☑ | 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 |
New York | 11-2153962 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
2929 California Street, Torrance, California | 90503 | |
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading symbol(s) | Name of each exchange on which registered |
Common Stock, par value $0.01 per share | MPAA | The Nasdaq Global Select Market |
Large accelerated filer ☐ | Accelerated filer ☑ |
Non-accelerated filer ☐ | Smaller reporting company ☐ |
Emerging growth company ☐ |
PART I — FINANCIAL INFORMATION | |||
4 | |||
4 | |||
5 | |||
6 | |||
7 | |||
8 | |||
9 | |||
32 | |||
32 | |||
PART II — OTHER INFORMATION | |||
September 30, 2019 | March 31, 2019 | June 30, 2020 | March 31, 2020 | |||||||||||||
ASSETS | (Unaudited) | (Unaudited) | ||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 6,455,000 | $ | 9,911,000 | $ | 27,464,000 | $ | 49,616,000 | ||||||||
Short-term investments | 2,192,000 | 3,273,000 | 1,061,000 | 850,000 | ||||||||||||
Accounts receivable — net | 69,914,000 | 56,015,000 | 66,138,000 | 91,748,000 | ||||||||||||
Inventory — net | 250,667,000 | 233,726,000 | ||||||||||||||
Inventory unreturned | 8,684,000 | 8,469,000 | ||||||||||||||
Contract assets (see Note 5) | 19,471,000 | 22,183,000 | ||||||||||||||
Income tax receivable | 10,205,000 | 10,009,000 | ||||||||||||||
Inventory | 241,253,000 | 234,680,000 | ||||||||||||||
Contract assets | 30,024,000 | 20,332,000 | ||||||||||||||
Prepaid expenses and other current assets | 8,846,000 | 9,296,000 | 14,658,000 | 11,890,000 | ||||||||||||
Total current assets | 376,434,000 | 352,882,000 | 380,598,000 | 409,116,000 | ||||||||||||
Plant and equipment — net | 40,723,000 | 35,151,000 | 46,311,000 | 44,957,000 | ||||||||||||
Operating lease assets (see Note 9) | 49,262,000 | - | ||||||||||||||
Operating lease assets | 68,729,000 | 53,029,000 | ||||||||||||||
Long-term deferred income taxes | 10,237,000 | 9,746,000 | 18,578,000 | 18,950,000 | ||||||||||||
Long-term contract assets (see Note 5) | 224,329,000 | 221,876,000 | ||||||||||||||
Goodwill | 3,205,000 | 3,205,000 | ||||||||||||||
Intangible assets — net | 7,493,000 | 8,431,000 | ||||||||||||||
Long-term contract assets | 234,735,000 | 239,540,000 | ||||||||||||||
Goodwill and intangible assets — net | 9,373,000 | 9,598,000 | ||||||||||||||
Other assets | 875,000 | 1,071,000 | 1,676,000 | 1,839,000 | ||||||||||||
TOTAL ASSETS | $ | 712,558,000 | $ | 632,362,000 | $ | 760,000,000 | $ | 777,029,000 | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | $ | 85,307,000 | $ | 92,461,000 | ||||||||||||
Accrued liabilities | 14,318,000 | 14,604,000 | ||||||||||||||
Accounts payable and accrued liabilities | $ | 101,901,000 | $ | 95,083,000 | ||||||||||||
Customer finished goods returns accrual | 23,621,000 | 22,615,000 | 27,595,000 | 25,326,000 | ||||||||||||
Contract liabilities (see Note 8) | 24,064,000 | 30,599,000 | ||||||||||||||
Contract liabilities | 34,718,000 | 27,911,000 | ||||||||||||||
Revolving loan | 144,000,000 | 110,400,000 | 112,000,000 | 152,000,000 | ||||||||||||
Other current liabilities | 4,852,000 | 4,990,000 | 7,047,000 | 9,390,000 | ||||||||||||
Operating lease liabilities (see Note 9) | 4,487,000 | - | ||||||||||||||
Operating lease liabilities | 6,249,000 | 5,104,000 | ||||||||||||||
Current portion of term loan | 3,678,000 | 3,685,000 | 3,678,000 | 3,678,000 | ||||||||||||
Total current liabilities | 304,327,000 | 279,354,000 | 293,188,000 | 318,492,000 | ||||||||||||
Term loan, less current portion | 22,299,000 | 24,187,000 | 19,543,000 | 20,462,000 | ||||||||||||
Long-term contract liabilities (see Note 8) | 49,327,000 | 40,889,000 | ||||||||||||||
Long-term contract liabilities | 90,125,000 | 92,101,000 | ||||||||||||||
Long-term deferred income taxes | 130,000 | 257,000 | 73,000 | 79,000 | ||||||||||||
Long-term operating lease liabilities (see Note 9) | 47,925,000 | - | ||||||||||||||
Long-term operating lease liabilities | 74,426,000 | 61,425,000 | ||||||||||||||
Other liabilities | 7,205,000 | 7,920,000 | 10,544,000 | 8,950,000 | ||||||||||||
Total liabilities | 431,213,000 | 352,607,000 | 487,899,000 | 501,509,000 | ||||||||||||
Commitments and contingencies | ||||||||||||||||
Shareholders’ equity: | ||||||||||||||||
Preferred stock; par value $.01 per share, 5,000,000 shares authorized; none issued | - | - | ||||||||||||||
Series A junior participating preferred stock; par value $.01 per share, 20,000 shares authorized; none issued | - | - | ||||||||||||||
Common stock; par value $.01 per share, 50,000,000 shares authorized; 18,944,886 and 18,817,400 shares issued and outstanding at September 30, 2019 and March 31, 2019, respectively | 189,000 | 188,000 | ||||||||||||||
Preferred stock; par value $0.01 per share, 5,000,000 shares authorized; NaN issued | - | - | ||||||||||||||
Series A junior participating preferred stock; par value $0.01 per share, 20,000 shares authorized; NaN issued | - | - | ||||||||||||||
Common stock; par value $0.01 per share, 50,000,000 shares authorized; 19,002,333 and 18,969,380 shares issued and outstanding at June 30, 2020 and March 31, 2020, respectively | 190,000 | 190,000 | ||||||||||||||
Additional paid-in capital | 216,430,000 | 215,047,000 | 219,437,000 | 218,581,000 | ||||||||||||
Retained earnings | 71,445,000 | 71,407,000 | 61,105,000 | 64,117,000 | ||||||||||||
Accumulated other comprehensive loss | (6,719,000 | ) | (6,887,000 | ) | (8,631,000 | ) | (7,368,000 | ) | ||||||||
Total shareholders’ equity | 281,345,000 | 279,755,000 | 272,101,000 | 275,520,000 | ||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 712,558,000 | $ | 632,362,000 | $ | 760,000,000 | $ | 777,029,000 |
Three Months Ended September 30, | Six Months Ended September 30, | Three Months Ended June 30, | ||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2020 | 2019 | |||||||||||||||||||
