Maier & Company, Inc.
(310) 471-1288
MOTORCAR PARTS OF AMERICA REPORTS FISCAL 2015 FOURTH QUARTER AND
YEAR-END RESULTS
-- Strong Momentum Continues; Business Outlook Remains Favorable --
LOS ANGELES, CA – June 15, 2015 – Motorcar Parts of America, Inc. (Nasdaq: MPAA) today reported results for its fiscal 2015 fourth quarter and year-end ended March 31, 2015 – reflecting record sales and adjusted profitability for the year, supported by the ramp up of new business and product-line expansion contributions.
Net sales for the fiscal 2015 fourth quarter increased 9.4 percent to $83.9 million from $76.7 million for the same period a year earlier. On an adjusted basis, net sales climbed 18.5 percent to $90.9 million from $76.7 million in fiscal 2014 -- excluding certain customer allowances related to new business, including core purchases and return accruals. The company’s sales performance for the fiscal 2015 fourth quarter reflects new rotating electrical business gains, as well as increased contributions from wheel hubs and the company’s master cylinder business that commenced in late July 2014.
Net income for the quarter was $3.1 million, or $0.16 per diluted share, compared with net income of $3.1 million, or $0.19 per diluted share, a year ago – reflecting an 18.9 percent increase in the diluted weighted average number of shares outstanding in the fiscal 2015 period.
Adjusted net income for the fiscal 2015 fourth quarter increased 39.7 percent to $9.9 million, or $0.53 per diluted share, from $7.1 million, or $0.45 per diluted share, the same period a year earlier -- excluding certain expenses noted in the Reconciliation of Non-GAAP Financial Measures tables below.
Gross profit was $20.9 million compared with $23.9 million a year earlier. Gross profit as a percentage of sales for the fiscal 2015 fourth quarter was 24.9 percent compared with 31.2 percent a year earlier -- primarily due to certain customer allowances related to new business that commenced in the fiscal 2015 fourth quarter, including core purchases and return accruals.
Adjusted gross profit was $28.2 million compared with $23.9 million a year ago, representing an 18.1 percent increase. Adjusted gross profit as a percentage of sales for the three months was 31.1 percent compared with 31.2 percent a year earlier.
(more)
Motorcar Parts of America, Inc.
2-2-2
Net sales for the fiscal 2015 full year increased 16.6 percent to $301.7 million from $258.7 million for the same period a year earlier. On an adjusted basis, net sales increased 23.3 percent to $320.7 million from $260.1 million in fiscal 2014.
Net income for the fiscal 2015 full year was $11.5 million, or $0.65 per diluted share, compared with net income of $107.4 million, or $7.01 per diluted share, a year ago – reflecting the fiscal 2014 period impact of $100.9 million income from discontinued operations, as well as a 14.9 percent increase in the diluted weighted average number of shares outstanding in the fiscal 2015 full-year period.
Adjusted net income for the fiscal 2015 full year increased 52.3 percent to $32.9 million, or $1.87 per diluted share, from $21.6 million, or $1.41 per diluted share, a year earlier -- excluding certain expenses noted in the Reconciliation of Non-GAAP Financial Measures tables below.
Gross profit was $81.6 million compared with $81.6 million a year earlier. Gross profit as a percentage of sales for the fiscal 2015 full year period was 27.0 percent compared with 31.5 percent a year earlier -- primarily due to factors noted above.
Adjusted gross profit for the full year was $101.2 million compared with $82.9 million a year ago, representing a 22.0 percent increase. Adjusted gross profit as a percentage of sales for the fiscal 2015 full year was 31.5 percent compared with 31.9 percent a year earlier.
“Results for fiscal 2015 reflect a record year for both sales and adjusted profitability. Market share gains in each of our product lines contributed to this strong performance, establishing a solid business base for future growth. We are well-positioned as we begin a new fiscal year, supported by an aging vehicle population, increased miles driven, positive operating synergies and product line expansion opportunities. Equally important, our ongoing success was achieved through the dedication of a team that is passionate about building shareholder value through superior product quality and exemplary service levels to our valued customers,” said Selwyn Joffe, chairman, president and chief executive officer of Motorcar Parts of America.
Separately, he highlighted a successful post fiscal year-end refinancing of the company’s credit facility and continued new business momentum.
