., as adopted on June 9, 2016
|
Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on June 14, 2016.
|
|||
Amendment to the Amended and Restated By-Laws of the Company
|
Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on February 22, 2017.
|
|||
Third Amendment to the Amended and Restated By-Laws of Motorcar Parts of America, Inc., as adopted on January 26, 2022
|
Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on February 1, 2022.
|
|||
Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934
|
Incorporated by reference to Exhibit 4.1 to Quarterly Report on Form 10-Q filed on August 9, 2022.
|
|||
2004 Non-Employee Director Stock Option Plan
|
Incorporated by reference to Appendix A to the Proxy Statement on Schedule 14A for the 2004 Annual Shareholders Meeting.
|
|||
2010 Incentive Award Plan
|
Incorporated by reference to Appendix A to the Proxy Statement on Schedule 14A filed on December 15, 2010.
|
|||
Amended and Restated 2010 Incentive Award Plan
|
Incorporated by reference to Appendix A to the Proxy Statement on Schedule 14A filed on March 5, 2013.
|
Number
|
Description of Exhibit
|
Method of Filing
|
||
Second Amended and Restated 2010 Incentive Award Plan
|
Incorporated by reference to Appendix A to the Proxy Statement on Schedule 14A filed on March 3, 2014.
|
|||
2014 Non-Employee Director Incentive Award Plan
|
Incorporated by reference to Appendix B to the Proxy Statement on Schedule 14A filed on March 3, 2014.
|
|||
Third Amended and Restated 2010 Incentive Award Plan
|
Incorporated by reference to Appendix A to the Proxy Statement on Schedule 14A filed on November 20, 2017.
|
|||
Fourth Amended and Restated 2010 Incentive Award Plan
|
Incorporated by reference to Appendix A to the Proxy Statement on Schedule 14A filed on July 24, 2020.
|
|||
2022 Incentive Award Plan
|
Incorporated by reference to Appendix A to the Proxy Statement on Schedule 14A filed on July 29, 2022.
|
|||
Form of Convertible Promissory Note
|
Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on March 31, 2023.
|
|||
Form of Common Stock Warrant
|
Incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed on March 31, 2023.
|
|||
First Amended and Restated Convertible Promissory Note
|
Incorporated by reference to Exhibit 4.12 to the Annual Report on Form 10-K filed on June 14, 2023.
|
|||
First Amended and Restated Common Stock Warrant
|
Incorporated by reference to Exhibit 4.13 to the Annual Report on Form 10-K filed on June 14, 2023.
|
|||
Seventh Amendment to Amended and Restated Loan Agreement, dated as of August 3, 2023, among Motorcar Parts of America, Inc., D & V Electronics Ltd., Dixie Electric Ltd., and Dixie Electric Inc., each lender from time to time
party thereto, and PNC Bank, National Association, as administrative agent
|
Incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed on August 9, 2023.
|
|||
Second Amendment to the Note Purchase Agreement
|
Incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q filed on August 9, 2023.
|
|||
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002
|
Filed herewith.
|
|||
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002
|
Filed herewith.
|
|||
Certification of Chief Accounting Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002
|
Filed herewith.
|
|||
Certifications of Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002
|
Filed herewith.
|
Number
|
Description of Exhibit
|
Method of Filing
|
||
101.INS
|
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document).
|
|||
101.SCM
|
Inline XBRL Taxonomy Extension Schema Document
|
|||
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
|||
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
|||
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
|||
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
|||
104
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
|
MOTORCAR PARTS OF AMERICA, INC.
|
|||
Dated: November 9, 2023
|
By:
|
/s/ David Lee
|
|
David Lee
|
|||
Chief Financial Officer
|
|||
Dated: November 9, 2023
|
By:
|
/s/ Kamlesh Shah
|
|
Kamlesh Shah
|
|||
Chief Accounting Officer
|
Date: November 9, 2023
|
/s/ Selwyn Joffe
|
Selwyn Joffe
|
|
Chief Executive Officer
|
Date: November 9, 2023
|
/s/ David Lee
|
David Lee
|
|
Chief Financial Officer
|
Date: November 9, 2023
|
/s/ Kamlesh Shah
|
Kamlesh Shah
|
|
Chief Accounting Officer
|
1. |
The Quarterly Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and
|
2. |
The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Selwyn Joffe
|
|
Selwyn Joffe
|
|
Chief Executive Officer
|
|
November 9, 2023
|
1. |
The Quarterly Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and
|
2. |
The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ David Lee
|
|
David Lee
|
|
Chief Financial Officer
|
|
November 9, 2023
|
1. |
The Quarterly Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and
|
2. |
The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Kamlesh Shah
|
|
Kamlesh Shah
|
|
Chief Accounting Officer
|
|
November 9, 2023
|
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Sep. 30, 2023 |
Mar. 31, 2023 |
---|---|---|
Shareholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock, issued (in shares) | 19,599,195 | 19,494,615 |
Common stock, outstanding (in shares) | 19,599,195 | 19,494,615 |
Series A Junior Participating Preferred Stock [Member] | ||
Shareholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized (in shares) | 20,000 | 20,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Condensed Consolidated Statements of Operations - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Condensed Consolidated Statements of Operations [Abstract] | ||||
Net sales | $ 196,639,000 | $ 172,543,000 | $ 356,344,000 | $ 336,528,000 |
Cost of goods sold | 155,491,000 | 146,027,000 | 288,629,000 | 279,710,000 |
Gross profit | 41,148,000 | 26,516,000 | 67,715,000 | 56,818,000 |
Operating expenses: | ||||
General and administrative | 14,325,000 | 14,846,000 | 26,927,000 | 28,480,000 |
Sales and marketing | 5,688,000 | 6,066,000 | 11,107,000 | 11,608,000 |
Research and development | 2,438,000 | 2,670,000 | 4,813,000 | 5,783,000 |
Foreign exchange impact of lease liabilities and forward contracts | 4,760,000 | 1,082,000 | 490,000 | 1,760,000 |
Total operating expenses | 27,211,000 | 24,664,000 | 43,337,000 | 47,631,000 |
Operating income | 13,937,000 | 1,852,000 | 24,378,000 | 9,187,000 |
Other Expenses: | ||||
Interest expense, net | 15,383,000 | 9,283,000 | 27,103,000 | 16,204,000 |
Change in fair value of compound net derivative liability | 390,000 | 0 | 530,000 | 0 |
Loss on extinguishment of debt | 168,000 | 0 | 168,000 | 0 |
Total other expenses | 15,941,000 | 9,283,000 | 27,801,000 | 16,204,000 |
Loss before income tax benefit | (2,004,000) | (7,431,000) | (3,423,000) | (7,017,000) |
Income tax benefit | (46,000) | (914,000) | (55,000) | (325,000) |
Net loss | $ (1,958,000) | $ (6,517,000) | $ (3,368,000) | $ (6,692,000) |
Basic net loss per share (in dollars per share) | $ (0.1) | $ (0.34) | $ (0.17) | $ (0.35) |
Diluted net loss per share (in dollars per share) | $ (0.1) | $ (0.34) | $ (0.17) | $ (0.35) |