Net sales | $ | 150,374,000 | $ | 127,939,000 | $ | 259,522,000 | $ | 219,607,000 | $ | 95,356,000 | $ | 109,148,000 | ||||||||||||
Cost of goods sold | 113,801,000 | 102,228,000 | 205,366,000 | 177,544,000 | 81,969,000 | 91,565,000 | ||||||||||||||||||
Gross profit | 36,573,000 | 25,711,000 | 54,156,000 | 42,063,000 | 13,387,000 | 17,583,000 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
General and administrative | 14,285,000 | 8,997,000 | 26,285,000 | 21,088,000 | 6,870,000 | 12,000,000 | ||||||||||||||||||
Sales and marketing | 5,448,000 | 4,537,000 | 10,367,000 | 8,929,000 | 4,200,000 | 4,919,000 | ||||||||||||||||||
Research and development | 2,148,000 | 1,784,000 | 4,520,000 | 3,520,000 | 1,942,000 | 2,372,000 | ||||||||||||||||||
Total operating expenses | 21,881,000 | 15,318,000 | 41,172,000 | 33,537,000 | 13,012,000 | 19,291,000 | ||||||||||||||||||
Operating income | 14,692,000 | 10,393,000 | 12,984,000 | 8,526,000 | ||||||||||||||||||||
Operating income (loss) | 375,000 | (1,708,000 | ) | |||||||||||||||||||||
Interest expense, net | 6,523,000 | 5,699,000 | 12,696,000 | 10,774,000 | 4,409,000 | 6,173,000 | ||||||||||||||||||
Income (loss) before income tax expense (benefit) | 8,169,000 | 4,694,000 | 288,000 | (2,248,000 | ) | |||||||||||||||||||
Income tax expense (benefit) | 1,980,000 | 1,181,000 | 250,000 | (266,000 | ) | |||||||||||||||||||
Net income (loss) | $ | 6,189,000 | $ | 3,513,000 | $ | 38,000 | $ | (1,982,000 | ) | |||||||||||||||
Basic net income (loss) per share | $ | 0.33 | $ | 0.19 | $ | 0.00 | $ | (0.10 | ) | |||||||||||||||
Diluted net income (loss) per share | $ | 0.32 | $ | 0.18 | $ | 0.00 | $ | (0.10 | ) | |||||||||||||||
Loss before income tax benefit | (4,034,000 | ) | (7,881,000 | ) | ||||||||||||||||||||
Income tax benefit | (1,022,000 | ) | (1,730,000 | ) | ||||||||||||||||||||
Net loss | $ | (3,012,000 | ) | $ | (6,151,000 | ) | ||||||||||||||||||
Basic net loss per share | $ | (0.16 | ) | $ | (0.33 | ) | ||||||||||||||||||
Diluted net loss per share | $ | (0.16 | ) | $ | (0.33 | ) | ||||||||||||||||||
Weighted average number of shares outstanding: | Weighted average number of shares outstanding: | |||||||||||||||||||||||
Basic | 18,903,182 | 18,878,674 | 18,862,901 | 18,887,214 | 18,976,178 | 18,822,178 | ||||||||||||||||||
Diluted | 19,217,327 | 19,319,465 | 19,246,599 | 18,887,214 | 18,976,178 | 18,822,178 |
Three Months Ended September 30, | Six Months Ended September 30, | Three Months Ended June 30, | ||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2020 | 2019 | |||||||||||||||||||
Net income (loss) | $ | 6,189,000 | $ | 3,513,000 | $ | 38,000 | $ | (1,982,000 | ) | |||||||||||||||
Net loss | $ | (3,012,000 | ) | $ | (6,151,000 | ) | ||||||||||||||||||
Other comprehensive (loss) income, net of tax: | ||||||||||||||||||||||||
Foreign currency translation (loss) gain | (431,000 | ) | (2,000 | ) | 168,000 | (717,000 | ) | (1,263,000 | ) | 599,000 | ||||||||||||||
Total other comprehensive (loss) income, net of tax | (431,000 | ) | (2,000 | ) | 168,000 | (717,000 | ) | (1,263,000 | ) | 599,000 | ||||||||||||||
Comprehensive income (loss) | $ | 5,758,000 | $ | 3,511,000 | $ | 206,000 | $ | (2,699,000 | ) | |||||||||||||||
Comprehensive loss | $ | (4,275,000 | ) | $ | (5,552,000 | ) |
Common Stock | Common Stock | |||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Additional Paid-in Capital Common Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | Shares | Amount | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income Loss | Total | |||||||||||||||||||||||||||||||||||||
Balance at March 31, 2019 | 18,817,400 | $ | 188,000 | $ | 215,047,000 | $ | 71,407,000 | $ | (6,887,000 | ) | $ | 279,755,000 | ||||||||||||||||||||||||||||||||||||
Compensation recognized under employee stock plans | - | - | 988,000 | - | - | 988,000 | ||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes | 36,872 | 1,000 | (363,000 | ) | - | - | (362,000 | ) | ||||||||||||||||||||||||||||||||||||||||
Foreign currency translation | - | - | - | - | 599,000 | 599,000 | ||||||||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | (6,151,000 | ) | - | (6,151,000 | ) | ||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2019 | 18,854,272 | $ | 189,000 | $ | 215,672,000 | $ | 65,256,000 | $ | (6,288,000 | ) | $ | 274,829,000 | ||||||||||||||||||||||||||||||||||||
Balance at March 31, 2020 | 18,969,380 | $ | 190,000 | $ | 218,581,000 | $ | 64,117,000 | $ | (7,368,000 | ) | $ | 275,520,000 | ||||||||||||||||||||||||||||||||||||
Compensation recognized under employee stock plans | - | - | 1,053,000 | - | - | 1,053,000 | - | - | 1,043,000 | - | - | 1,043,000 | ||||||||||||||||||||||||||||||||||||
Exercise of stock options | 52,800 | - | 405,000 | - | - | 405,000 | 3,000 | - | 20,000 | - | - | 20,000 | ||||||||||||||||||||||||||||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes | 37,814 | - | (700,000 | ) | - | - | (700,000 | ) | 29,953 | - | (207,000 | ) | - | - | (207,000 | ) | ||||||||||||||||||||||||||||||||
Foreign currency translation | - | - | - | - | (431,000 | ) | (431,000 | ) | - | - | - | - | (1,263,000 | ) | (1,263,000 | ) | ||||||||||||||||||||||||||||||||
Net income | - | - | - | 6,189,000 | - | 6,189,000 | ||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2019 | 18,944,886 | $ | 189,000 | $ | 216,430,000 | $ | 71,445,000 | $ | (6,719,000 | ) | $ | 281,345,000 | ||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | (3,012,000 | ) | - | (3,012,000 | ) | ||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2020 | 19,002,333 | $ | 190,000 | $ | 219,437,000 | $ | 61,105,000 | $ | (8,631,000 | ) | $ | 272,101,000 |
Common Stock | ||||||||||||||||||||||||