Use of Non-GAAP Measures
We define adjusted net income (loss) as net income (loss) adjusted for certain items related to the company’s discontinued subsidiaries, as well as financing, consulting and other fees. We define Adjusted EBITDA as adjusted net income (loss), plus interest expense, income tax expense and depreciation and amortization. Adjusted net income (loss) does not reflect many items that affect the company’s net income (loss), including many items related to company’s discontinued subsidiaries. Adjusted EBITDA does not reflect the impact of a number of items that affect the company’s net income, including financing costs and matters related to the company’s discontinued subsidiaries. Adjusted EBITDA and adjusted net income (loss) are not measures of financial performance under GAAP, and should not be considered as alternatives to net income or income from operations as a measure of liquidity. Adjusted EBITDA and adjusted net income (loss) have significant limitations as analytical tools, and should not be considered in isolation, or as a substitute for analysis of the company’s results as reported under GAAP. For a reconciliation of Adjusted EBITDA and adjusted net income (loss) to net income (loss) see the financial tables included in the press release.
Motorcar Parts of America, Inc.
3-3-3
Teleconference and Web Cast
Selwyn Joffe, chairman, president and chief executive officer, and David Lee, chief financial officer, will host an investor conference call today at 6:30 a.m. Pacific time to discuss the company’s financial results and operations.
The call will be open to all interested investors either through a live audio Web broadcast at www.motorcarparts.com or live by calling (877)-776-4016 (domestic) or (973)-638-3231 (international). For those who are not available to listen to the live broadcast, the call will be archived for seven days on Motorcar Parts of America’s website www.motorcarparts.com. A telephone playback of the conference call will also be available from approximately 9:30 a.m. Pacific time today through 8:59 p.m. Pacific time on Monday, June 22, 2015 by calling (855)-859-2056 (domestic) or (404)-537-3406 (international) and using access code: 62650191
About Motorcar Parts of America, Inc.
Motorcar Parts of America is a remanufacturer, manufacturer and distributor of automotive aftermarket parts -- including alternators, starters, wheel hub assembly products and brake master cylinders utilized in imported and domestic passenger vehicles, light trucks and heavy duty applications. Motorcar Parts of America’s products are sold to automotive retail outlets and the professional repair market throughout the United States and Canada, with facilities located in California, Mexico, Malaysia and China, and administrative offices located in California, Tennessee, Mexico, Singapore and Malaysia. Additional information is available at www.motorcarparts.com.
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for certain forward-looking statements. The statements contained in this press release that are not historical facts are forward-looking statements based on the company’s current expectations and beliefs concerning future developments and their potential effects on the company. These forward-looking statements involve significant risks and uncertainties (some of which are beyond the control of the company) and are subject to change based upon various factors. Reference is also made to the Risk Factors set forth in the company’s Form 10-K Annual Report filed with the Securities and Exchange Commission (SEC) in June 2015 and in its Forms 10-Q filed with the SEC for additional risks and uncertainties facing the company. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise.
