MPAA - Earnings call transcript Q2 2018 | Motorcar Parts of America, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and welcome to the Motorcar Parts of America Fiscal 2018 Second Quarter Results Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Later we will conduct a question-and-answer session and instructions will follow at that time.

As a reminder today’s conference is being recorded. I’d now like to introduce your host for today’s conference Mr. Relations. Investor Maier, Gary ahead. go please Sir,

Gary Maier

Thank you. us call. everyone joining much. you our fiscal very for conference Thanks XXXX for Thank second quarter

Before provides the Chief The the turn Joffe, Securities we Financial press including Officer, Lee, a I of Act Litigation release. over XXXX safe statements, remind forward-looking Chief during of certain statement begin expectations and Selwyn everyone included me Such to on today’s of the statements for the company’s Chairman, harbor Officer; Private Executive call call. and developments let and beliefs made based concerning effects the course safe potential current David President harbor today’s forward-looking and are future Reform statements their and which There company’s these that may on forward-looking statements. company the can affecting obligation information, the to anticipated assurance various in undertakes be results statements result whether company. new of change a significant company company Actual and be or projected developments factors. events or The are based no forward-looking no and subject will those uncertainties, as of the publicly any future forward-looking those some by risks upon update of These revise statements, involve beyond otherwise. future from the to the control differ company. in

Joffe. with the I’d call filings over ongoing uncertainties that Selwyn of and begin various the of Securities the Commission. risks more please the a and these of business, refer discussion call to For to some detailed and to like company’s turn With the Exchange

Selwyn Joffe

us today. everyone you, thank joining Okay, I appreciate Gary.

performance sales even we morning, second widely to achieved bullish. to factors, Despite rates. highlighted inventory record however initiatives. impacted that sales with X% not the our disappointed we sales, approximately discussed this were factor quarter customer despite softness industry-wide remain due that stress certain press were by various As in earnings growth we for I though adversely to due want record was and our inline this reduction historical release

market gaining are products Our share.

are product new momentum. initiatives Our gaining

are for our expectations infrastructure physical growth and as human resources as Our are exceptional. ever. strong And accelerated

second strengthening historical our accelerated our have an in to rate year our and fiscal performance line more expect half this with at XXXX stronger for We of fiscal year. sales

gross beginning demand are sales at age to a statistics such by pace. automotive to and due higher recovering albeit purchasing parts given stronger. sales. It see adjusted a important were believe negatively and for of moderate our today’s is We parts in that of return momentum is continue affected overhead reduction nondiscretionary understand percentage driven as related a will vehicles, volume hard margins factors the the get absorption returns as and that to lower miles We to favorable

increases. sales expect improve margins volume We will as gross

of categories equipment industry. excluding product aftermarket current billion Our $X.X represent estimated diagnostic $XXX approximately automotive the billion U.S. test parts hard

a Diagnostic products next the a well growth services We years company been and well-recognized expands our market. in $X a aggressively a opportunity acquisition, for growth. D&V diagnostic positioned five sales client already from growth. revenue over believe and our complement should value-added testing that contributor We and fast be to overall are billion significant with our our Furthermore D&V growth market added, new Electronics growing opportunities lot growth our on are horizon. of has greatly the which recent global we potential see

affectively We product expansion pursue cost company the that exceptional competitive management are footprint a new based quality. on existing to product lines enables and and team to an sound to line have for maintain our global opportunities fortunate economics structure a and

an innovative important lines strategy. the technologies developing remains and Our state-of-the-art offering ongoing on company’s and companies product acquiring of focus component expanding and growth

starters both American outlets. benchtop a automotive starters believe testing These and the recognized and retail few are it’s million state-of-the-art is environment. the benchtop for that just alternators, manufacturing for We discussing in D&V. used testers a spending market parts in in alone It testing stop-start more this systems testers North systems. alternator exceeds $XXX I and technology morning worth minutes including diagnostics think leader

rotating applications to The business, addition the works technologies. related In D&V new to hand vehicles with and of in development equipment a hand for potential the and for diagnostic leader expanding also evolving electrical OE its testing respect technologies. electric manufacturing is company developing company in

technology the are and testing In more appeal addition, potential capabilities widespread some power lithium-ion it developed have utilized for for as source. has unique more that batteries battery should a as

look to our updated the equipment for by testing forward prospects on keeping progress. you excited and We’re

to our reiterate of those fundamentals. plan me new For you business our story let

are we existing our First, growing product lines.