Shares | Amount | Additional Paid-in Capital Common Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | |||||||||||||||||||
Balance at March 31, 2018 | 18,893,102 | $ | 189,000 | $ | 213,609,000 | $ | 78,510,000 | $ | (5,428,000 | ) | $ | 286,880,000 | ||||||||||||
Cumulative-effect adjustment for the adoption of ASU 2016-01 | - | - | - | 746,000 | (746,000 | ) | - | |||||||||||||||||
Balance at April 1, 2018 | 18,893,102 | $ | 189,000 | $ | 213,609,000 | $ | 79,256,000 | $ | (6,174,000 | ) | $ | 286,880,000 | ||||||||||||
Compensation recognized under employee stock plans | - | - | 941,000 | - | - | 941,000 | ||||||||||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes | 23,006 | - | (192,000 | ) | - | - | (192,000 | ) | ||||||||||||||||
Foreign currency translation | - | - | - | - | (715,000 | ) | (715,000 | ) | ||||||||||||||||
Net loss | - | - | - | (5,495,000 | ) | - | (5,495,000 | ) | ||||||||||||||||
Balance at June 30, 2018 | 18,916,108 | $ | 189,000 | $ | 214,358,000 | $ | 73,761,000 | $ | (6,889,000 | ) | $ | 281,419,000 | ||||||||||||
Compensation recognized under employee stock plans | - | - | 1,180,000 | - | - | 1,180,000 | ||||||||||||||||||
Exercise of stock options | 39,032 | 1,000 | 243,000 | - | - | 244,000 | ||||||||||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes | 8,152 | - | (128,000 | ) | - | - | (128,000 | ) | ||||||||||||||||
Repurchase and cancellation of treasury stock, including fees | (163,815 | ) | (2,000 | ) | (4,060,000 | ) | - | - | (4,062,000 | ) | ||||||||||||||
Foreign currency translation | - | - | - | - | (2,000 | ) | (2,000 | ) | ||||||||||||||||
Net income | - | - | - | 3,513,000 | - | 3,513,000 | ||||||||||||||||||
Balance at September 30, 2018 | 18,799,477 | $ | 188,000 | $ | 211,593,000 | $ | 77,274,000 | $ | (6,891,000 | ) | $ | 282,164,000 |
Common Stock | ||||||||||||||||||||||||
Shares | Amount | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | |||||||||||||||||||
Balance at March 31,2019 | 18,817,400 | $ | 188,000 | $ | 215,047,000 | $ | 71,407,000 | $ | (6,887,000 | ) | $ | 279,755,000 | ||||||||||||
Compensation recognized under employee stock plans | - | - | 988,000 | - | - | 988,000 | ||||||||||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes | 36,872 | 1,000 | (363,000 | ) | - | - | (362,000 | ) | ||||||||||||||||
Foreign currency translation | - | - | - | - | 599,000 | 599,000 | ||||||||||||||||||
Net loss | - | - | - | (6,151,000 | ) | - | (6,151,000 | ) | ||||||||||||||||
Balance at June 30, 2019 | 18,854,272 | $ | 189,000 | $ | 215,672,000 | $ | 65,256,000 | $ | (6,288,000 | ) | $ | 274,829,000 |
Six Months Ended September 30, | Three Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2020 | 2019 | |||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net income (loss) | $ | 38,000 | $ | (1,982,000 | ) | |||||||||||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||||||||||
Net loss | $ | (3,012,000 | ) | $ | (6,151,000 | ) | ||||||||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||||||||||
Depreciation and amortization | 3,631,000 | 2,834,000 | 2,551,000 | 2,379,000 | ||||||||||||
Amortization of intangible assets | 988,000 | 384,000 | ||||||||||||||
Amortization and write-off of debt issuance costs | 383,000 | 647,000 | ||||||||||||||
Amortization of interest on contract liabilities, net | 478,000 | 513,000 | ||||||||||||||
Amortization of interest | 312,000 | 328,000 | �� | |||||||||||||
Amortization of core premiums paid to customers | 1,223,000 | 1,108,000 | ||||||||||||||
Noncash lease expense | 2,431,000 | - | 1,686,000 | 1,179,000 | ||||||||||||
Loss due to the change in the fair value of the contingent consideration | 123,000 | - | ||||||||||||||
Loss due to the remeasurement of lease liabilities | 637,000 | - | ||||||||||||||
(Gain) loss due to the change in the fair value of the contingent consideration | (47,000 | ) | 228,000 | |||||||||||||
Gain due to the remeasurement of lease liabilities | (1,985,000 | ) | (502,000 | ) | ||||||||||||
Gain on short-term investments | (136,000 | ) | (180,000 | ) | (155,000 | ) | (109,000 | ) | ||||||||
Net provision for inventory reserves | 6,656,000 | 5,285,000 | 2,074,000 | 3,352,000 | ||||||||||||
Net provision for customer payment discrepancies | 721,000 | 274,000 | ||||||||||||||
Net provision for doubtful accounts | 106,000 | 206,000 | ||||||||||||||
Net provision for customer payment discrepancies and credit losses | 30,000 | 562,000 | ||||||||||||||
Deferred income taxes | (638,000 | ) | (667,000 | ) | 465,000 | 191,000 | ||||||||||
Share-based compensation expense | 2,041,000 | 2,121,000 | 1,043,000 | 988,000 | ||||||||||||
Loss on disposal of plant and equipment | 3,000 | 11,000 | - | 5,000 | ||||||||||||
Changes in operating assets and liabilities, net of effects of acquisitions: | ||||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Accounts receivable | (14,672,000 | ) | 6,598,000 | 25,847,000 | 10,524,000 | |||||||||||
Inventory | (23,254,000 | ) | (32,380,000 | ) | (8,034,000 | ) | (31,374,000 | ) | ||||||||
Inventory unreturned | (215,000 | ) | (1,592,000 | ) | ||||||||||||
Income tax receivable | (200,000 | ) | (3,595,000 | ) | ||||||||||||
Prepaid expenses and other current assets | 506,000 | (658,000 | ) | (2,898,000 | ) | (1,684,000 | ) | |||||||||
Other assets | 182,000 | (79,000 | ) | 219,000 | 209,000 | |||||||||||
Accounts payable and accrued liabilities | (6,600,000 | ) | 17,840,000 | 6,478,000 | (3,924,000 | ) | ||||||||||
Customer finished goods returns accrual | 1,005,000 | 2,156,000 | 1,621,000 | (1,132,000 | ) | |||||||||||
Contract assets, net | 261,000 | (8,773,000 | ) | (6,076,000 | ) | 9,410,000 | ||||||||||
Contract liabilities, net | 1,405,000 | 2,724,000 | 4,620,000 | (1,897,000 | ) | |||||||||||
Operating lease liabilities | (2,107,000 | ) | - | (1,416,000 | ) | (904,000 | ) | |||||||||