Weighted average number of shares outstanding: | ||||
Basic (in shares) | 19,599,162 | 19,272,557 | 19,554,142 | 19,197,181 |
Diluted (in shares) | 19,599,162 | 19,272,557 | 19,554,142 | 19,197,181 |
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Condensed Consolidated Statements of Comprehensive Income (Loss) [Abstract] | ||||
Net loss | $ (1,958,000) | $ (6,517,000) | $ (3,368,000) | $ (6,692,000) |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation gain (loss) | 2,122,000 | 687,000 | 5,465,000 | (181,000) |
Total other comprehensive income (loss), net of tax | 2,122,000 | 687,000 | 5,465,000 | (181,000) |
Comprehensive income (loss) | $ 164,000 | $ (5,830,000) | $ 2,097,000 | $ (6,873,000) |
Company Background and Organization |
6 Months Ended |
---|---|
Sep. 30, 2023 | |
Company Background and Organization [Abstract] | |
Company Background and Organization |
1. Company Background and Organization
Motorcar Parts of America, Inc. and its subsidiaries (the “Company”, or “MPA”) is a leading supplier of
automotive aftermarket non-discretionary replacement parts, and test solutions and diagnostic equipment. These replacement parts are primarily sold to automotive retail chain stores and warehouse distributors throughout North America and to major
automobile manufacturers for both their aftermarket programs and warranty replacement programs (“OES”). The Company’s test solutions and diagnostic equipment primarily serves the global automotive component and powertrain testing market. The
Company’s products include (i) light duty and heavy duty rotating electrical products such as alternators and starters, (ii) wheel hub assemblies and bearings, (iii) brake-related products, which include brake calipers, brake boosters, brake
rotors, brake pads, brake shoes, and brake master cylinders, and (iv) other products, which include (a) turbochargers and (b) test solutions and diagnostic equipment including: (i) applications for combustion engine vehicles, including bench top
testers for alternators and starters, (ii) equipment for the pre- and post-production of electric vehicles, and (iii) software emulation of power system applications for the electrification of all forms of transportation (including automobiles,
trucks, the emerging electrification of systems within the aerospace industry, and electric vehicle charging stations).
|
Basis of Presentation |
6 Months Ended |
---|---|
Sep. 30, 2023 | |
Basis of Presentation [Abstract] | |
Basis of Presentation |
2. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial
information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the
fiscal year ending March 31, 2024. This report should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the fiscal year ended March 31, 2023, which are included in the Company’s Annual Report
on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on June 14, 2023.
The accompanying condensed consolidated financial statements have been prepared on a
consistent basis with, and there have been no material changes to the accounting policies described in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements that are presented in the Company’s Annual Report
on Form 10-K for the fiscal year ended March 31, 2023.
|
Accounts Receivable - Net |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable - Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable - Net |
3. Accounts Receivable — Net
The Company has trade accounts receivable that result from the sale of goods and services. Accounts receivable — net includes offset accounts related to allowances for
credit losses, customer payment discrepancies, and returned goods authorizations (“RGAs”) issued for in-transit unit returns. The Company uses accounts receivable discount programs with certain customers and their respective banks (see Note 10).
Accounts receivable — net is comprised of the following:
|
Inventory |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory |
4. Inventory
Inventory is comprised of the following:
|
Contract Assets |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract Assets |
5. Contract Assets
During the three months ended September 30, 2023 and 2022, the Company reduced the carrying
value of Remanufactured Cores held at customers’ locations by $1,995,000 and $1,269,000, respectively. During the six months ended September 30, 2023 and 2022, the Company reduced the carrying value of Remanufactured Cores held at customers’ locations by $2,773,000 and $1,841,000, respectively.
Contract assets are comprised of the following:
|
Significant Customer and Other Information |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Customer and Other Information [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Customer and Other Information |
6. Significant Customer and Other Information
Significant Customer Concentrations
The largest customers accounted for the following percentage of consolidated net sales:
Revenues for Customers A through C were derived from the Hard Parts segment and Test Solutions and Diagnostic Equipment segment. Revenues for Customer D were
derived from the Hard Parts segment. See Note 17 for a discussion of the Company’s segments.
The largest customers accounted for the following percentage of accounts receivable – trade:
Geographic and Product Information
The Company’s products are sold predominantly in North America and accounted for the following percentages of net sales:
Significant Supplier Concentrations
The Company had no suppliers that accounted for more than 10% of inventory purchases for the three and six months ended September 30, 2023 and 2022.
|
Debt |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt |
7. Debt
The Company is party to a $268,620,000
senior secured financing, (as amended from time to time, the “Credit Facility”), consisting of a $238,620,000 revolving loan facility
(the “Revolving Facility”), subject to certain restrictions, and a $30,000,000 term loan facility (the “Term Loans”). The loans under
the Credit Facility mature on May 28, 2026 and the lenders have a security interest in substantially all of the assets of the
Company.
On August 3, 2023, the Company entered into a seventh amendment to the Credit Facility, which among other things, (i)
permitted the Company to repay its outstanding balance of Term Loans, (ii) permitted the exclusion of quarterly principal payments of Term Loans from the fixed charge coverage ratio (including retrospectively for the prior periods) for all
quarters beginning June 30, 2023, (iii) reset the fixed charge coverage ratio financial covenant level for the quarters ending September 30, 2023 and December 31, 2023, (iv) eliminated the senior leverage ratio financial covenant effective with
the quarter ended June 30, 2023, (v) extended the minimum undrawn availability financial covenant through the delivery of the June 30, 2024 compliance certificate, and (vi) excluded the amount of all amendment fees and expenses incurred in
connection with this amendment as well as prior unamortized fees associated with the Term Loans from bank EBITDA and the fixed charge coverage ratio financial covenant.