# # #
(Financial tables follow)
MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
Consolidated Statements of Income
| | | Three Months Ended | | | Years Ended | |
| | | March 31, | | | March 31, | |
| | | 2015 | | | 2014 | | | 2015 | | | 2014 | |
| | | (Unaudited) | | | | | | | |
| | | | | | | | | | | | | |
| Net sales | | $ | 83,904,000 | | | $ | 76,682,000 | | | $ | 301,711,000 | | | $ | 258,669,000 | |
| Cost of goods sold | | | 62,995,000 | | | | 52,761,000 | | | | 220,138,000 | | | | 177,103,000 | |
| Gross profit | | | 20,909,000 | | | | 23,921,000 | | | | 81,573,000 | | | | 81,566,000 | |
| Operating expenses: | | | | | | | | | | | | | | | | |
| General and administrative | | | 10,031,000 | | | | 11,766,000 | | | | 37,863,000 | | | | 39,684,000 | |
| Sales and marketing | | | 1,907,000 | | | | 2,059,000 | | | | 7,851,000 | | | | 7,838,000 | |
| Research and development | | | 611,000 | | | | 541,000 | | | | 2,273,000 | | | | 1,940,000 | |
| Total operating expenses | | | 12,549,000 | | | | 14,366,000 | | | | 47,987,000 | | | | 49,462,000 | |
| Operating income | | | 8,360,000 | | | | 9,555,000 | | | | 33,586,000 | | | | 32,104,000 | |
| Interest expense, net | | | 3,148,000 | | | | 3,177,000 | | | | 13,065,000 | | | | 18,289,000 | |
| Income from continuing operations before income tax expense | | | 5,212,000 | | | | 6,378,000 | | | | 20,521,000 | | | | 13,815,000 | |
| Income tax expense | | | 2,110,000 | | | | 3,311,000 | | | | 9,068,000 | | | | 7,333,000 | |
| Income from continuing operations | | | 3,102,000 | | | | 3,067,000 | | | | 11,453,000 | | | | 6,482,000 | |
| Income from discontinued operations | | | - | | | | - | | | | - | | | | 100,877,000 | |
| | | | | | | | | | | | | | | | | |
| Net income | | $ | 3,102,000 | | | $ | 3,067,000 | | | $ | 11,453,000 | | | $ | 107,359,000 | |
| | | | | | | | | | | | | | | | | |
| Basic net income per share from continuing operations | | $ | 0.17 | | | $ | 0.20 | | | $ | 0.68 | | | $ | 0.45 | |
| Basic net income per share from discontinued operations | | | - | | | | - | | | | - | | | | 6.89 | |
| | | | | | | | | | | | | | | | | |
| Basic net income per share | | $ | 0.17 | | | $ | 0.20 | | | $ | 0.68 | | | $ | 7.34 | |
| | | | | | | | | | | | | | | | | |
| Diluted net income per share from continuing operations | | $ | 0.16 | | | $ | 0.19 | | | $ | 0.65 | | | $ | 0.42 | |
| Diluted net income per share from discontinued operations | | | - | | | | - | | | | - | | | | 6.59 | |
| | | | | | | | | | | | | | | | | |
| Diluted net income per share | | $ | 0.16 | | | $ | 0.19 | | | $ | 0.65 | | | $ | 7.01 | |
| | | | | | | | | | | | | | | | | |
| Weighted average number of shares outstanding: | | | | | | | | | | | | | | | | |
| Basic | | | 17,967,060 | | | | 14,996,959 | | | | 16,734,539 | | | | 14,633,946 | |
| Diluted | | | 18,815,858 | | | | 15,819,326 | | | | 17,605,940 | | | | 15,317,931 | |
MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
March 31,
| | | 2015 | | | 2014 | |
| ASSETS | | | | | | |
| Current assets: | | | | | | |
| Cash | | $ | 61,230,000 | | | $ | 24,599,000 | |
| Short-term investments | | | 699,000 | | | | 521,000 | |
| Accounts receivable — net | | | 24,799,000 | | | | 22,283,000 | |
| Inventory— net | | | 56,829,000 | | | | 47,246,000 | |
| Inventory unreturned | | | 7,833,000 | | | | 7,534,000 | |
| Deferred income taxes | | | 22,998,000 | | | | 18,767,000 | |
| Prepaid expenses and other current assets | | | 7,407,000 | | | | 4,316,000 | |
| Total current assets | | | 181,795,000 | | | | 125,266,000 | |
| Plant and equipment — net | | | 12,535,000 | | | | 11,025,000 | |
| Long-term core inventory — net | | | 188,950,000 | | | | 143,476,000 | |
| Long-term core inventory deposits | | | 31,571,000 | | | | 29,375,000 | |
| Long-term deferred income taxes | | | 261,000 | | | | 2,614,000 | |
| Intangible assets — net | | | 2,574,000 | | | | 3,244,000 | |
| Other assets | | | 4,074,000 | | | | 3,853,000 | |
| TOTAL ASSETS | | $ | 421,760,000 | | | $ | 318,853,000 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Accounts payable | | $ | 61,893,000 | | | $ | 59,509,000 | |