customer launching are relationships. strong lines product we new our leveraging Second,

I we through industry stock too leading value-added daily get capital on to value to will we shareholder including Third, committed of our proprietary, acquisitions. customers potential specific. important and are And are not basis more buybacks fourth, deploy enhance services. to so be a our initiatives Many customer

build market in of product lines. to is initiative share first Our all our

In our one we lines. fact, and receive say new of product for every commitments continue pleased I’m each to to that business

is focus additional initiative launching to second on Our product lines.

great We this regard. in progress are making

opportunities is deploy acquisitions strategic bolt-ons accretively. more our whether a they significant capital Our Alternatives continue to to size. and stock repurchase and include plan program We pursue or are initiative stock third buybacks. in acquisition small

XX% further XX-months return deployed trailing of the approximately pretax capital effectively remain our plans. we capital on execute have deploying we successfully and as for committed invested capital We rate at a to

strides. our worth of been to important continue have to repurchased we shares $X.X respect approximately have We to make date. customer our With more fourth initiative million to great

supporting an industry us emphasized the this distinguishes I’ve our customers As are leader industry. in and clearly in we before

evolving areas cataloguing and of category other resources support customer have functions. We education, management, many in technology, data the committed management,

establishing I areas noted now. customers. of in up these commitments, in gaining investments new Our business as our with have some are which quarter, increased are business and instrumental In last summary, we long-term significant ramping relationships

XX% sales electrical remain we fronts. is on level we hold appropriate an of rotating which supplier share We generally and will approximately an represents the at level. of line both the estimated $X.X consumer product new optimistic consumer acquisitions The continue to level, market XX% the at pursue and opportunities which market

We continue all entered million $XXX July of we estimated we and to a entered level, market an market market sales June There into Brake which of master million others. growth currently for in have $XXX share. of is is XXXX. which at estimated XX% this in wheel XXXX consumer which we category the hub, an in cylinder expect

the this Turbochargers We be year, in aftermarket This share about a have currently in power is we in utilized category. which in a years is boosters, market in estimated a million X% still mainstream $XXX the technology last we States market domestic hold to X% is is and an applications. market Break added approximately more share and emerging the is became gas this Europe and diesel its both infancy. market. ago United in $XXX ten market. in than and million Turbochargers

Our still OE, consumption. in to estimated turbocharger Approximately for fuel U.S. market bodes more vehicles to perspective, have future growth. way provide with turbocharger be early nice well technology, the billion. of for the turbochargers. while add U.S. than Turbochargers an solution to XX% power expectations year which vehicles turbochargers, have the new This approximately enhancing of is small-engine European vehicles was $X opportunity each X% including of a passenger market. sold significant Today the adopter of in

in to power agricultural This replacement. of used there’s heavy-duty provide In addition, opportunity a product for and to for industrial, customer value-added lines. represents these of of leverage for sports. to a growth continue numerous Clearly, all value. in our significant our We footprint enables of are categories shareholder applications, see lot existing America excellent us opportunities potential which and enhance turbochargers aftermarket including further in Parts us all services, Motorcar

are continue to the grow and All of ages. car population as expands our to categories expected

the factors during presentation, the the to age website. as next for of benefit it While been various age that million influence product there you replacement the a of will rates X replacement will average of categories. vehicles, the that XXX Slide in is quarters, lines average increase. refer approximately each vehicles XX our short-term on years, growth are our vehicles the Please which require XX-year-plus on on the analyze there case X, is company’s road last has will When our to the and in majority the to Demand may parts clear basis, XX as on X product three for existing investor categories. available year be the few

repair In demand. will that addition, vehicle increased drive believe the will replacement. miles We growth driven XX-year-plus part accelerates to continue continue and the of category

year, number more of parts. increase vehicles these resulting rates Also, category a sophisticated the continues subscribe in parts replacement. We question when. category for We a higher-priced parts contributions the the to to increased the of is XX-plus-year-old XX-plus-year cars theory failure as in repair grow, in significantly, vehicle; question includes and move each we there is anticipate whether of it the continued through for that a forward just cycle. aging is a it not the positive As

reverse. gains, believe have softness we we that Once beginning market the replenishment due While seen haven’t we achieved revenue softness. again, the commensurate share to the is gains to

bodes our business. future All for of well this and current

expectations, proud of believe and to share has that supply quality product our to DIY both gain Today, in share stores, in which We and allowed the to we are part customers more professional service our our XX,XXX us markets. our installer than we market the products categories. gain continue the levels exceed and continue in

as and segments both further results up more call has numerous for we our product the and questions. service now progress call on open the in detail, quality, we products. growing the to David made quarter the turn award-winning then an in fiscal and I’ll review offerings growth will second David? leverage continued provide expect to nondiscretionary then and coupled of I’ll the We that customer initiatives for with over update company