Other liabilities | (509,000 | ) | 1,904,000 | (2,158,000 | ) | (1,165,000 | ) | |||||||||
Net cash used in operating activities | (26,736,000 | ) | (6,409,000 | ) | ||||||||||||
Net cash provided by (used in) operating activities | 22,388,000 | (18,379,000 | ) | |||||||||||||
Cash flows from investing activities: | ||||||||||||||||
Purchase of plant and equipment | (6,943,000 | ) | (5,259,000 | ) | (2,983,000 | ) | (3,976,000 | ) | ||||||||
Proceeds from sale of plant and equipment | 26,000 | - | ||||||||||||||
Change in short-term investments | 1,216,000 | (222,000 | ) | (55,000 | ) | 1,308,000 | ||||||||||
Net cash used in investing activities | (5,701,000 | ) | (5,481,000 | ) | (3,038,000 | ) | (2,668,000 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||||||
Borrowings under revolving loan | 42,000,000 | 35,200,000 | - | 25,000,000 | ||||||||||||
Repayments of revolving loan | (8,400,000 | ) | (36,294,000 | ) | (40,000,000 | ) | - | |||||||||
Borrowings under term loan | - | 13,594,000 | ||||||||||||||
Repayments of term loan | (1,875,000 | ) | (782,000 | ) | (938,000 | ) | (938,000 | ) | ||||||||
Payments for debt issuance costs | (901,000 | ) | (1,757,000 | ) | - | (889,000 | ) | |||||||||
Payments on finance lease obligations | (1,108,000 | ) | (711,000 | ) | (549,000 | ) | (483,000 | ) | ||||||||
Exercise of stock options | 405,000 | 244,000 | 20,000 | - | ||||||||||||
Cash used to net share settle equity awards | (1,062,000 | ) | (320,000 | ) | (207,000 | ) | (362,000 | ) | ||||||||
Repurchase of common stock, including fees | - | (4,062,000 | ) | |||||||||||||
Net cash provided by financing activities | 29,059,000 | 5,112,000 | ||||||||||||||
Net cash (used in) provided by financing activities | (41,674,000 | ) | 22,328,000 | |||||||||||||
Effect of exchange rate changes on cash and cash equivalents | (78,000 | ) | (96,000 | ) | 172,000 | 15,000 | ||||||||||
Net decrease in cash and cash equivalents | (3,456,000 | ) | (6,874,000 | ) | ||||||||||||
Net (decrease) increase in cash and cash equivalents | (22,152,000 | ) | 1,296,000 | |||||||||||||
Cash and cash equivalents — Beginning of period | 9,911,000 | 13,049,000 | 49,616,000 | 9,911,000 | ||||||||||||
Cash and cash equivalents — End of period | $ | 6,455,000 | $ | 6,175,000 | $ | 27,464,000 | $ | 11,207,000 | ||||||||
Supplemental disclosures of cash flow information: | ||||||||||||||||
Cash paid for interest, net | $ | 11,859,000 | $ | 9,534,000 | $ | 4,234,000 | $ | 5,835,000 | ||||||||
Cash paid for income taxes, net of refunds | - | 3,263,000 | 447,000 | - | ||||||||||||
Cash paid for operating leases | 3,538,000 | - | 2,574,000 | 1,637,000 | ||||||||||||
Cash paid for finance leases | 1,249,000 | - | 632,000 | 551,000 | ||||||||||||
Plant and equipment acquired under finance leases | 2,308,000 | $ | - | 1,427,000 | 677,000 | |||||||||||
Assets acquired under operating leases | 1,497,000 | - | 15,564,000 | 3,000 | ||||||||||||
Non-cash capital expenditures | 678,000 | - |
1. Company Background and Organization |
September 30, 2019 | March 31, 2019 | June 30, 2020 | March 31, 2020 | |||||||||||||
Accounts receivable — trade | $ | 86,974,000 | $ | 75,847,000 | $ | 82,835,000 | $ | 109,164,000 | ||||||||
Allowance for bad debts | (4,187,000 | ) | (4,100,000 | ) | ||||||||||||
Allowance for credit losses | (425,000 | ) | (4,252,000 | ) | ||||||||||||
Customer payment discrepancies | (1,169,000 | ) | (854,000 | ) | (754,000 | ) | (1,040,000 | ) | ||||||||
Customer returns RGA issued | (11,704,000 | ) | (14,878,000 | ) | (15,518,000 | ) | (12,124,000 | ) | ||||||||
Less: total accounts receivable offset accounts | (17,060,000 | ) | (19,832,000 | ) | ||||||||||||
Total accounts receivable — net | $ | 69,914,000 | $ | 56,015,000 | $ | 66,138,000 | $ | 91,748,000 |
Three Months Ended | ||||
June 30, 2020 | ||||
Balance at beginning of period | $ | 4,252,000 | ||
Provision for expected credit losses | 170,000 | |||
Recoveries | (100,000 | ) | ||
Amounts written off charged against the allowance | (3,897,000 | ) | ||
Balance at end of period | $ | 425,000 |
September 30, 2019 | March 31, 2019 | June 30, 2020 | March 31, 2020 | |||||||||||||
Inventory - net | ||||||||||||||||
Inventory | ||||||||||||||||
Raw materials | $ | 104,180,000 | $ | 95,757,000 | $ | 108,143,000 | $ | 99,360,000 | ||||||||
Work-in-process | 4,720,000 | 3,502,000 | 5,165,000 | 3,906,000 | ||||||||||||
Finished goods | 154,901,000 | 146,366,000 | 131,823,000 | 135,601,000 | ||||||||||||
263,801,000 | 245,625,000 | 245,131,000 | 238,867,000 | |||||||||||||
Less allowance for excess and obsolete inventory | (13,134,000 | ) | (11,899,000 | ) | (13,812,000 | ) | (13,208,000 | ) | ||||||||
Total inventory - net | $ | 250,667,000 | $ | 233,726,000 | ||||||||||||
Inventory — net | 231,319,000 | 225,659,000 | ||||||||||||||
Inventory unreturned | $ | 8,684,000 | $ | 8,469,000 | 9,934,000 | 9,021,000 | ||||||||||
Total inventory | $ | 241,253,000 | $ | 234,680,000 |
September 30, 2019 | March 31, 2019 | June 30, 2020 | March 31, 2020 | |||||||||||||
Short-term contract assets | Short-term contract assets | |||||||||||||||
Cores expected to be returned by customers | $ | 11,776,000 | $ | 14,671,000 | $ | 22,912,000 | $ | 12,579,000 | ||||||||
Upfront payments to customers | 3,312,000 | 3,101,000 | 2,198,000 | 2,865,000 | ||||||||||||
Core premiums paid to customers | 4,383,000 | 4,411,000 | 4,914,000 | 4,888,000 | ||||||||||||
Total short-term contract assets | $ | 19,471,000 | $ | 22,183,000 | $ | 30,024,000 | $ | 20,332,000 | ||||||||
Long-term contract assets | Long-term contract assets | |||||||||||||||
Remanufactured cores held at customers’ locations | $ | 203,024,000 | $ | 196,914,000 | $ | 213,469,000 | $ | 217,616,000 | ||||||||
Upfront payments to customers | 1,234,000 | 2,775,000 | 418,000 | 589,000 | ||||||||||||