| Accrued liabilities | | | 10,096,000 | | | | 8,316,000 | |
| Customer finished goods returns accrual | | | 19,678,000 | | | | 16,251,000 | |
| Accrued core payment | | | 13,190,000 | | | | - | |
| Revolving loan | | | - | | | | 10,000,000 | |
| Other current liabilities | | | 2,471,000 | | | | 1,270,000 | |
| Current portion of term loan | | | 7,843,000 | | | | 7,843,000 | |
| Total current liabilities | | | 115,171,000 | | | | 103,189,000 | |
| Term loan, less current portion | | | 72,258,000 | | | | 79,434,000 | |
| Deferred core revenue | | | - | | | | 15,065,000 | |
| Long-term accrued core payment | | | 23,880,000 | | | | - | |
| Other liabilities | | | 20,248,000 | | | | 11,529,000 | |
| Total liabilities | | | 231,557,000 | | | | 209,217,000 | |
| 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; 17,974,598 and 15,067,645 shares issued and outstanding at March 31, 2015 and 2014, respectively | | | 180,000 | | | | 151,000 | |
| Additional paid-in capital | | | 191,279,000 | | | | 120,553,000 | |
| Accumulated other comprehensive loss | | | (2,518,000 | ) | | | (877,000 | ) |
| Retained earnings (accumulated deficit) | | | 1,262,000 | | | | (10,191,000 | ) |
| Total shareholders' equity | | | 190,203,000 | | | | 109,636,000 | |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 421,760,000 | | | $ | 318,853,000 | |
Reconciliation of Non-GAAP Financial Measures
To supplement the consolidated financial statements presented in accordance with U.S. generally accepted accounting principles ("GAAP"), the Company has included the following non-GAAP adjusted financial measures in this press release and in the webcast to discuss the Company's financial results for the three and twelve months ended March 31, 2015 and 2014. Each of these non-GAAP adjusted financial measures is adjusted from results based on GAAP to exclude certain expenses and gains. Among other things, the Company uses such non-GAAP adjusted financial measures in addition to and in conjunction with corresponding GAAP measures to help analyze the performance of its business.
These non-GAAP adjusted financial measures reflect an additional way of viewing aspects of the Company's operations that, when viewed with the GAAP results and the reconciliations to corresponding GAAP financial measures, provide a more complete understanding of the Company's results of operations and the factors and trends affecting the Company's business. However, these non-GAAP adjusted financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.
Income statement information for the three and twelve months ended March 31, 2015 and 2014 are as follows:
| Reconciliation of Non-GAAP Financial Measures | Exhibit 1 |
| | | Three Months Ended March 31, | | | Years Ended March 31, | |
| | | 2015 | | | 2014 | | | 2015 | | | 2014 | |
| GAAP Results: | | | | | | | | | | | | |
| Net sales | | $ | 83,904,000 | | | $ | 76,682,000 | | | $ | 301,711,000 | | | $ | 258,669,000 | |
| Net income | | | 3,102,000 | | | | 3,067,000 | | | | 11,453,000 | | | | 107,359,000 | |
| Diluted income per share (EPS) | | | 0.16 | | | | 0.19 | | | | 0.65 | | | | 7.01 | |
| Gross margin | | | 24.9 | % | | | 31.2 | % | | | 27.0 | % | | | 31.5 | % |
| Non-GAAP Adjusted Results: | | | | | | | | | | | | | | | | |
| Non-GAAP adjusted net sales | | $ | 90,899,000 | | | $ | 76,682,000 | | | $ | 320,748,000 | | | $ | 260,081,000 | |
| Non-GAAP adjusted net income | | | 9,919,000 | | | | 7,100,000 | | | | 32,858,000 | | | | 21,581,000 | |
| Non-GAAP adjusted diluted earnings per share (EPS) | | | 0.53 | | | | 0.45 | | | | 1.87 | | | | 1.41 | |
| Non-GAAP adjusted gross margin | | | 31.1 | % | | | 31.2 | % | | | 31.5 | % | | | 31.9 | % |
| Non-GAAP adjusted EBITDA | | | 20,066,000 | | | | 15,468,000 | | | | 69,453,000 | | | | 52,947,000 | |
Note: Results for the year ended March 31, 2015 include recognition of net revenue related to cores of $12,625,000, which was previously deferred (which has a $3,892,000 gross profit and EBITDA impact).