David Lee

our XXXX review I for noted, record reflecting, quarter. Selwyn. you, the fiscal the will as sales quarter, now second second highlights for financial Selwyn Thank

was quarter fiscal for more million to Net increased read the encourage filed $XXX.X this press $XXX.X net I quarter. with second later to for for $X.X detailed quarter The our electrical earnings XX-Q, year. $XX.X filed million sales adjusted including Adjusted reconciliation X.X% and prior from be $X.X with year assemblies XX, Net $XXX.X the X.X% which the to the master bearings net begin, $X.X $XXX.X million cylinders the prior million GAAP ago. and million Rotating non-GAAP quarter the prior from million the break to I sales September the will $XX.X $XX.X results, for second net second a hub sales for Before year million increase to from the today. compared increased XXXX, for for a morning $X.X of million from $XX.X financial release everyone were $X.X sales million net of measures, the for sales second respect to the sales the million year decreased second earlier. net million quarter of increased to to Wheel explanations X-K for due sales quarter million year. following. for second million

sales for $X Additionally, in began the prior turbochargers the with second profit $XX.X July year. combined million Gross compared million in of Electronics. year a connection sales earlier. earlier. a was brake year second quarter the was sales net $XXX,XXX the percentage compared with the million with for D&V this year second was testers with in as XX.X% for quarter XX.X% acquisition power for Tester $XX.X the and compared a of profit quarter net boosters, Gross

core finished absorption lower second standard each purchasing impacted customers’ sold charge realizable that revalued are of was sales, of of new is to a to and percentage lower of related business, cost lower further by cores prices, goods volume returns as cost. a at quarter, To recorded due quarter, shelves. explain, or overhead higher the margin gross noncash cores cost return standard goods the on lower was the of locations part customer costs to impacting net to the value of accruals and For

$XX.X was quarter, The for $XX.X $XXX.X of costs For gross share year million quarter. diluted absorption last by accounts in Income lower was adjustment higher a for second the current Depreciation million for as Adjusted with adjusted product income sales by value expense per operating compared $XXX.X Electronics. XX.X% related share sales $X.X Adjusted receivable goods our million Operating a ago. customer expense adjusted period and with Adjusted of the primarily the for earlier. $XX.X was percentage XX, average million months. sales $X.X net million borrowings. XX.X% offset compared million margin increase purchasing the second the period to quarter, prior increased second the And amortization outstanding cores adjusted $X.X to compared to with year and allowances well programs shelves. year. $X.XX for were stock million line mark-to-market impacted was income our was was net and by of quarter year million last Electronics was Adjusted Interest partially part $XXX,XXX previously. increased with of million million tax gross change are $XX.X year. was support the return a discount EBITDA $X.X for year due compared was compared gross the for adjusted was warrant $XXX.X million interest month quarter second million value-added adjusted expenses six compared for months. loss for ago. year use was returns administrative expense prior net period from impacted or compared year approximately rate for second million sales year second expense gross net the a year as a quarter for for $X.XX the customer second for compared prior Adjusted with year. the September for quarter. year share diluted decreased with for was for by $XX.X $XXX,XXX increased year per for earnings Total with million with compared $X.XX $X.XX million million $XX.X million expenses of net the million Adjusted six second and to in the the $X.XX net six were decrease with prior income the the realizable of of $XX.X profit $XX.X six in customer quarter. adjusted six lower prior $XX.X finished year the with and months for were D&V of new sales with start-up months quarter This Net with second profit the profit Adjusted I XXXX. diluted as $XX.X quarter. second or accruals for $X.X overhead quarter XXXX discuss results prior gains, $XX.X to million from and second the year of compared for that million and now and EBITDA new expenses Net $XXX.X $X.XX The compared compared diluted months net a $X.XX Net which last percentage the for $X $XX for year million six $X.X net D&V million $XX.X impacted the cost fiscal of quarter earnings service million, the share was prior the and six prior net initial was year impacted to business, fair impacting ago. sales quarter income $XX.X the share per million a per an million on compared the as liability. percentage last expenses was six million, million sales month second was diluted for $XX.X second compared earlier. mentioned income or the operating ended with net volume months the prior or as $X.XX $XX.X operating for the as share, million offset diluted will or for with XX% million per value the $X.X expenses the was compared a Adjusted year. per increase expenses. general for growth quarter $XX.X for by programs