Core premiums paid to customers | 14,502,000 | 16,618,000 | 15,279,000 | 15,766,000 | ||||||||||||
Long-term core inventory deposits | 5,569,000 | 5,569,000 | 5,569,000 | 5,569,000 | ||||||||||||
Total long-term contract assets | $ | 224,329,000 | $ | 221,876,000 | $ | 234,735,000 | $ | 239,540,000 |
Three Months Ended September 30, | Six Months Ended September 30, | Three Months Ended June 30, | ||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2020 | 2019 | |||||||||||||||||||
Net sales | ||||||||||||||||||||||||
Customer A | 41 | % | 39 | % | 40 | % | 38 | % | 45 | % | 38 | % | ||||||||||||
Customer B | 20 | % | 26 | % | 21 | % | 24 | % | 26 | % | 23 | % | ||||||||||||
Customer C | 23 | % | 20 | % | 22 | % | 22 | % | 17 | % | 20 | % |
September 30, 2019 | March 31, 2019 | June 30, 2020 | March 31,2020 | |||||||||||||
Accounts receivable - trade | ||||||||||||||||
Customer A | 33 | % | 34 | % | 28 | % | 28 | % | ||||||||
Customer B | 15 | % | 18 | % | 31 | % | 14 | % | ||||||||
Customer C | 23 | % | 16 | % | 13 | % | 33 | % |
Three Months Ended September 30, | Six Months Ended September 30, | Three Months Ended June 30, | ||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2020 | 2019 | |||||||||||||||||||
Rotating electrical products | 77 | % | 80 | % | 76 | % | 79 | % | 72 | % | 75 | % | ||||||||||||
Wheel hub products | 15 | % | 14 | % | 16 | % | 16 | % | 18 | % | 18 | % | ||||||||||||
Brake caliper products | 3 | % | - | % | 2 | % | - | % | ||||||||||||||||
Brake master cylinders products | 1 | % | 2 | % | 2 | % | 2 | % | ||||||||||||||||
Brake related products | 9 | % | 4 | % | ||||||||||||||||||||
Other products | 4 | % | 4 | % | 4 | % | 3 | % | 1 | % | 3 | % | ||||||||||||
100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
7. Debt |
September 30, 2019 | March 31, 2019 | June 30, 2020 | March 31, 2020 | |||||||||||||
Principal amount of term loan | $ | 26,250,000 | $ | 28,125,000 | $ | 23,437,000 | $ | 24,375,000 | ||||||||
Unamortized financing fees | (273,000 | ) | (253,000 | ) | (216,000 | ) | (235,000 | ) | ||||||||
Net carrying amount of term loan | 25,977,000 | 27,872,000 | 23,221,000 | 24,140,000 | ||||||||||||
Less current portion of term loan | (3,678,000 | ) | (3,685,000 | ) | (3,678,000 | ) | (3,678,000 | ) | ||||||||
Long-term portion of term loan | $ | 22,299,000 | $ | 24,187,000 | $ | 19,543,000 | $ | 20,462,000 |
Year Ending March 31, | ||||||||
2020 - remaining six months | $ | 1,875,000 | ||||||
2021 | 3,750,000 | |||||||
2021 - remaining nine months | $ | 2,812,000 | ||||||
2022 | 3,750,000 | 3,750,000 | ||||||
2023 | 3,750,000 | 3,750,000 | ||||||
2024 | 13,125,000 | 13,125,000 | ||||||
Total payments | $ | 26,250,000 | $ | 23,437,000 |
September 30, 2019 | March 31, 2019 | June 30, 2020 | March 31, 2020 | |||||||||||||
Short-term contract liabilities | Short-term contract liabilities | |||||||||||||||
Customer core returns accruals | $ | 11,355,000 | $ | 4,126,000 | ||||||||||||
Customer allowances earned | $ | 10,365,000 | $ | 12,755,000 | 12,769,000 | 13,844,000 | ||||||||||
Customer core returns accruals | 3,973,000 | 3,933,000 | ||||||||||||||
Customer deposits | 1,377,000 | 2,674,000 | 1,538,000 | 1,365,000 | ||||||||||||
Core bank liability | 770,000 | 528,000 | ||||||||||||||
Accrued core payment, net | 8,349,000 | 11,237,000 | 8,286,000 | 8,048,000 | ||||||||||||
Total short-term contract liabilities | $ | 24,064,000 | $ | 30,599,000 | $ | 34,718,000 | $ | 27,911,000 | ||||||||
Long-term contract liabilities | Long-term contract liabilities | |||||||||||||||
Customer core returns accruals | $ | 38,841,000 | $ | 25,722,000 | $ | 69,212,000 | $ | 77,927,000 | ||||||||
Customer allowances earned | 517,000 | 542,000 | ||||||||||||||
Core bank liability | 14,892,000 | 7,556,000 | ||||||||||||||
Accrued core payment, net | 10,486,000 | 15,167,000 | 5,504,000 | 6,076,000 | ||||||||||||
Total long-term contract liabilities | $ | 49,327,000 | $ | 40,889,000 | $ | 90,125,000 | $ | 92,101,000 |
September 30, 2019 | June 30, 2020 | March 31, 2020 | |||||||||||||
Leases | Classification | Classification | |||||||||||||
Assets: | |||||||||||||||
Operating | Operating lease assets | $ | 49,262,000 | Operating lease assets | $ | 68,729,000 | $ | 53,029,000 | |||||||
Finance | Plant and equipment | 7,079,000 | Plant and equipment | 7,504,000 | 6,922,000 | ||||||||||
Total leased assets | $ | 56,341,000 | $ | 76,233,000 | $ | 59,951,000 | |||||||||
Liabilities: | |||||||||||||||
Current | |||||||||||||||
Operating | Operating lease liabilities | $ | 4,487,000 | Operating lease liabilities | $ | 6,249,000 | $ | 5,104,000 | |||||||
Finance | Other current liabilities | 2,036,000 | Other current liabilities | 2,289,000 | 2,059,000 | ||||||||||
Long-term | |||||||||||||||
Operating | Long-term operating lease liabilities | 47,925,000 | Long-term operating lease liabilities | 74,426,000 | 61,425,000 | ||||||||||
Finance | Other liabilities | 4,149,000 | Other liabilities | 4,556,000 | 3,905,000 | ||||||||||
Total lease liabilities | $ | 58,597,000 | $ | 87,520,000 | $ | 72,493,000 |
Three Months Ended September 30, | Six Months Ended September 30, | Three Months Ended June 30, | ||||||||||||||
2019 | 2019 | 2020 | 2019 | |||||||||||||
Lease cost | ||||||||||||||||
Operating lease cost | $ | 1,987,000 | $ | 3,885,000 | $ | 2,683,000 | $ | 1,898,000 | ||||||||
Short-term lease cost | 295,000 | 698,000 | 317,000 | 403,000 | ||||||||||||
Variable lease cost | 157,000 | 287,000 | 143,000 | 130,000 | ||||||||||||
Finance lease cost: | ||||||||||||||||
Amortization of finance lease assets | 372,000 | 730,000 | 413,000 | 358,000 | ||||||||||||
Interest on finance lease liabilities | 73,000 | 141,000 | 83,000 | 68,000 | ||||||||||||
Total lease cost | $ | 2,884,000 | $ | 5,741,000 | $ | 3,639,000 | $ | 2,857,000 |