On August 3, 2023, the Company repaid the remaining outstanding balance of its Term Loans and recorded a loss on extinguishment of debt for the
remaining unamortized debt issuance costs of $168,000 in the condensed consolidated statement of operations.
The Credit Facility, as amended, requires the Company to maintain a minimum fixed charge coverage ratio and a specified
minimum undrawn availability. The Company was in compliance these covenants as of September 30, 2023.
The Company had $165,000,000
and $145,200,000 outstanding under the Revolving Facility at September 30, 2023 and March 31, 2023, respectively. In addition, $6,370,000 was outstanding for letters of credit at September 30, 2023. At September 30, 2023, after certain contractual adjustments, $67,250,000 was available under the Revolving Facility. The interest rate on the Company’s Revolving Facility was 8.68% and 8.13% respectively, at
September 30, 2023 and March 31, 2023, respectively.
Convertible Notes
On March 31, 2023, the Company entered into a note purchase agreement (the “Note Purchase Agreement”) with Bison Capital
Partners VI, L.P. and Bison Capital Partners VI-A, L.P. (collectively, the “Purchasers”) and Bison Capital Partners VI, L.P., as the purchaser representative (the “Purchaser Representative”) for the issuance and sale of $32,000,000 in aggregate principal amount of convertible notes due in 2029 (the “Convertible Notes”), which was used for general corporate purposes.
The Convertible Notes bear interest at a rate of 10.0% per annum, compounded annually, and payable (i) in kind or (ii) in cash,
annually in arrears on April 1 of each year, commencing on April 1, 2024. The Convertible Notes have an initial conversion price of approximately $15.00
per share of common stock (“Conversion Option”). Unless and until the Company delivers a redemption notice, the Purchasers of the Convertible Notes may convert their Convertible Notes at any time at their option. Upon conversion, the Convertible
Notes will be settled in shares of the Company’s common stock. Except in the case of the occurrence of a fundamental transaction, as defined in the form of convertible promissory note, the Company may not redeem the Convertible Notes prior to
March 31, 2026. After March 31, 2026, the Company may redeem all or part of the Convertible Notes for a cash purchase (the “Company Redemption”) price.
On June 8, 2023, the Company entered into the first amendment to the Note Purchase Agreement, which among other things,
removed a provision that specified the Purchasers would be entitled to receive a dividend or distribution payable in certain circumstances. This amendment was effective as of March 31, 2023.
On August 1, 2023, the Company entered into the second amendment to the Note Purchase Agreement, which amended the
definition of “Permitted Restricted Payments” to permit the prepayment of the Company’s Term Loans.
The Company’s Convertible Notes are comprised of the following:
In connection with the Note Purchase
Agreement, the Company entered into common stock warrants (the “Warrants”) with the Purchasers, which mature on March 30, 2029. The
fair value of the Warrants, using Level 3 inputs and the Monte Carlo simulation model, was zero at September 30, 2023 and March
31, 2023.
The Company Redemption option has been combined with the Conversion Option as a compound net derivative liability (the
“Compound Net Derivative Liability”). The Compound Net Derivative Liability has been recorded within
in the condensed consolidated balance sheets at September 30, 2023 and March 31, 2023. The fair value of the Conversion Option and the Company Redemption option using Level 3 inputs and the Monte Carlo simulation model was a liability of $11,300,000 and $10,400,000, and an
asset of $2,340,000 and $1,970,000
at September 30, 2023 and March 31, 2023, respectively. During the three and six months ended September 30, 2023, the Company recorded $390,000
and $530,000, respectively, as the change in fair value of the Compound Net Derivative Liability in the condensed consolidated
statement of operations and condensed consolidated statement of cash flows.
The
Convertible Notes also contain additional features, such as, default interest and options related to a fundamental transaction, which were not separately accounted for as the value of such features were not material at September 30, 2023 and
March 31, 2023.
Interest expense related to the Convertible Notes is as follows:
There are no future payments required under the Convertible Notes prior to their maturity, therefore, the principal amount
of the Convertible Notes plus interest payable in kind, assuming no early redemption or conversion has occurred, of $56,704,000 would
be paid on March 30, 2029.
|
Contract Liabilities |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract Liabilities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract Liabilities |
8. Contract Liabilities
Contract liabilities are comprised of the following:
|
Leases |
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases |
9. Leases
The Company leases various facilities in North America and Asia under operating leases expiring through August 2033. The Company has material nonfunctional currency leases that could have a material impact on the Company’s
condensed consolidated statements of operations. As required for other monetary liabilities, lessees remeasure foreign currency-denominated lease liabilities using the exchange rate at each reporting date, but the lease assets are nonmonetary
assets measured at historical rates and are not affected by subsequent changes in the exchange rates. In connection with the remeasurement of these leases, the Company recorded a loss of $1,948,000 and $1,041,000 during the three months ended September 30, 2023 and 2022, respectively. During the six months ended September 30, 2023 and 2022, the Company
recorded a gain of $1,822,000 and a loss of $1,021,000,
respectively, in connection with the remeasurement of these leases. These amounts are included in foreign exchange impact of lease liabilities and forward contracts in the condensed consolidated statements of operations.
Balance sheet information for leases is as follows:
Lease cost recognized in the condensed consolidated statements of operations is as follows:
Maturities of lease commitments at September 30, 2023 by
fiscal year were as follows:
Other information about leases is as follows:
|
Accounts Receivable Discount Programs |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable Discount Programs [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable Discount Programs |
10. Accounts Receivable Discount Programs
The Company uses accounts receivable discount programs with certain customers and their respective banks. Under these programs, the Company may sell those customers’
receivables to those banks at a discount to be agreed upon at the time the receivables are sold. These discount arrangements allow the Company to accelerate receipt of payment on customers’ receivables.