trailing debt XX average XX, and XXXX, and basis. was pretax the September $XX.X resulting adjusted was month on million net invested $XXX.X million, of capital on balance return EBITDA in equity XX.X% a As a

on Current Our we September revolving of average XX, period. divide Net debt of to by months At plus calculating cash, balance in the adjusted XXXX, totaled $XXX $XX.X had is method million in term approximately borrowings income plus The and and payment, $X.X trailing and $XX.X various $XXX $XX $XXX operating Total company core of on an facility total of EBITDA outstanding million. quarter. of credit million million approximately and XX, in XX, at assets. X.X% in XX-month decrease increase $X.X bear resulting consisting million million X.XX%, million million our facility tax $XXX business, term ROIC of new XX, of $XX offset reflects assets and credit million. ended a million equity facility deposits, an X.X%. LIBOR liabilities million approximately in At the September debt million. three loan, operating bank in the long-term $XX.X Currently, prepaid net XXXX, MPA cash interest revolver activities payments during September loan was margin in million activities revolver XX-months inventory income the $XXX XXXX. XXXX, for with net $XX.X credit the the core an million $XX.X current cash in for loans had during at was of of used the at September approximately availability inventory cash the net locations currently under increase used a by approximately accrued

the During company XX,XXX quarter, also approximately the second shares repurchased $X.X totaling million.

repurchase has by repurchase XX, XXXX, $X.X million to remains million of September $X.X and utilized As the stock shares $XX program. Board repurchase authorized million of the under share the of Directors program been approved available

and in us warrant during $X second quarter, warrant the holder million. Additionally the exercised paid their full

was date of longer the million. $X.X the of result value fair outstanding, exercise and the is warrant no the a on warrant As the exercise,

to the long-term please components through time, At in as detail For like refer of XXXX. the press X Exhibits $XXX.X million I this morning’s core this sheet September earnings financial release. X the on measures, balance our reconciliation inventory to would of XX, of non-GAAP

receive company’s goods at of cores sum it less As locations. of only know core the $X.X portion goods quite customers’ to at the feedback locations $XX.X to the returned million received the these core customer at $XX.X company Selwyn. company categories long-term of finished and portion million; turn viewed core who locations $XXX.X company’s a of now program, cores represents positive. excess core of used cores used customers goods the have represent at of held finished and we long-term of expected core that is be cores of many categories, or the will disclosed exchange get of inventory, a by cores facilities in you held core finished of will when used by produced continue million; haven’t noted for the million the expected a if core in that the and non-return the at company’s recently ensure XX% website directly result the customer of $XX.X totaling but encourage does four million, million of have to allowance video a be of the the we inventory Of held discussing the either to cores consists of or that remanufactured core returned. the those of remanufactured on and million, cores customers four the company’s tracked directly company’s of manage returned to manages customer call should core including of or remanufactured million; The company’s and the not to back $XXX.X by dynamics which $XX.X look. be balance. used million a be of of $XXX $XX.X We the be filings, inventory balance back obsolete total million and for video that facilities our take as since million XX% of we remaining company The I $XX.X $XX.X payment the or posting

Selwyn Joffe

David. you, Thank

our multiproduct forward look challenges business despite excited short-term the We’re industry and outlook the growth in to about success. continued line

returns This $XXX should new rate as winter sales year significant anticipated Based that such, quarter. are of adjusted we the and to XX, related this million I in sales of growth during to and our X.X%, million December natural our for revising our As for XXXX. annual such X.X% past to end our fiscal change quarter. disasters, XXXX run at factors a as revenue represents this $XXX year business sales guidance gain between exceed the accrual experienced net stated for ramping excluding the third have ending on guided current impact we for million And $X.X the adjustments is earlier, a year negative due the mild up March XXXX. in stock weather

for summary, of Our between remains for adjusted on road cars reflecting driven than in $XX an there gross miles than XX.X% with ever, margin relatively D&V more updated additional the of we operating total operating customer million the remains gasoline expenses, products million Electronics. is have and target best ever stronger estimate XX.X% our are the expenses In the inexpensive, base before, industry.