| Reconciliation of Non-GAAP Financial Measures | Exhibit 2 |
| | | Three Months Ended March 31, | | | Years Ended March 31, | |
| | | 2015 | | | 2014 | | | 2015 | | | 2014 | |
| Net sales, as reported | | $ | 83,904,000 | | | $ | 76,682,000 | | | $ | 301,711,000 | | | $ | 258,669,000 | |
| Adjustments: | | | | | | | | | | | | | | | | |
| Net sales | | | | | | | | | | | | | | | | |
| Customer allowance - cost of new business | | | 628,000 | | | | - | | | | 1,070,000 | | | | 125,000 | |
| Inventory purchases, returns and stock adjustment accruals related to new product lines and new business | | | 6,367,000 | | | | - | | | | 17,967,000 | | | | 1,287,000 | |
| Adjusted net sales | | $ | 90,899,000 | | | $ | 76,682,000 | | | $ | 320,748,000 | | | $ | 260,081,000 | |
Note: Results for the year ended March 31, 2015 include recognition of net revenue related to cores of $12,625,000, which was previously deferred.
| Reconciliation of Non-GAAP Financial Measures | Exhibit 3 |
| | | Three Months Ended March 31, | |
| | | 2015 | | | 2014 | |
| | | $ | | | Per Diluted Share | | | $ | | | Per Diluted Share | |
| GAAP net income, as reported | | $ | 3,102,000 | | | $ | 0.16 | | | $ | 3,067,000 | | | $ | 0.19 | |
| Adjustments: | | | | | | | | | | | | | | | | |
| Net sales | | | | | | | | | | | | | | | | |
| Customer allowance - cost of new business | | | 628,000 | | | $ | 0.03 | | | | | | | | | |
| Inventory purchases, returns and stock adjustment accruals related to new product lines and new business | | | 6,367,000 | | | $ | 0.34 | | | | | | | | | |
| Cost of goods sold | | | | | | | | | | | | | | | | |
| Lower of cost or market revaluation - cores on customers' shelves and other costs | | | 345,000 | | | $ | 0.02 | | | | | | | | | |
| Operating expenses | | | | | | | | | | | | | | | | |
| Disc. subsidiaries legal, severance and other costs | | | 2,967,000 | | | $ | 0.16 | | | | 670,000 | | | $ | 0.04 | |
| Share-based and certain cash incentive compensation expenses (a) | | | 2,514,000 | | | $ | 0.13 | | | | 947,000 | | | $ | 0.06 | |
| Mark-to-market losses (gains) | | | (1,772,000 | ) | | $ | (0.09 | ) | | | 3,645,000 | | | $ | 0.23 | |
| Tax effected at 39% tax rate (b) | | | (4,232,000 | ) | | $ | (0.22 | ) | | | (1,229,000 | ) | | $ | (0.08 | ) |
| Adjusted net income | | $ | 9,919,000 | | | $ | 0.53 | | | $ | 7,100,000 | | | $ | 0.45 | |
(a) Includes cash payments reflecting incentive compensation expense of $2,002,000 and $528,000 in the three months ended March 31, 2015 and 2014, respectively, that were made in lieu of granting restricted stock in 2013, which is non-recurring
(b) Tax effect at 39% of the income from continuing operations before income tax expense (reflecting the adjustments)
| Reconciliation of Non-GAAP Financial Measures | Exhibit 4 |
| | | Years Ended March 31, | |
| | | 2015 | | | 2014 | |
| | | $ | | | Per Diluted Share | | | $ | | | Per Diluted Share | |
| GAAP net income, as reported | | $ | 11,453,000 | | | $ | 0.65 | | | $ | 107,359,000 | | | $ | 7.01 | |
| Adjustments: | | | | | | | | | | | | | | | | |
| Income from discontinued operations | | | - | | | | | | | | (100,877,000 | ) | | $ | (6.59 | ) |
| Net sales | | | | | | | | | | | | | | | | |
| Customer allowance - cost of new business | | | 1,070,000 | | | $ | 0.06 | | | | 125,000 | | | $ | 0.01 | |
| Inventory purchases, returns and stock adjustment accruals related to new product lines and new business | | | 17,967,000 | | | $ | 1.02 | | | | 1,287,000 | | | $ | 0.08 | |
| Cost of goods sold | | | | | | | | | | | | | | | | |
| New product line start-up costs | | | 189,000 | | | $ | 0.01 | | | | | | | | | |
| Lower of cost or market revaluation - cores on customers' shelves and other costs | | | 1,378,000 | | | $ | 0.08 | | | | | | | | | |
| Cost of returns and stock adjustment accruals related to new product lines and new business | | | (983,000 | ) | | $ | (0.06 | ) | | | (354,000 | ) | | $ | (0.02 | ) |
| Discontinued subsidiaries costs | | | - | | | | | | | | 325,000 | | | $ | 0.02 | |