The following is a summary of accounts receivable discount programs:
|
Net Loss per Share |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss per Share |
11. Net Loss per Share
Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss
per share includes the effect, if any, from the potential exercise or conversion of securities, such as stock options, Warrants, and Convertible Notes (as defined in Note 7), which would result in the issuance of incremental shares of common
stock to the extent such impact is not anti-dilutive.
The following presents a reconciliation of basic and diluted net loss per
share:
Potential common shares that would have the effect of increasing diluted net
income per share or decreasing diluted net loss per share are considered to be anti-dilutive and as such, these shares are not included in calculating diluted net loss per share. For the three and six months ended September 30, 2023 and
2022, there were 2,104,035 and 1,945,392,
respectively, of potential common shares not included in the calculation of diluted net loss per share because their effect was anti-dilutive. In addition, for the
three and six months ended September 30, 2023, there were 2,240,593, respectively, of potential common shares not included in the
calculation of diluted loss per share under the “if-converted” method for the Convertible Notes because their effect was anti-dilutive. The potential common shares related to the Warrants issued in connection with the Convertible Notes (see Note 7) are anti-dilutive until they
become exercisable and as of September 30, 2023, the Warrants were not exercisable.
|
Income Taxes |
6 Months Ended |
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Sep. 30, 2023 | |
Income Taxes [Abstract] | |
Income Taxes |
12. Income Taxes
The Company recorded an income tax benefit of $46,000, or an effective tax rate of 2.3%, and $914,000, or an effective tax rate of 12.3%,
for the three months ended September 30, 2023 and 2022, respectively. The Company recorded an income tax benefit of $55,000, or an
effective tax rate of 1.6%, and $325,000,
or an effective tax rate of 4.6%, for the six months ended September 30, 2023 and 2022, respectively. Effective tax rates are based on
current annual projections and any changes in future periods could result in an effective tax rate that is materially different from the current estimate. The effective tax rate for the three and six months ended September 30, 2023, was primarily impacted by (i)
non-deductible executive compensation under Internal Revenue Code Section 162(m), (ii) the portion of book expense related to convertible notes and derivatives that is not expected to be deductible for tax, (iii) foreign income taxed at rates
that are different from the federal statutory rate, and (iv) specific jurisdictions that the Company does not expect to recognize the benefit of losses.
The Company and its subsidiaries file income tax returns in the U.S. federal, various state, and foreign jurisdictions with varying
statutes of limitations. At
September 30, 2023, the Company is under examination by the State of California for fiscal years . At September 30,
2023, the Company is not under any other examination in any material jurisdictions except for the State of California, and remains subject to examination from the years ended March 31, 2018. The Company believes no significant changes in the
unrecognized tax benefits will occur within the next 12 months.
|
Financial Risk Management and Derivatives |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Risk Management and Derivatives [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Risk Management and Derivatives |
13. Financial Risk Management and Derivatives
Purchases and expenses denominated in currencies other than the U.S. dollar, which are primarily related to the Company’s overseas facilities, expose the
Company to market risk from material movements in foreign exchange rates between the U.S. dollar and the foreign currencies. The Company’s primary risk exposure is from fluctuations in the value of the Mexican peso and to a lesser extent the Chinese
yuan. To mitigate these risks, the Company enters into forward foreign currency exchange contracts to exchange U.S. dollars for these foreign currencies. The extent to which forward foreign currency exchange contracts are used, is modified
periodically in response to the Company’s estimate of market conditions and the terms and length of anticipated requirements.
The Company enters into forward foreign currency exchange contracts in order to reduce the impact of foreign currency fluctuations and not to engage in
currency speculation. The use of derivative financial instruments allows the Company to reduce its exposure to the risk that the eventual cash outflow resulting from funding the expenses of the foreign operations will be materially affected by
changes in exchange rates between the U.S. dollar and the foreign currencies. The Company does not hold or issue financial instruments for trading purposes. The Company designates forward foreign currency exchange contracts for forecasted expenditure
requirements to fund foreign operations.
The Company had forward foreign currency exchange contracts with a U.S. dollar
equivalent notional value of $52,278,000 and $48,486,000 at September 30, 2023 and March 31, 2023, respectively. These contracts generally have a term of one year or less, at rates agreed at the inception of the contracts. The counterparty to these derivative transactions is a major financial institution with investment grade credit
rating; however, the Company is exposed to credit risk with this institution. The credit risk is limited to the potential unrealized gains (which offset currency fluctuations adverse to the Company) in any such contract should this counterparty
fail to perform as contracted. Any changes in the fair values of forward foreign currency exchange contracts are included in foreign exchange impact of lease liabilities and forward contracts in the condensed consolidated statements of operations.
The following shows the effect of derivative instruments on the condensed consolidated statements of operations:
The fair value of the forward foreign currency exchange contracts of $1,577,000 and $3,889,000 is included in prepaid expenses and other current assets in the condensed consolidated balance sheets at September 30, 2023 and March 31, 2023, respectively. The changes in the
fair values of forward foreign currency exchange contracts are included in foreign exchange impact of lease liabilities and forward contracts in the condensed consolidated statements of cash flows for the six months ended September 30, 2023 and
2022.
|
Fair Value Measurements |
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Fair Value Measurements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements |
14. Fair Value Measurements
The following summarizes financial assets and liabilities measured at fair value, by level within the fair value hierarchy:
Short-term Investments and Deferred Compensation
The Company’s short-term investments, which fund
its deferred compensation liabilities, consist of investments in mutual funds. These investments are classified as Level 1 as the shares of these mutual funds trade with sufficient frequency and volume to enable the Company to obtain pricing information on an ongoing basis.
Forward Foreign Currency Exchange Contracts
The forward foreign currency exchange contracts
are primarily measured based on the foreign currency spot and forward rates quoted by the banks or foreign currency dealers (See Note 13).
Compound Net Derivative Liability
The Company estimates the fair value of the Compound Net Derivative Liability (see Note 7) using Level 3 inputs and the
Monte Carlo simulation model at the balance sheet date. The Monte Carlo simulation model requires the input of subjective assumptions including the expected volatility of the underlying stock. These subjective assumptions are based on both
historical and other information. Changes in the values assumed and used in the model can materially affect the estimate of fair value. This amount is recorded within convertible notes, related party in the condensed consolidated balance sheets
at September 30, 2023 and March 31, 2023. Any changes in the fair value of the Compound Net Derivative Liability are recorded in change in fair value of compound net derivative liability in the condensed consolidated statements of operations.