Maturity of lease liabilities | Operating Leases | Finance Leases | Total | Operating Leases | Finance Leases | Total | ||||||||||||||||||
2020 - remaining six months | $ | 3,799,000 | $ | 1,172,000 | $ | 4,971,000 | ||||||||||||||||||
2021 | 6,957,000 | 2,074,000 | 9,031,000 | |||||||||||||||||||||
2021- remaining nine months | $ | 8,237,000 | $ | 1,981,000 | $ | 10,218,000 | ||||||||||||||||||
2022 | 6,168,000 | 1,740,000 | 7,908,000 | 10,312,000 | 2,338,000 | 12,650,000 | ||||||||||||||||||
2023 | 4,968,000 | 1,131,000 | 6,099,000 | 9,237,000 | 1,701,000 | 10,938,000 | ||||||||||||||||||
2024 | 4,866,000 | 472,000 | 5,338,000 | 8,097,000 | 927,000 | 9,024,000 | ||||||||||||||||||
2025 | 8,095,000 | 528,000 | 8,623,000 | |||||||||||||||||||||
Thereafter | 47,268,000 | 113,000 | 47,381,000 | 69,261,000 | 49,000 | 69,310,000 | ||||||||||||||||||
Total lease payments | 74,026,000 | 6,702,000 | 80,728,000 | 113,239,000 | 7,524,000 | 120,763,000 | ||||||||||||||||||
Less amount representing interest | (21,614,000 | ) | (517,000 | ) | (22,131,000 | ) | (32,564,000 | ) | (679,000 | ) | (33,243,000 | ) | ||||||||||||
Present value of lease liabilities | $ | 52,412,000 | $ | 6,185,000 | $ | 58,597,000 | $ | 80,675,000 | $ | 6,845,000 | $ | 87,520,000 |
Three Months Ended June 30, | ||||||||
2020 | 2019 | |||||||
Lease term and discount rate | ||||||||
Weighted-average remaining lease term (years): | ||||||||
Finance leases | 3.4 | 3.1 | ||||||
Operating leases | 11.7 | 12.4 | ||||||
Weighted-average discount rate: | ||||||||
Finance leases | 5.6 | % | 5.0 | % | ||||
Operating leases | 5.9 | % | 5.6 | % |
Six Months Ended September 30, | Three Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2020 | 2019 | |||||||||||||
Receivables discounted | $ | 205,882,000 | $ | 191,849,000 | $ | 111,360,000 | $ | 96,854,000 | ||||||||
Weighted average days | 346 | 338 | 345 | 346 | ||||||||||||
Annualized weighted average discount rate | 3.6 | % | 4.1 | % | 2.5 | % | 3.9 | % | ||||||||
Amount of discount recognized as interest expense | $ | 7,196,000 | $ | 7,441,000 | $ | 2,686,000 | $ | 3,649,000 |
Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net income (loss) | $ | 6,189,000 | $ | 3,513,000 | $ | 38,000 | $ | (1,982,000 | ) | |||||||
Basic shares | 18,903,182 | 18,878,674 | 18,862,901 | 18,887,214 | ||||||||||||
Effect of potentially dilutive securities | 314,145 | 440,791 | 383,698 | - | ||||||||||||
Diluted shares | 19,217,327 | 19,319,465 | 19,246,599 | 18,887,214 | ||||||||||||
Net income (loss) per share: | ||||||||||||||||
Basic net income (loss) per share | $ | 0.33 | $ | 0.19 | $ | 0.00 | $ | (0.10 | ) | |||||||
Diluted net income (loss) per share | $ | 0.32 | $ | 0.18 | $ | 0.00 | $ | (0.10 | ) |
Three Months Ended June 30, | ||||||||
2020 | 2019 | |||||||
Net loss | $ | (3,012,000 | ) | $ | (6,151,000 | ) | ||
Basic shares | 18,976,178 | 18,822,178 | ||||||
Effect of potentially dilutive securities | - | - | ||||||
Diluted shares | 18,976,178 | 18,822,178 | ||||||
Net loss per share: | ||||||||
Basic net loss per share | $ | (0.16 | ) | $ | (0.33 | ) | ||
Diluted net loss per share | $ | (0.16 | ) | $ | (0.33 | ) |
12. Income Taxes |
13. Financial Risk Management and Derivatives |
Derivatives Not Designated as Hedging Instruments | Gain (Loss) Recognized within General and Administrative Expenses | |||||||||||||||
Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Forward foreign currency exchange contracts | $ | (663,000 | ) | $ | 1,898,000 | $ | (628,000 | ) | $ | (768,000 | ) |
Gain Recognized within General and Administrative Expenses | ||||||||
Derivatives Not Designated as | Three Months Ended June 30, | |||||||
Hedging Instruments | 2020 | 2019 | ||||||
Forward foreign currency exchange contracts | $ | 2,832,000 | $ | 35,000 |
14. Fair Value Measurements |
September 30, 2019 | March 31, 2019 | June 30, 2020 | March 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Fair Value Measurements Using Inputs Considered as | Fair Value | Fair Value Measurements Using Inputs Considered as | Fair Value Measurements Using Inputs Considered as | Fair Value Measurements Using Inputs Considered as | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | Fair Value | Level 1 | Level 2 | Level 3 | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-term investments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mutual funds | $ | 2,192,000 | $ | 2,192,000 | - | - | $ | 3,273,000 | $ | 3,273,000 | - | - | $ | 1,061,000 | $ | 1,061,000 | $ | - | $ | - | $ | 850,000 | $ | 850,000 | $ | - | $ | - | ||||||||||||||||||||||||||||||||||||
Prepaid expenses and other current assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Forward foreign currency exchange contracts | - | - | - | - | 207,000 | - | $ | 207,000 | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-term contingent consideration | 2,721,000 | - | - | $ | 2,721,000 | 2,816,000 | - | - | $ | 2,816,000 | 2,076,000 | - | - | 2,076,000 | 2,190,000 | - | - | 2,190,000 | ||||||||||||||||||||||||||||||||||||||||||||||
Other current liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred compensation | 2,192,000 | 2,192,000 | - | - | 3,273,000 | 3,273,000 | - | - | 1,061,000 | 1,061,000 | - | - | 850,000 | 850,000 | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
Forward foreign currency exchange contracts | 421,000 | - | $ | 421,000 | - | - | - | - | - | 3,452,000 | - | 3,452,000 | - | 6,284,000 | - | 6,284,000 | - | |||||||||||||||||||||||||||||||||||||||||||||||
Other liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term contingent consideration | 2,130,000 | - | - | 2,130,000 | 1,905,000 | - | - | 1,905,000 | 530,000 | - | - | 530,000 | 463,000 | - | - | 463,000 |
June 30, 2020 | ||||
Risk free interest rate | 0.18 | % | ||
Counter party rate | 6.70 | % | ||