| Operating expenses | | | | | | | | | | | | | | | | |
| Disc. subsidiaries legal, severance and other costs | | | 8,020,000 | | | $ | 0.46 | | | | 4,056,000 | | | | 0.26 | |
| Share-based and certain cash incentive compensation expenses (a) | | | 4,211,000 | | | $ | 0.24 | | | | 1,497,000 | | | $ | 0.10 | |
| Mark-to-market losses (gains) | | | 1,493,000 | | | $ | 0.08 | | | | 11,069,000 | | | $ | 0.72 | |
| Disc. subsidiaries sales and marketing expenses | | | - | | | | | | | | 21,000 | | | $ | 0.001 | |
| Consulting fees, research and development | | | - | | | | | | | | 75,000 | | | $ | 0.005 | |
| Interest | | | | | | | | | | | | | | | | |
| Disc. subsidiaries supplier revolving credit line interest and write-off of prior deferred loan fees | | | - | | | | | | | | 3,462,000 | | | $ | 0.23 | |
| Tax effected at 39% tax rate (b) | | | (11,940,000 | ) | | $ | (0.68 | ) | | | (6,464,000 | ) | | $ | (0.42 | ) |
| Adjusted net income | | $ | 32,858,000 | | | $ | 1.87 | | | $ | 21,581,000 | | | $ | 1.41 | |
(a) Includes cash payments reflecting incentive compensation expense of $2,002,000 and $528,000 in the three months ended March 31, 2015 and 2014, respectively, that were made in lieu of granting restricted stock in 2013, which is non-recurring
(b) Tax effect at 39% of the income from continuing operations before income tax expense (reflecting the adjustments)
Note: Results for the year ended March 31, 2015 include recognition of net revenue related to cores of $12,625,000, which was previously deferred (which has a $0.12 earnings per share impact).
| Reconciliation of Non-GAAP Financial Measures | Exhibit 5 |
| | | Three Months Ended March 31, | |
| | | 2015 | | | 2014 | |
| | | $ | | | Gross Margin | | | $ | | | Gross Margin | |
| GAAP gross profit, as reported | | $ | 20,909,000 | | | | 24.9 | % | | $ | 23,921,000 | | | | 31.2 | % |
| Adjustments: | | | | | | | | | | | | | | | | |
| Net sales | | | | | | | | | | | | | | | | |
| Customer allowance - cost of new business | | | 628,000 | | | | | | | | | | | | | |
| Inventory purchases, returns and stock adjustment accruals related to new product lines and new business | | | 6,367,000 | | | | | | | | | | | | | |
| Cost of goods sold | | | | | | | | | | | | | | | | |
| Lower of cost or market revaluation - cores on customers' shelves and other costs | | | 345,000 | | | | | | | | | | | | | |
| Total adjustments | | | 7,340,000 | | | | 6.2 | % | | | - | | | | | |
| Adjusted gross profit | | $ | 28,249,000 | | | | 31.1 | % | | $ | 23,921,000 | | | | 31.2 | % |
| Reconciliation of Non-GAAP Financial Measures | Exhibit 6 |
| | | Years Ended March 31, | |
| | | 2015 | | | 2014 | |
| | | $ | | | Gross Margin | | | $ | | | Gross Margin | |
| GAAP gross profit, as reported | | $ | 81,573,000 | | | | 27.0 | % | | $ | 81,566,000 | | | | 31.5 | % |
| Adjustments: | | | | | | | | | | | | | | | | |
| Net sales | | | | | | | | | | | | | | | | |
| Customer allowance - cost of new business | | | 1,070,000 | | | | | | | | 125,000 | | | | | |
| Inventory purchases, returns and stock adjustment accruals related to new product lines and new business | | | 17,967,000 | | | | | | | | 1,287,000 | | | | | |
| Cost of goods sold | | | | | | | | | | | | | | | | |
| New product line start-up costs | | | 189,000 | | | | | | | | | | | | | |
| Lower of cost or market revaluation - cores on customers' shelves and other costs | | | 1,378,000 | | | | | | | | | | | | | |
| Cost of returns and stock adjustment accruals related to new product lines and new business | | | (983,000 | ) | | | | | | | (354,000 | ) | | | | |
| Discontinued subsidiaries costs | | | - | | | | | | | | 325,000 | | | | | |
| Total adjustments | | | 19,621,000 | | | | 4.5 | % | | | 1,383,000 | | | | 0.4 | % |
| Adjusted gross profit | | $ | 101,194,000 | | | | 31.5 | % | | $ | 82,949,000 | | | | 31.9 | % |
Note: Results for the year ended March 31, 2015 include recognition of net revenue related to cores of $12,625,000, which was previously deferred (which has a $3,892,000 gross profit impact and 0.0% gross margin impact).