The following assumptions were used to determine the fair value of the Compound Net Derivative Liability:
The following summarizes the activity for Level 3 fair value measurements:
During the three and six months ended September 30, 2023, the Company had no significant measurements of assets or
liabilities at fair value on a nonrecurring basis subsequent to their initial recognition.
The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities
approximate their fair value due to the short-term nature of these instruments. The carrying amounts of the revolving loan and other long-term liabilities approximate their fair value based on the variable nature of interest rates and current
rates for instruments with similar characteristics. At September 30, 2023 and March 31, 2023, the net carrying amount of the Convertible Notes was $31,819,000
and $30,994,000, respectively, with unamortized debt discounts and debt issuance costs of $9,141,000 and $9,436,000, respectively, and Compound Net
Derivative Liability of $8,960,000 and $8,430,000,
respectively. The estimated fair value of the Company’s Convertible Notes was $34,319,000 using Level 3 inputs at September 30, 2023.
The net carrying amount of the Convertible Notes approximated their fair value at March 31, 2023, as they were issued on March 31, 2023.
|
Share-based Payments |
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Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payments |
15. Share-based Payments
Stock Options
The Company granted options to purchase 132,133
shares of common stock during the six months ended September 30, 2023. No options to purchase shares of the Company’s common stock were
granted during the six months ended September 30, 2022. The cost associated with stock options is estimated using the Black-Scholes option-pricing model. This model requires the input of subjective assumptions including the expected volatility of
the underlying stock and the expected holding period of the option. These subjective assumptions are based on both historical and other information. Changes in the values assumed and used in the model can materially affect the estimate of fair
value.
The following assumptions were used to derive the weighted average fair value of the stock options
granted:
The following is a summary of stock option transactions:
At September 30, 2023, options to purchase
132,133 shares of common stock were unvested at a weighted average exercise price of $9.32.
At September 30, 2023, there was $491,000 of total unrecognized compensation expense related to unvested stock option awards, which
will be recognized over the weighted average remaining vesting period of approximately 3.0 years.
Restricted Stock Units and Restricted Stock Awards (collectively
“RSUs”)
The Company did not grant any restricted stock awards during the six
months ended September 30, 2023. During the six months ended September 30, 2022, the Company granted (i) performance-based restricted stock awards which had a threshold performance level of 33,333 shares, a target performance level of 66,667 shares, and a maximum
performance level of 100,000
shares at the grant date and (ii) 176,353
of time-based vesting restricted stock units, respectively, based on the closing market price on the grant date.
The following is a summary of non-vested RSUs:
At September 30, 2023, there was $1,866,000 of unrecognized compensation expense related to RSUs, which will be recognized over the weighted average remaining vesting period of approximately 1.3 years.
Performance Stock Units (“PSUs”)
During the six months ended September 30, 2023, the Company granted 585,583 PSUs, which vest, subject
to continued employment, as follows: (i) if the stock price is greater than or equal to $10.00 per share, then of the grant will vest, (ii) if the stock price is greater than or equal to $15.00 per share then the next of the grant will vest, and
(iii) if the stock price is greater than or equal to $20.00 per share then the final of the grant will vest. Recipients are eligible to vest in between 50%
and 150% of the third tranche by achieving a stock price between $17.50 and $25.00 per share (each stock price target must be met
for thirty consecutive trading days). The Company calculated the fair value of these PSUs individually for each tranche using the Monte
Carlo Simulation Model at the grant date. Compensation cost is recognized over the estimated derived service period. Compensation cost related to these awards will not be adjusted even if the market condition is not met.
During the six months ended September 30, 2022 , the Company granted 126,028 PSUs (at target performance levels), which cliff vest after
three-years, subject to continued employment. These awards are contingent and granted separately for each of the following metrics:
adjusted EBITDA, net sales, and relative total shareholder return (“TSR”). Compensation cost at the grant date is recognized on a straight-line basis over the requisite service period to the extent the conditions are deemed probable. The number
of shares earned at the end of the three-year period will vary, based only on actual performance, from 0% to 150% of the target number of PSUs granted. Adjusted EBITDA and net sales are considered performance conditions. The Company will reassess the
probability of achieving each performance condition separately each reporting period. TSR is considered a market condition because it measures the Company’s return against the performance of the Russell 3000, excluding companies classified as
financials and real estate, over a given period of time. Compensation cost related to the TSR award will not be adjusted even if the market condition is not met. The Company calculated the fair value of the PSUs for each component individually.
The fair value of PSUs subject to performance conditions is equal to the closing stock price on the grant date. The fair value of PSUs
subject to a market condition is determined using the Monte Carlo simulation model.The following table summarizes the assumptions used in determining the fair value of the awards subject to market
conditions:
The following is a summary of non-vested PSUs:
At September 30,
2023, there was $3,298,000 of unrecognized
compensation expense related to these awards, which will be recognized over the weighted average remaining vesting period of approximately 1.5 years.
|
Commitments and Contingencies |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies |
16. Commitments and Contingencies
Warranty Returns
The Company allows its customers to return goods that their consumers have returned to them, whether or not the returned item is defective (“warranty
returns”). The Company accrues an estimate of its exposure to warranty returns based on a historical analysis of the level of this type of return as a percentage of unit sales. Amounts charged to expense for these warranty returns are considered in
arriving at the Company’s net sales.
The following summarizes the changes in the warranty returns:
Contingencies
The Company is subject to various lawsuits and claims. In addition, government agencies and self-regulatory organizations have the ability to conduct
periodic examinations of and administrative proceedings regarding the Company’s business, and its compliance with law, code, and regulations related to matters including, but not limited to, environmental, information security, taxes, levies,
tariffs and such.
|
Segment Information |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information |
17. Segment Information
Effective as of the fourth quarter of fiscal 2023, the Company revised its segment
reporting as it determined that its three operating segments no longer met the criteria to be aggregated. The Company recast its prior year segment disclosures to conform to the current year’s presentation.