product We in introduce continue existing expect gain lines new to to and parts to business. share our hard in lines product

we exciting is position our business, tester opportunities addition, financial further to growth for have grow strong, our accretive remains In our capacity excellent. and new

open thank continue sell all on and provide. America. see the line the is their for As up you as exceptional for all of I your in pride for products that and Parts our to exciting questions. in to commitment execute we to customer-centric always, the And I interest focus push energy we The now customer service of plans. our to for and their team want our we’ll services team further of thank we Motorcar members

Operator

question comes Steve line from Our with of Instructions] Dyer Craig-Hallum. the [Operator first

Your now line is open.

Steve Dyer

morning. Good Thanks.

Selwyn Joffe

Thanks, David.

Steve Dyer

kind And wondering said, you of thing? sort as customers. that’s else the if You’d at thing and had of term somebody industry that’s see sort to talked of the I’m as a one-quarter if starting that about, inventory improve, being in in one a reduction or your there of quarter, longer

Selwyn Joffe

tell think, any I is get up. rates our don’t that granular any there return to want believe of year in is our to trying I pretty hurt up Steve, of we customers specifically, through to really the end little mean, on refer of really think range and you that into that discussion our fiscal our And would ramped have going quarter. will we and down customers. not to we we come volume any general, We’re of our go the margins the and down significantly, so gross I to thing a also to margins. our I anticipating upper ramped important we bit expect that guidance of a inventory. gross strong our this return

Steve Dyer

Got how it’s it. as ramps, before a have – you the maybe ramp at about that margins you look bigger you’ve space. And just And then revenue then but what business, on customer, the we think enter should like tester of that there? in obviously had order scale? sort hand big very well a the early, typically, a Do

David Lee

that at the think will XX% impact we think think quarters. – negatively that, I operating And I don’t that margins our margins margins, are normal on Yeah, of all. about to I operating XX%,

profile going think I margin from tester same, the business. we’re to the same be

terms the of difficult initiatives see more growth. higher. growth expect them of have XX% year, that excellent well but a next they terms in maybe little and fiscal certainly their from on we In should progress above to made rates predict, And revenue I ramp, it’s

So completion-type it’s business. a percentage of

later. operating so up then don’t and the expenses have So they these, disproportioned revenue, as orders, for a revenue they new ramp recognize little you recognition you you construct get

first had certainly, least. at is their profile, quantify I But base, from they’re and mean, to growth we’ve overhang positive. year, that, off not would And but an expenses little the from expectation revenue I’m at a least very XX% I of want that yet, I’m incurring. it I expecting I quite sure operating say, think, bit that now, in right So the

Steve Dyer

seen Yeah, understood okay. a run that we that’s number of Is you much is higher and sort lower of then maybe an and implies, with what’s make at around some years. have in guidance, implies of operating And wanted guidance taken combination to that? sort have than kind million, on, lastly, that been margin I $XX – it last in a rate kind and all gross sure the of margin that revenue right? driving of fairly And I than just of color OpEx correctly. – about then

Selwyn Joffe

Yeah, and you will coming onboard. maybe give new start got lot a then of can I with We’ve the more David color, the granular so detail. business

We in up our is the terms lines are up. we ramping Part curve as expertise We ahead product infrastructure are definitely of we launch support sure what appropriately make ramping of our to of lines. in product offer them. we

fiscal management our And there’s spend a that, so next going programs. of all already And to relates lot in – there’s to again, a growth fair think support our for that and amount of cataloging programs, of category and training and field our disproportionately see educational year I programs higher you’re our rate us.

for operating half our expenses everybody my – and is of skis I but important where that’s D&V, made operating think to our And of gone growth of on. And so then ahead have number. sort D&V understand on we’re – acquisition I’m the we it’s of that, little the that in a obviously, gross

about it’s XX:XX. So

granular if – you granular. don’t want more give I if could more get David, you to So know

David Lee

operating fiscal guidance did about we’re about the giving for $XX million $XX through so quarter. six so $XX Yes, first the million expenses per months back about is that We for six million XXXX. $XX the would million months, or imply

Selwyn Joffe

now wanted I XXX,XXX and to the were possession our also just building, freights Mexico there and thing our out is recently other of – we’re a and in process the consolidating one foot FF&E think of have it, new got that New point capacity square we I And we in – Yeah, we there. doing have so of logistics.

that, and the there we to logistics that be ability of amount our flexibility whole importantly, And freight get how in with complete much savings able lines. more between are I fair as order so, in And consolidate customers believe be to product going our would to as they model. have a multiple

Steve Dyer

Thank you.