Probability | 100.00 | % |
Risk free interest rate | % | |||
Counter party rate | % | |||
Expected volatility (1) | % | |||
Weighted average cost of capital (1) | % |
(1) | The range for expected volatility was 32.5% to 42.5% and the range for the weighted average cost of capital was 12.5% to 14.0%. |
June 30, | ||||
Risk free interest rate | % | |||
Counter party rate | % | |||
Revenue volatility (1) | % | |||
Revenue discount rate (1) | % | |||
% |
(1) | The range for revenue volatility was 5.5% to 7.5%, 1.5% to 2.5% for the revenue discount rate, and 36% to 46% for asset volatility. |
Three Months Ended June 30, | ||||||||||||||||
Contingent Consideration | 2020 | 2019 | ||||||||||||||
Three Months Ended September 30, 2019 | Six Months Ended September 30, 2019 | Contingent Consideration | Contingent Consideration | |||||||||||||
Beginning balance | $ | 4,970,000 | $ | 4,721,000 | $ | 2,653,000 | $ | 4,721,000 | ||||||||
Changes in revaluations of contingent consideration included in earnings | (119,000 | ) | 130,000 | (47,000 | ) | 249,000 | ||||||||||
Ending balance | $ | 4,851,000 | $ | 4,851,000 | $ | 2,606,000 | $ | 4,970,000 |
Six Months Ended September 30, | Three Months Ended June 30, | |||||||||||
2019 | 2018 | 2020 | ||||||||||
Weighted average risk free interest rate | 1.77 | % | 2.82 | % | 0.44 | % | ||||||
Weighted average expected holding period (years) | 5.70 | 5.94 | 5.97 | |||||||||
Weighted average expected volatility | 42.51 | % | 43.98 | % | 44.92 | % | ||||||
Weighted average expected dividend yield | - | - | - | |||||||||
Weighted average fair value of options granted | $ | 8.28 | $ | 8.71 | $ | 6.43 |
Number of Shares | Weighted Average Exercise Price | Number of Shares | Weighted Average Exercise Price | |||||||||||||
Outstanding at March 31, 2019 | 1,337,165 | $ | 17.58 | |||||||||||||
Outstanding at March 31, 2020 | 1,536,123 | $ | 18.18 | |||||||||||||
Granted | 300,039 | $ | 19.75 | 341,825 | $ | 15.14 | ||||||||||
Exercised | (52,800 | ) | $ | 7.67 | (3,000 | ) | $ | 6.62 | ||||||||
Forfeited | (5,171 | ) | $ | 20.62 | (11,509 | ) | $ | 24.20 | ||||||||
Outstanding at September 30, 2019 | 1,579,233 | $ | 18.31 | |||||||||||||
Outstanding at June 30, 2020 | 1,863,439 | $ | 17.60 |
Number of Shares | Weighted Average Grant Date Fair Value | |||||||
Outstanding at March 31, 2019 | 243,134 | $ | 21.75 | |||||
Granted | 79,851 | $ | 19.93 | |||||
Vested | (133,488 | ) | $ | 21.11 | ||||
Forfeited | (1,101 | ) | $ | 21.40 | ||||
Outstanding at September 30, 2019 | 188,396 | $ | 21.44 |
Number of Shares | Weighted Average Grant Date Fair Value | |||||||
Outstanding at March 31, 2020 | 201,983 | $ | 20.06 | |||||
Granted | 112,293 | $ | 15.15 | |||||
Vested | (43,929 | ) | $ | 22.63 | ||||
Outstanding at June 30, 2020 | 270,347 | $ | 17.60 |
Three Months Ended September 30, 2019 | Three Months Ended September 30, 2018 | |||||||||||||||||||||||
Unrealized Gain on Short-Term Investments | Foreign Currency Translation | Total | Unrealized Gain on Short-Term Investments | Foreign Currency Translation | Total | |||||||||||||||||||
Balance at June 30, 2019 and 2018 | $ | - | $ | (6,288,000 | ) | $ | (6,288,000 | ) | $ | - | $ | (6,889,000 | ) | $ | (6,889,000 | ) | ||||||||
Other comprehensive loss, net of tax | - | (431,000 | ) | (431,000 | ) | - | (2,000 | ) | (2,000 | ) | ||||||||||||||
Amounts reclassified from accumulated other comprehensive loss, net of tax | - | - | - | - | - | - | ||||||||||||||||||
Balance at September 30, 2019 and 2018 | $ | - | $ | (6,719,000 | ) | $ | (6,719,000 | ) | $ | - | $ | (6,891,000 | ) | $ | (6,891,000 | ) |
Six Months Ended September 30, 2019 | Six Months Ended September 30, 2018 | |||||||||||||||||||||||
Unrealized Gain on Short-Term Investments | Foreign Currency Translation | Total | Unrealized Gain on Short-Term Investments | Foreign Currency Translation | Total | |||||||||||||||||||
Balance at March 31, 2019 and 2018 | $ | - | $ | (6,887,000 | ) | $ | (6,887,000 | ) | $ | 746,000 | $ | (6,174,000 | ) | $ | (5,428,000 | ) | ||||||||
Cumulative-effect adjustment | - | - | - | (746,000 | ) | - | (746,000 | ) | ||||||||||||||||
Balance at April 1, 2019 and 2018 | - | (6,887,000 | ) | (6,887,000 | ) | - | (6,174,000 | ) | (6,174,000 | ) | ||||||||||||||
Other comprehensive income (loss), net of tax | - | 168,000 | 168,000 | - | (717,000 | ) | (717,000 | ) | ||||||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss), net of tax | - | - | - | - | - | - | ||||||||||||||||||
Balance at September 30, 2019 and 2018 | $ | - | $ | (6,719,000 | ) | $ | (6,719,000 | ) | $ | - | $ | (6,891,000 | ) | $ | (6,891,000 | ) |
Three Months Ended September 30, | Six Months Ended September 30, | Three Months Ended June 30, | ||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2020 | 2019 | |||||||||||||||||||
Balance at beginning of period | $ | 15,818,000 | $ | 14,543,000 | $ | 19,475,000 | $ | 16,646,000 | $ | 18,300,000 | $ | 19,475,000 | ||||||||||||
Charged to expense/additions | 32,531,000 | 30,860,000 | 55,716,000 | 54,753,000 | ||||||||||||||||||||
Charged to expense | 23,089,000 | 23,185,000 | ||||||||||||||||||||||
Amounts processed | (31,774,000 | ) | (28,993,000 | ) | (58,616,000 | ) | (54,989,000 | ) | (19,197,000 | ) | (26,842,000 | ) | ||||||||||||
Balance at end of period | $ | 16,575,000 | $ | 16,410,000 | $ | 16,575,000 | $ | 16,410,000 | $ | 22,192,000 | $ | 15,818,000 |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Three Months Ended September 30, | ||||||||
2019 | 2018 | |||||||
Gross profit percentage | 24.3 | % | 20.1 | % | ||||
Cash flow used in operations | $ | (8,357,000 | ) | $ | (5,485,000 | ) | ||
Finished goods turnover (annualized) (1) | 2.8 | 3.9 |
Three Months Ended June 30, | ||||||||
2020 | 2019 | |||||||
Gross profit percentage | 14.0 | % | 16.1 | % | ||||