The Company’s three operating segments are:
The Company’s Hard Parts operating segment meets the criteria of a reportable
segment while Test Solutions and Diagnostic Equipment and Heavy Duty are not material, are not required to be separately reported, and are included within the “all other” category.
Financial information relating to the Company’s segments is as follows:
|
Share Repurchases |
6 Months Ended |
---|---|
Sep. 30, 2023 | |
Share Repurchases [Abstract] | |
Share Repurchases |
18. Share Repurchases
In August 2018, the Company’s board of directors approved an increase in its share repurchase program from $20,000,000 to $37,000,000 of its common
stock. During the three and six months ended September 30, 2023,
the Company did not repurchase any shares of its common stock. As of September 30, 2023, $18,745,000 has been utilized and $18,255,000 remains available to
repurchase shares under the authorized share repurchase program, subject to the limit in the Company’s Credit Facility. The Company retired the 837,007
shares repurchased under this program through September 30, 2023. The Company’s share repurchase program does not obligate it to acquire any specific number of shares and shares may be repurchased in privately negotiated and/or open market
transactions.
|
Related Party Transactions |
6 Months Ended |
---|---|
Sep. 30, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions |
19. Related Party
Transactions
Lease
In December 2022, the Company entered into an
operating lease for its 35,000 square foot manufacturing, warehouse, and office facility in Ontario, Canada, with a company co-owned by
a member of management. The lease, which commenced January 1, 2023, has an initial term of one year with a base rent of approximately $27,000 per month and includes options to renew for up to four years. The rent expense recorded by the Company for the related party lease was $81,000 and $162,000 for the three and six months ended September 30, 2023.
|
Insider Trading Arrangements |
3 Months Ended |
---|---|
Sep. 30, 2023 | |
Insider Trading Arrangements [Line Items] | |
Rule 10b5-1 Arrangement Adopted [Flag] | false |
Non-Rule 10b5-1 Arrangement Adopted [Flag] | false |
Rule 10b5-1 Arrangement Terminated [Flag] | false |
Non-Rule 10b5-1 Arrangement Terminated [Flag] | false |
Basis of Presentation (Policies) |
6 Months Ended |
---|---|
Sep. 30, 2023 | |
Basis of Presentation [Abstract] | |
Basis of Presentation |
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial
information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the
fiscal year ending March 31, 2024. This report should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the fiscal year ended March 31, 2023, which are included in the Company’s Annual Report
on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on June 14, 2023.
The accompanying condensed consolidated financial statements have been prepared on a
consistent basis with, and there have been no material changes to the accounting policies described in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements that are presented in the Company’s Annual Report
on Form 10-K for the fiscal year ended March 31, 2023.
|
Accounts Receivable - Net (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable - Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable |
Accounts receivable — net is comprised of the following:
|
Inventory (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Net |
Inventory is comprised of the following:
|
Contract Assets (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Contract Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract Assets |
Contract assets are comprised of the following:
|
Significant Customer and Other Information (Tables) |
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Significant Customer and Other Information [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Concentrations of Risk |
Significant Customer Concentrations
The largest customers accounted for the following percentage of consolidated net sales:
Revenues for Customers A through C were derived from the Hard Parts segment and Test Solutions and Diagnostic Equipment segment. Revenues for Customer D were
derived from the Hard Parts segment. See Note 17 for a discussion of the Company’s segments.
The largest customers accounted for the following percentage of accounts receivable – trade:
Geographic and Product Information
The Company’s products are sold predominantly in North America and accounted for the following percentages of net sales:
|
Debt (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Debt |
The Company’s Convertible Notes are comprised of the following:
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Total Interest Expense Recognized Related to Convertible Notes |
Interest expense related to the Convertible Notes is as follows:
|
Contract Liabilities (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Contract Liabilities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract Liabilities |
Contract liabilities are comprised of the following:
|
Leases (Tables) |
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Information for Leases |
Balance sheet information for leases is as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease Cost Recognized in Consolidated Statement of Operations |
Lease cost recognized in the condensed consolidated statements of operations is as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maturity of Lease Commitments |
Maturities of lease commitments at September 30, 2023 by
fiscal year were as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Information about Leases |
Other information about leases is as follows:
|
Accounts Receivable Discount Programs (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable Discount Programs [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable Discount Programs |
The following is a summary of accounts receivable discount programs:
|
Net Loss per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Basic and Diluted Net Loss Per Share |
The following presents a reconciliation of basic and diluted net loss per
share:
|
Financial Risk Management and Derivatives (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Risk Management and Derivatives [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments on Consolidated Statements of Operations |