Operator

Our next of with question Scott King. the comes CL Stember line from

is Your open. now line

Scott Stember

afternoon. Good

Selwyn Joffe

Scott. Hi,

Scott Stember

the about at and towards moderately that Selwyn, selling Or from they’re modestly are rates taking guess, talking POS sales Are you I levels. your you the turning talked now? or just whether sell-through what back talking to right everything, customers normalized monitoring? about, you’re you we

Selwyn Joffe

to at Again, to communicate comment I us, in it’s sales That’s up that. want think, and all think I decide both, Also, customers already and I on But seen optimistic general looking elements And really sales. with it our sales. involves great am the to their we’ve Scott. we’re on our increasing. for just can’t question. how sort they of POS are that I

Scott Stember

a right, significant quarters and of sounds as there into as weighting new year. quarter. the products between maybe evenly weighting of that? this Can comment on market the fourth a more these All a as half – you back bit dispersed of far if it’s to the of It last was new year, two some little in coming products the

Selwyn Joffe

this is it’s mean, Well, new the that of so, growth – we the back revenue, new all in the product in I organic not guidance. even organic, don’t included products. with half – But year all include and that’s

the you tell this products. our you, by again, So is the to want product on mean, skis. I get new I on status. But we’re of working year given we based would organic And be revenue. our don’t right don’t expect now I in new guidance affected we’ve to focus ahead continuously

share market picked have up We commitments.

our We haven’t of in D&V. started all, but shipping one single including every so categories,

not be by the we’re that back story. I in to I mean, about mean, part back half growth. And if that. product the share that’s excited we’re new But seeing add that’ll every increased of value the market products we’re then replenishments, increased more So that growth forecasting line. come, half reason

Scott Stember

for bottom of these you quarter a the at quarter? starting more you for is the of growth earnings, talked all talk in quarter least are a line to third we can account for which factors the – taking just that Or this of resumption expectations, when guys growth about about right, All earnings talk event? about – fourth into

Selwyn Joffe

is Well, the I think better be sequentially. than second quarter to third quarter going

more and this lot certainly, And up well, unfortunately, And have what it’s we going market, us, to call, year. being expect more initiatives company. in return up. David in been our as it in big this you our see and we weather share met I in feel as the – and this hopefully, to as fiscal had regardless moving new I have been. I of then I’m ever like status. soft probably of prepared we’ve quarter. think normalized see will But fourth weather, I margins a think and And that A fourth would we this get robust. in make outlook next sure the quarter into our a the CEO And with but went you’re tell I a team revenue in accurately. So I camouflaged. of of initiatives growth as we’ll is our as as and at through the – been do it’s company, so building have second lot brings for quarter, building quarter But a think team both I a and sat saying to growth sequential market to the I’m good the the we looking mean,

Scott Stember

update where last you Got it. on will expense an think interest And give be for you year? David, question. just the can

David Lee

sales, the at so a percentage the as in little right, look quarter second All up for you percentage that will if a bit. go interest back of half, the expense

a interest but We’re increase. it little proportionately seeing bit, rate increase will

Scott Stember

Thanks all taking questions guys. my Thant’s Okay, have. got I for it.

Selwyn Joffe

you. Thank

David Lee

Thank you.

Operator

comes line Our of next the Chris Riley. Van question Horn B. with from

Your line is now open.

Chris Van Horn

taking my Good call. morning guys. Thanks for

Selwyn Joffe

Thanks, Chris.