| Reconciliation of Non-GAAP Financial Measures | Exhibit 7 |
| | | Three Months Ended March 31, | | | Year Ended March 31, | |
| | | 2015 | | | 2014 | | | 2015 | | | 2014 | |
| GAAP net income, as reported | | $ | 3,102,000 | | | $ | 3,067,000 | | | $ | 11,453,000 | | | $ | 107,359,000 | |
| Income from discontinued operations | | | - | | | | | | | | | | | | (100,877,000 | ) |
| Interest expense, net | | | 3,148,000 | | | | 3,177,000 | | | | 13,065,000 | | | | 18,289,000 | |
| Income tax expense | | | 2,110,000 | | | | 3,311,000 | | | | 9,068,000 | | | | 7,333,000 | |
| Depreciation and amortization | | | 657,000 | | | | 651,000 | | | | 2,522,000 | | | | 2,742,000 | |
| EBITDA, as reported | | $ | 9,017,000 | | | $ | 10,206,000 | | | $ | 36,108,000 | | | $ | 34,846,000 | |
| | | | | | | | | | | | | | | | | |
| Adjustments: | | | | | | | | | | | | | | | | |
| Net sales | | | | | | | | | | | | | | | | |
| Customer allowance - cost of new business | | | 628,000 | | | | | | | | 1,070,000 | | | | 125,000 | |
| Inventory purchases, returns and stock adjustment accruals related to new product lines and new business | | | 6,367,000 | | | | | | | | 17,967,000 | | | | 1,287,000 | |
| Cost of goods sold | | | | | | | | | | | | | | | | |
| New product line start-up costs | | | | | | | | | | | 189,000 | | | | | |
| Lower of cost or market revaluation - cores on customers' shelves and other costs | | | 345,000 | | | | | | | | 1,378,000 | | | | | |
| Cost of returns and stock adjustment accruals related to new product lines and new business | | | | | | | | | | | (983,000 | ) | | | (354,000 | ) |
| Discontinued subsidiaries costs | | | - | | | | | | | | | | | | 325,000 | |
| Operating expenses | | | | | | | | | | | | | | | | |
| Disc. subsidiaries legal, severance and other costs | | | 2,967,000 | | | | 670,000 | | | | 8,020,000 | | | | 4,056,000 | |
| Share-based and certain cash incentive compensation expenses (a) | | | 2,514,000 | | | | 947,000 | | | | 4,211,000 | | | | 1,497,000 | |
| Mark-to-market losses (gains) | | | (1,772,000 | ) | | | 3,645,000 | | | | 1,493,000 | | | | 11,069,000 | |
| Disc. subsidiaries sales and marketing expenses | | | - | | | | | | | | | | | | 21,000 | |
| Consulting fees, research and development | | | - | | | | | | | | | | | | 75,000 | |
| Adjusted EBITDA | | $ | 20,066,000 | | | $ | 15,468,000 | | | $ | 69,453,000 | | | $ | 52,947,000 | |
(a) Includes cash payments reflecting incentive compensation expense of $2,002,000 and $528,000 in the three months ended March 31, 2015 and 2014, respectively, that were made in lieu of granting restricted stock in 2013, which is non-recurring
Note: Results for the year ended March 31, 2015 include recognition of net revenue related to cores of $12,625,000, which was previously deferred (which has a $3,892,000 EBITDA impact).