The following shows the effect of derivative instruments on the condensed consolidated statements of operations:
|
Fair Value Measurements (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Assets and Liabilities Measured at Fair Value Recurring Basis |
The following summarizes financial assets and liabilities measured at fair value, by level within the fair value hierarchy:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Assumptions |
The following assumptions were used to determine the fair value of the Compound Net Derivative Liability:
|
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Activity for Level 3 Fair Value Measurements |
The following summarizes the activity for Level 3 fair value measurements:
|
Share-based Payments (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assumptions Used to Derive Weighted Average Fair Value of Stock Options Granted |
The following assumptions were used to derive the weighted average fair value of the stock options
granted:
|
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Stock Option Transactions |
The following is a summary of stock option transactions:
|
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Restricted Stock Units Activity |
The following is a summary of non-vested RSUs:
|
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Monte Carlo Valuation Model Assumptions Used in Determining Fair Value of TSR Awards | The following table summarizes the assumptions used in determining the fair value of the awards subject to market
conditions:
|
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Performance Stock Units Activity |
The following is a summary of non-vested PSUs:
|
Commitments and Contingencies (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Warranty Returns |
The following summarizes the changes in the warranty returns:
|
Segment Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Information Relating to Segments |
Financial information relating to the Company’s segments is as follows:
|
Accounts Receivable - Net (Details) - USD ($) |
Sep. 30, 2023 |
Mar. 31, 2023 |
---|---|---|
Components of accounts receivable [Abstract] | ||
Accounts receivable - trade | $ 182,879,000 | $ 136,076,000 |
Allowance for credit losses | (312,000) | (339,000) |
Customer payment discrepancies | (1,848,000) | (1,634,000) |
Customer returns RGA issued | (19,599,000) | (14,235,000) |
Total accounts receivable - net | $ 161,120,000 | $ 119,868,000 |
Inventory (Details) - USD ($) |
Sep. 30, 2023 |
Mar. 31, 2023 |
---|---|---|
Inventory [Abstract] | ||
Raw materials | $ 152,835,000 | $ 147,880,000 |
Work-in-process | 11,078,000 | 7,033,000 |
Finished goods | 200,270,000 | 201,198,000 |
Inventory, gross | 364,183,000 | 356,111,000 |
Less allowance for excess and obsolete inventory | (16,490,000) | (16,436,000) |
Inventory - net | 347,693,000 | 339,675,000 |
Inventory unreturned | 18,712,000 | 16,579,000 |
Total inventory | $ 366,405,000 | $ 356,254,000 |
Contract Assets (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Mar. 31, 2023 |
|
Contract Assets [Abstract] | |||||
Long-term contract assets, write-down | $ 1,995,000 | $ 1,269,000 | $ 2,773,000 | $ 1,841,000 | |
Short-term contract assets [Abstract] | |||||
Cores expected to be returned by customers | 17,982,000 | 17,982,000 | $ 13,463,000 | ||
Core premiums paid to customers | 9,669,000 | 9,669,000 | 9,812,000 | ||
Upfront payments to customers | 1,509,000 | 1,509,000 | 1,593,000 | ||
Finished goods premiums paid to customers | 786,000 | 786,000 | 575,000 | ||
Total short-term contract assets | 29,946,000 | 29,946,000 | 25,443,000 | ||
Long-term contract assets [Abstract] | |||||
Remanufactured cores held at customers' locations | 269,371,000 | 269,371,000 | 271,628,000 | ||
Core premiums paid to customers | 34,493,000 | 34,493,000 | 38,310,000 | ||
Long-term core inventory deposits | 5,569,000 | 5,569,000 | 5,569,000 | ||
Finished goods premiums paid to customers | 2,604,000 | 2,604,000 | 2,530,000 | ||
Upfront payments to customers | 1,576,000 | 1,576,000 | 344,000 | ||
Total long-term contract assets | $ 313,613,000 | $ 313,613,000 | $ 318,381,000 |
Contract Liabilities (Details) - USD ($) |
Sep. 30, 2023 |
Mar. 31, 2023 |
---|---|---|
Short-term contract liabilities [Abstract] | ||
Customer allowances earned | $ 26,469,000 | $ 19,997,000 |
Customer core returns accruals | 17,594,000 | 11,112,000 |
Accrued core payment | 3,258,000 | 3,056,000 |
Customer deposits | 2,766,000 | 3,232,000 |
Core bank liability | 1,713,000 | 1,686,000 |
Finished goods liabilities | 1,568,000 | 1,257,000 |
Total short-term contract liabilities | 53,368,000 | 40,340,000 |
Long-term contract liabilities [Abstract] | ||
Customer core returns accruals | 175,923,000 | 170,420,000 |
Core bank liability | 12,719,000 | 13,582,000 |
Accrued core payment | 9,155,000 | 9,171,000 |
Finished goods liabilities | 289,000 | 433,000 |
Total long-term contract liabilities | $ 198,086,000 | $ 193,606,000 |
Leases, General Information (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Leases [Abstract] | ||||
Gain (loss) in foreign currency-denominated lease liabilities | $ (1,948,000) | $ (1,041,000) | $ 1,822,000 | $ (1,021,000) |
Leases, Cost Recognized in Consolidated Statements of Income (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Lease cost [Abstract] | ||||
Operating lease cost | $ 3,761,000 | $ 3,130,000 | $ 7,503,000 | $ 6,295,000 |
Short-term lease cost | 350,000 | 559,000 | 643,000 | 1,013,000 |
Variable lease cost | 146,000 | 179,000 | 332,000 | 364,000 |
Finance lease cost [Abstract] | ||||
Amortization of finance lease assets | 391,000 | 489,000 | 794,000 | 1,028,000 |
Interest on finance lease liabilities | 57,000 | 64,000 | 119,000 | 132,000 |
Total lease cost | $ 4,705,000 | $ 4,421,000 | $ 9,391,000 | $ 8,832,000 |
Leases, Maturities of Lease Commitments (Details) - USD ($) |
Sep. 30, 2023 |
Mar. 31, 2023 |
---|---|---|
Operating Leases [Abstract] | ||
2024 - remaining six months | $ 6,959,000 | |
2025 | 12,457,000 | |
2026 | 12,154,000 | |
2027 | 10,962,000 | |
2028 | 10,871,000 | |
Thereafter | 54,475,000 | |
Total lease payments | 107,878,000 | |
Less amount representing interest | (23,443,000) | |
Present value of lease liabilities | 84,435,000 | |
Finance Leases [Abstract] | ||
2024 - remaining six months | 996,000 | |
2025 | 1,576,000 | |
2026 | 844,000 | |
2027 | 353,000 | |
2028 | 194,000 | |