Chris Van Horn

of you’re What’s all? a it gaining that? want dropping of deeper and competitors seeing are really bit more gains to driving just it price? quality? Is to into just share get color. out? I dig little hope How some the Are Is Combination little you share? market the a

Selwyn Joffe

too of think for But statement we get mean, a me I to that. we as business. factors boil down reliable granular service on And I levels. win you lot industry-leading backbone, customers why, out sort to are us, to we we think obviously, of, it send customer a to think there’s competitive of support our if which I have It’s great are one I has enabled us trust product. hard that proud and

when think some that that’s competitive customers looking so granular And what advantages. the And you we I for. combine together, all have are

to infrastructure is ready I think absorb. our

to of We capacity have plenty sell.

significantly. question we’re bringing ready we business pocket board, capacity capacity a on mean, I I to we the can And with new the our that’s can to the with grow are So been that The this want our I in good I I’m projects question. we’ve more don’t taking going – we’re we grow, able further side mean, in we And the to probably not that to good know. is that. and capable take probably it. on. think plenty to the historically to a scale of of to question business, willing think position on don’t are a not that I big and we have we rest anything get But we returns others even And it, or continue perhaps to than But not scale capability sure. that know get. of for have customers. scale

Chris Van Horn

boosters. there, to from and complementary you for Thanks think you we think for complementing best to the look for you’re How the you cylinders about about do opportunity the just do definitely about – you what good. growth think color. When you’ve your products product like, portfolio? Okay, do opportunity went for when when going add? How expansion line or you done,

Selwyn Joffe

think two Well, D&V, I just that the growth based filtering approach. that growth opportunities. our the think some then existing look do technology. the technology. of into fold part applications that in and is technology we in of that technology And customer certainly, to electric dynamics engine capability there’s be but And that generator applications, driven of I and legacy we has that testing what – and going had. vehicle ongoing We hard market statistics think lot applications some busy – opportunities that’s we the hybrid that we we’ve see in – starter a on and which or business, mean, and a – to there relate we combustion are at parts, belt we out there’s prong electric hybrid electric can even

matrix of invested day, don’t on capital. end not all of it’s businesses are our to So looking of And at that the into targeted ratios above. return the go any the a we

make the but does Are end in our at So there we it the Is be not least, can to – going stock opportunity? strategic is last that’s mean, it? sense? the day, capable of is, there? capital the filter ultimate things. And on and return I doing of invest market other Otherwise, we

Chris Van Horn

go range can Okay, then the that if don��t puts guidance, the just takes we into, you of great. the if into me, – and like, finally And see wanted guidance, to some get that mind. for

Selwyn Joffe

Yes.

be just growth and know – that to within which with the to a guidance we the and than that know disproportionate I we big So softer months think the hoped – But top it bit. a the six going see first have reduce we to gives again, to I mean, have then much back resurrect certainly amount share, we we it when level you’re it the replenishment thing, heartburn feel of is, me we and level our bigger lower comes were us. little itself had of

stand we’re that the with convinced most I’m products will coming have people may We to on we – there’s are on these the see own referring of failure one replenishment the statistics, on them. are plank. at the even it. I may not we And these been growth the not guarantee our end, out the period we’re we’re down started see the some in that on to rates. periodically moderate short we low I’m – – not categories that convinced, to coming And statistics again, no regardless throwing business. get firmly announce probably to our But point, the our this population, going we the these is statistics neck car through them, from increase look we’ll an we’re rates it’s base products us, us I going and of organic and so in again, see lie I I on that mean, just just When to industry forward that by these vehicle. – are firmly carpool, but you’re something saw age failing But And convinced out that’s And people at feet. XX happened to years weather going announce all. in now. stop what that at agree great industry. And cars are I to new growing, people ago at their time and our I’ve referring And assessing and at we putting very conservative. of being a growth replenishment. mean, I I’m many or first of line, new products. the mean, don’t right we’re think

a the rambling to wanted I little make for got sure give flavor. you Sorry – bit, but you

Chris Van Horn

Yes, that’s great. you, Thank the very for much time.

Selwyn Joffe

Thank you.

Operator

from comes line with of Koranda question Matt next Our Instructions] [Operator Roth Partners. the Capital

open. now is line Your

Brad Noss

this guys, Noss for Matt. Hi Brad is on

Selwyn Joffe

Hi, Brad.

Brad Noss

due lower more start into to a underlying lower sustained guide it with But on new your business it’s industry based revenue wanted dynamics. the of seems just like a of at slower that I play does guidance. ramp-up to And commentary, all?