Cash flow provided by (used in) operations | $ | 22,388,000 | $ | (18,379,000 | ) | |||
Finished goods turnover (annualized) (1) | 2.5 | 2.3 |
(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 finished goods inventory values, which includes all on-hand core inventory, 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, | Three Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2020 | 2019 | |||||||||||||
Net sales | $ | 150,374,000 | $ | 127,939,000 | $ | 95,356,000 | $ | 109,148,000 | ||||||||
Cost of goods sold | 113,801,000 | 102,228,000 | 81,969,000 | 91,565,000 | ||||||||||||
Gross profit | 36,573,000 | 25,711,000 | 13,387,000 | 17,583,000 | ||||||||||||
Gross profit percentage | 24.3 | % | 20.1 | % | 14.0 | % | 16.1 | % |
Three Months Ended September 30, | Three Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2020 | 2019 | |||||||||||||
General and administrative | $ | 14,285,000 | $ | 8,997,000 | $ | 6,870,000 | $ | 12,000,000 | ||||||||
Sales and marketing | 5,448,000 | 4,537,000 | 4,200,000 | 4,919,000 | ||||||||||||
Research and development | 2,148,000 | 1,784,000 | 1,942,000 | 2,372,000 | ||||||||||||
Percent of net sales | ||||||||||||||||
General and administrative | 9.5 | % | 7.0 | % | 7.2 | % | 11.0 | % | ||||||||
Sales and marketing | 3.6 | % | 3.5 | % | 4.4 | % | 4.5 | % | ||||||||
Research and development | 1.4 | % | 1.4 | % | 2.0 | % | 2.2 | % |
Six Months Ended September 30, | ||||||||
2019 | 2018 | |||||||
Gross profit percentage | 20.9 | % | 19.2 | % | ||||
Cash flow used in operations | $ | (26,736,000 | ) | $ | (6,409,000 | ) | ||
Finished goods turnover (annualized) (1) | 2.7 | 3.7 |
Six Months Ended September 30, | ||||||||
2019 | 2018 | |||||||
Net sales | $ | 259,522,000 | $ | 219,607,000 | ||||
Cost of goods sold | 205,366,000 | 177,544,000 | ||||||
Gross profit | 54,156,000 | 42,063,000 | ||||||
Gross profit percentage | 20.9 | % | 19.2 | % |
Six Months Ended September 30, | ||||||||
2019 | 2018 | |||||||
General and administrative | $ | 26,285,000 | $ | 21,088,000 | ||||
Sales and marketing | 10,367,000 | 8,929,000 | ||||||
Research and development | 4,520,000 | 3,520,000 | ||||||
Percent of net sales | ||||||||
General and administrative | 10.1 | % | 9.6 | % | ||||
Sales and marketing | 4.0 | % | 4.1 | % | ||||
Research and development | 1.7 | % | 1.6 | % |
Six Months Ended September 30, | Three Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2020 | 2019 | |||||||||||||
Cash flow provided by (used in): | ||||||||||||||||
Cash flows provided by (used in): | ||||||||||||||||
Operating activities | $ | (26,736,000 | ) | $ | (6,409,000 | ) | $ | 22,388,000 | $ | (18,379,000 | ) | |||||
Investing activities | (5,701,000 | ) | (5,481,000 | ) | (3,038,000 | ) | (2,668,000 | ) | ||||||||
Financing activities | 29,059,000 | 5,112,000 | (41,674,000 | ) | 22,328,000 | |||||||||||
Effect of exchange rates on cash and cash equivalents | (78,000 | ) | (96,000 | ) | 172,000 | 15,000 | ||||||||||
Net decrease in cash and cash equivalents | $ | (3,456,000 | ) | $ | (6,874,000 | ) | ||||||||||
Net (decrease) increase in cash and cash equivalents | $ | (22,152,000 | ) | $ | 1,296,000 | |||||||||||
Additional selected cash flow data: | ||||||||||||||||
Depreciation and amortization | $ | 4,619,000 | $ | 3,218,000 | $ | 2,551,000 | $ | 2,379,000 | ||||||||
Capital expenditures | 6,943,000 | 5,259,000 | 2,983,000 | 3,976,000 |
Calculation as of September 30, 2019 | Financial covenants required under the Credit Facility | Financial covenants required under the Credit Facility | Calculation as of June 30, 2020 | |||||||||||||
Maximum senior leverage ratio | 2.33 | 3.00 | 3.00 | 1.82 | ||||||||||||
Minimum fixed charge coverage ratio | 1.46 | 1.10 | 1.10 | 1.38 |
Six Months Ended September 30, | Three Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2020 | 2019 | |||||||||||||
Receivables discounted | $ | 205,882,000 | $ | 191,849,000 | $ | 111,360,000 | $ | 96,854,000 | ||||||||
Weighted average days | 346 | 338 | 345 | 346 | ||||||||||||
Annualized weighted average discount rate | 3.6 | % | 4.1 | % | 2.5 | % | 3.9 | % | ||||||||
Amount of discount recognized as interest expense | $ | 7,196,000 | $ | 7,441,000 | $ | 2,686,000 | $ | 3,649,000 |
Quantitative and Qualitative Disclosures About Market Risk |
Controls and Procedures |
Item 1A. |
Item 2. |
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) | 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, 2019: | ||||||||||||||||||||||||||||||||
April 1 - April 30, 2020: | ||||||||||||||||||||||||||||||||
Open market and privately negotiated purchases | - | $ | - | - | $ | 21,308,000 | - | $ | - | - | $ | 21,308,000 | ||||||||||||||||||||
August 1 - August 31, 2019: | ||||||||||||||||||||||||||||||||
May 1 - May 31, 2020: | ||||||||||||||||||||||||||||||||
Open market and privately negotiated purchases | - | $ | - | - | 21,308,000 | - | $ | - | - | 21,308,000 | ||||||||||||||||||||||
September 1 - September 30, 2019: | ||||||||||||||||||||||||||||||||
June 1 - June 30, 2020: | ||||||||||||||||||||||||||||||||
Open market and privately negotiated purchases | - | $ | - | - | 21,308,000 | - | $ | - | - | 21,308,000 | ||||||||||||||||||||||
Total | 0 | 0 | $ | 21,308,000 | 0 | 0 | $ | 21,308,000 |
(1) | As of |
Item 6. |
(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. | |||
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. | |||
Amendment No. 4 to Employment Agreement, dated as of May 21, 2020, between Motorcar Parts of America, Inc., and Selwyn Joffe | Filed herewith. | |||
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. | |||
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: August 10, 2020 | By: | /s/ David Lee |
David Lee | ||
Chief Financial Officer | ||
Dated: August 10, 2020 | By: | /s/ Kamlesh Shah |
Chief Accounting Officer |