Thereafter | 2,000 | |
Total lease payments | 3,965,000 | |
Less amount representing interest | (300,000) | |
Present value of lease liabilities | 3,665,000 | |
Total [Abstract] | ||
2024 - remaining six months | 7,955,000 | |
2025 | 14,033,000 | |
2026 | 12,998,000 | |
2027 | 11,315,000 | |
2028 | 11,065,000 | |
Thereafter | 54,477,000 | |
Total lease payments | 111,843,000 | |
Less amount representing interest | (23,743,000) | |
Present value of lease liabilities | $ 88,100,000 | $ 92,678,000 |
Leases, Other Information (Details) |
Sep. 30, 2023 |
Mar. 31, 2023 |
---|---|---|
Weighted-average remaining lease term (years) [Abstract] | ||
Finance leases | 2 years 7 months 6 days | 2 years 10 months 24 days |
Operating leases | 8 years 8 months 12 days | 9 years |
Weighted-average discount rate [Abstract] | ||
Finance leases | 6.00% | 5.90% |
Operating leases | 5.80% | 5.80% |
Accounts Receivable Discount Programs (Details) - USD ($) |
6 Months Ended | |
---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Accounts Receivable Discount Programs [Abstract] | ||
Receivables discounted | $ 255,303,000 | $ 283,359,000 |
Weighted average number of days collection was accelerated | 338 days | 327 days |
Annualized weighted average discount rate | 6.60% | 4.40% |
Amount of discount as interest expense | $ 15,940,000 | $ 11,293,000 |
Income Taxes (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Income Taxes [Abstract] | ||||
Income tax benefit | $ (46,000) | $ (914,000) | $ (55,000) | $ (325,000) |
Effective income tax rate | 2.30% | 12.30% | 1.60% | 4.60% |
State of California [Member] | ||||
Income Tax Examination [Abstract] | ||||
Tax years under examination | 2021 2022 |
Commitments and Contingencies (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Change in warranty returns [Roll Forward] | ||||
Balance at beginning of period | $ 16,677,000 | $ 17,868,000 | $ 19,830,000 | $ 20,125,000 |
Charged to expense | 37,022,000 | 33,895,000 | 68,134,000 | 64,815,000 |
Amounts processed | (37,502,000) | (33,302,000) | (71,767,000) | (66,479,000) |
Balance at end of period | $ 16,197,000 | $ 18,461,000 | $ 16,197,000 | $ 18,461,000 |
Segment Information (Details) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2023
USD ($)
Segment
|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2023
USD ($)
|
Sep. 30, 2022
USD ($)
|
Mar. 31, 2023
USD ($)
|
|
Segment Information [Abstract] | |||||
Number of operating segments | Segment | 3 | ||||
Selected Financial Data [Abstract] | |||||
Net sales | $ 196,639,000 | $ 172,543,000 | $ 356,344,000 | $ 336,528,000 | |
Operating income (loss) | 13,937,000 | 1,852,000 | 24,378,000 | 9,187,000 | |
Segment assets | 1,066,772,000 | 1,066,772,000 | $ 1,028,565,000 | ||
Interest expense, net | (15,383,000) | (9,283,000) | (27,103,000) | (16,204,000) | |
Change in fair value of compound net derivative liability | (390,000) | 0 | (530,000) | 0 | |
Loss on extinguishment of debt | (168,000) | 0 | (168,000) | 0 | |
Total consolidated loss before income tax benefit | (2,004,000) | (7,431,000) | (3,423,000) | (7,017,000) | |
Hard Parts [Member] | |||||
Selected Financial Data [Abstract] | |||||
Net sales | 184,421,000 | 166,061,000 | 334,168,000 | 318,489,000 | |
All Other [Member] | |||||
Selected Financial Data [Abstract] | |||||
Net sales | 12,218,000 | 6,482,000 | 22,176,000 | 18,039,000 | |
Operating Segments [Member] | |||||
Selected Financial Data [Abstract] | |||||
Operating income (loss) | 13,903,000 | 1,959,000 | 24,330,000 | 9,290,000 | |
Depreciation and amortization | 2,933,000 | 3,090,000 | 5,966,000 | 6,214,000 | |
Segment assets | 1,126,451,000 | 1,065,492,000 | 1,126,451,000 | 1,065,492,000 | |
Capital expenditures | 129,000 | 1,269,000 | 169,000 | 2,644,000 | |
Operating Segments [Member] | Hard Parts [Member] | |||||
Selected Financial Data [Abstract] | |||||
Net sales | 184,489,000 | 166,264,000 | 334,368,000 | 318,839,000 | |
Operating income (loss) | 15,203,000 | 7,174,000 | 26,709,000 | 16,785,000 | |
Depreciation and amortization | 2,589,000 | 2,724,000 | 5,268,000 | 5,475,000 | |
Segment assets | 1,074,783,000 | 1,022,669,000 | 1,074,783,000 | 1,022,669,000 | 1,032,739,000 |
Capital expenditures | 91,000 | 1,194,000 | 131,000 | 2,536,000 | |
Operating Segments [Member] | All Other [Member] | |||||
Selected Financial Data [Abstract] | |||||
Net sales | 12,256,000 | 6,498,000 | 22,309,000 | 18,197,000 | |
Operating income (loss) | (1,300,000) | (5,215,000) | (2,379,000) | (7,495,000) | |
Depreciation and amortization | 344,000 | 366,000 | 698,000 | 739,000 | |
Segment assets | 51,668,000 | 42,823,000 | 51,668,000 | 42,823,000 | 49,778,000 |
Capital expenditures | 38,000 | 75,000 | 38,000 | 108,000 | |
Intersegment Sales [Member] | |||||
Selected Financial Data [Abstract] | |||||
Net sales | (106,000) | (219,000) | (333,000) | (508,000) | |
Operating income (loss) | 34,000 | (107,000) | 48,000 | (103,000) | |
Segment assets | (59,679,000) | (59,679,000) | $ (53,952,000) | ||
Intersegment Sales [Member] | Hard Parts [Member] | |||||
Selected Financial Data [Abstract] | |||||
Net sales | 68,000 | 203,000 | 200,000 | 350,000 | |
Intersegment Sales [Member] | All Other [Member] | |||||
Selected Financial Data [Abstract] | |||||
Net sales | $ 38,000 | $ 16,000 | $ 133,000 | $ 158,000 |
Share Repurchases (Details) - Common Stock [Member] - USD ($) |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2023 |
Aug. 31, 2018 |
|
Stock Repurchase Program [Abstract] | |||
Stock repurchase program, approved amount | $ 37,000,000 | $ 37,000,000 | $ 20,000,000 |
Repurchase of shares (in shares) | 0 | 0 | |
Shares utilized, amount | $ 18,745,000 | ||
Shares available for repurchase, amount | $ 18,255,000 | $ 18,255,000 | |
Shares repurchased and retired (in shares) | 837,007 |
Related Party Transactions (Details) - Company Co-owned by Member of Management [Member] - Manufacturing Facility [Member] |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Sep. 30, 2023
USD ($)
|
Sep. 30, 2023
USD ($)
|
Dec. 31, 2022
USD ($)
ft²
|
|
Operating Lease [Abstract] | |||
Area of facility | ft² | 35,000 | ||
Initial lease term | 1 year | 1 year | |
Base rent | $ 27,000 | ||
Lease renewal term | 4 years | 4 years | |
Rent expenses | $ 81,000 | $ 162,000 |
1 Year Motorcar Parts and Assoc... Chart |
1 Month Motorcar Parts and Assoc... Chart |
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