Selwyn Joffe

are cash would us we it there’s reverse It’s there’s inventory, that’s But of will ready why ramp some to based itself ready you yes, into we But early. it’s were on not slower slower in to that are able a orders but in going which – being ramp, again, this be. well, slower the than roll. a see much not do because coming use they out. of we to thought And

Brad Noss

gross then cost that absorption to between Okay, just return And volumes? this just the you quarter, fixed the saw versus lower accruals of that’s impacts help just, helpful. quantify would you regards able on like, in of margin kind to sort pressure be the

Selwyn Joffe

again, – get structure don’t know it can and But growth think I that give for Yes. we is geared volume anticipate. if that I I mean, that our granular. we

a allocate in played they of replenishment, have And you And your that don��t part so out certainly product are returns overhead the there units the the volume so affects the the market big whether and that you that lower have. has to, if number it. purchasing then

through starting chain think general in best whether throughout way so there’s are And initiatives And mature to that or I I will pretty the think, – have going that sales. And completely inventory the my And sales see are come but increased to future. think POS level your is those describe I down, in supply way going I think of initiatives over, the again, the opportunity think to certain they’re a in. are maybe mean, I do up belief it. their that is I seen the don’t near adjustment minimizing. customers returns are for it’s to

Brad Noss

of new margins in some mean, that? just couple mix And perspective I been like or that’s has the business any just Okay. based the weighed of a then there anything on margins quarters, past on from

Selwyn Joffe

No.

margin adjusted the We really relating – the I I that’s the returns. business mean, the are new is and strictly for number. in business. big up to think the the of set the fundamentals the some well as relating accruals volume strictly is pressure I that same. It’s our drive. mean, big

any revenue So anytime from have upfront come a up we start we set to expenses on that before got take to recognize warranty business, And accrual. those you business.

normal higher our the reduction but absorption. sales my early clearly my right overhead it’s our – and, now instinct this continue more the And it’s our and out, – hopefully a the return and within most but within higher now at right now very – adjusted but because because So, that mean, – but look I guidance at above we’ve show part and some should reverse the higher sales this and statistic it’s with that quarter, again, an in levels the instinct but guidance that, of the guidance, at to really and that I over that, still within out starting for of the on. rate inventory quarter

Brad Noss

be just then you half you’ll be second believe better able better just that, or margin regards to can in second expand of for so margins year, production to the should return Okay. for profile that you’re activity a think of you to what on in half? far get exactly you the leads And terms – there confidence that seeing the that in this customer

Selwyn Joffe

can we’re back and seeing mean, Well, that purchases we’ve I tell I turned back turned yes. you, we’ve demand, on. on. What

we’ve we’ve in. coming production that know not be of on, product turned XXX% we’ve been, So it we the there’ll on. turned volume back where ramped And it’s to more back but up, and

for we’ve so out you lowered six right And But we to at we’re next the than years years lot for months, back we’re I going guidance look us, but mean, if more X the need cautious. got product now. again, or our a X.X

So ramping up. we’re back

Brad Noss

annualized Okay, is the of just just more I perfect. one sort in to figure rotating for the half, ramp what And think million in believe to second here there. business how and on about then But more second that me. just I regards give think half? in Can growth new color that the the the on $XX implies you ramps some for us rotating electrical electrical

Selwyn Joffe

Yes. as And again, again now. that’s not ramp an expectation, reasonable is example, to a it’s think hard million which beginning but $XX to quantify using it certainly mean, I I what is. But

– we shipping, again, we picked have have and where share. So up multiple we’re customers we

not but the and board. electrical it’s rotating in So across only shipping

Brad Noss

Okay.

you And that almost be would Or a it ramped be think this should still stronger fully would quarter? it QX? so

Selwyn Joffe

do have – this business that certain we ramped, to be It’s – a And quarter, going all customers the I we think ordering I patterns just of the when it’s think in we’ll mean, at question we’re the of get. we I fully are – to ready end these yes. ramp. that

the of we’re quarter. will that end So – it convinced the but by

Brad Noss

queue. in Okay, thanks guys I’ll step back

Selwyn Joffe

Thank you.

Operator

Joffe like Instructions] Mr. to no further back I’d remarks. in queue [Operator the at showing any time. to this for closing I’m call turn questions

Selwyn Joffe

go we February joining Thank us call. And returning support, volume you call we’re to the be going look look to XXXX our and to forward at for and we speaking the for that in, in much. we hopefully, again we third in quarter conferences and various thank We forward We everybody’s you you fiscal Thank when very you. to road. down you host everybody, to appreciate thank continued the again, interim. the as

Operator

you This now and your Everyone, day. may Ladies today’s in a and program, the disconnect. great thank conference. for have gentlemen, participation you concludes

Motorcar Parts of America (MPAA) 9 Nov 172018 Q2 Earnings call transcript