MPAA - Earnings call transcript Q3 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 Third Quarter Results Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Gary Maier, Investor Relations. Sir, you may begin.

Gary Maier

Amanda. you, Thank for everyone, for call the Thank joining morning. this you, us

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

Exchange would like of it call his various with uncertainties, refer over the remarks. the I Selwyn more I and filings detailed and now for discussion and Securities to you For of some begin turn risks these a to the to Commission.

Selwyn Joffe

our the us apologize outlook assure way a quarter Clearly, a for Thank I today. business performance. third our appreciate little for we the quarter begin you, for joining of the sales. regarding everyone bit and in past pickup I no quarter indications details October, early a diminishes this this year. next like of you, and upfront. very In our disappointed some our and this fourth in were in our fiscal there But the I'd Gary. clear dynamics of in I that were quarter. to of month optimism of so current congestion, Got in of by discussing November, --

public a by levels. last Some for also my made through growth This was may one Unfortunately, our comments made the in which the in sales quarter. I quarter our third was contributed recently of optimism large decline of you lowest significant recall December, in presentation after mid-November, regarding to sales customers. dip in highlighted there demand industry

resulting expected that initiatives orders would Thus, The we of a quarter, replenishment second we preceding X%. Due November into million in compared addition, the for for orders as In the the March impact year, new today's overhead deferred cuts in in ending $XXX we XXXX. these inventory approximately guidance current gross did. earlier sales negative are reduced net fourth were to adjusted consequently was in on of provided and the effect than our shipments quarter X%, press in margin, decline quarter. to production this X% by a million XX, factors, with approximately for Consequently, December, for reduction between quarter revising quarter. the the particular end $XXX December customer release they sales third absorption third and and production

XX.X%. to target Our adjusted XX.X% remains gross between margin

be revenues to these end the expect higher We return. margins at as

growth are acquisition our reflective initiatives. We expense D&V annual estimate continued updating operating of $XX million, to and

fourth fourth to have be the strong quarter. a already received shipment the orders and Fortunately, quarter reversing be fiscal for the we the in softness should record, appears in sales given

replenishment sales we the January harsher Although compared are quarter, approximately January now is which are is encouraging the current were winter, This year experiencing or not up third XX% for levels the our by add to period. particularly quarter double-digit projected with fourth should since quarter. increase January percent reorders this Consequently, our momentum. production a prior full a to from

business As a concur market to of XXXX we up important, that the strong industry-leading to electrical ramping general in a industry our is result, indications rotating across and to our Equally we especially year the The all lines, continue should for us category. product volumes. with expected gain be industry. close new share

our increase if remains stated end be XX.X% guidance product for margin on I to production for anticipated increase I as expectations which As And gross levels should again, by the gross improvement. expect mix this stated approximately previously, well as sales margin bodes and our which upper before, said, XX% between quarter, and materialize. XX.X%, we

move that for firstly, also we capital additional from expenses a return on sales secondly, result XX%, acquisition; lines, our replenishment continued plans SG&A reasons, think. our two XX% for as incurred product are existing We aggressive diagnostic new and primarily believe move our including to pretax should XX.X% order up levels SG&A return our is to growth current we invested of should realized and D&V as -- due products. business

be a to infrastructure we and products In that will best-in-class to addition, appropriate continue superior continue with to new roll out we the with commensurate support. products ensure

These for Mexican our opportunities recently opportunities more a and in a and expanded growth, vehicle our as structure. and electric markets. new with with We allowing we Torrance in the particular, custom initiatives operations legacy Mexico cost which and building, location efficient our XXX,XXX as ordering our square-foot logistics existing In our streamline easier Malaysian operations for Technology accelerate will Center. well hybrid Chinese, support emerging are our will products scaling growth along

track, opportunities. are and we excited as Our plans on our about are ever as

statistics to the As related increase age a factors. miles reminder, vehicles, such today's driven of as automotive the car park be in continue average favorable, and

aging and park be the fact, this. reverse, XXXX sales during helped reduced from will starting the In car headwinds now are by XXXX to car new through

XX our to continue while You get can parts, short, presentation such demand website, Slide details. as stronger. weather, is In recovering more nondiscretionary mild by for negatively impacted prolonged see should our and factors investor being for on

current represent approximately -- the parts' diagnostic hard retail automotive Our level billion $X.X product product aftermarket. billion at the estimated categories, test $XXX of excluding equipment,

Our a diagnostic global sold separate $X are products have opportunity also significant billion which in market. worldwide,

We expanding lines, opportunities, months structure focused to pursue economics and are to line and in to effectively have product ahead. a fortunate and company lines enables global an our and announce team quality. on expect footprint the that cost We management existing product product sound companies and on developments to a new expansion based exciting acquiring the competitive remain exceptional maintain for

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

First, share we of lines them. in grow and our seek product to existing increase market each

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

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

in regard. We are progress making great this

to to deploy $XX repurchase in We shareholder our enhance approximately board authorization has million, our release, plan continue is accretively available. and initiative to program, currently million $XX as from stated $XX to increased value. with capital third Our stock today's press the million

bolt-ons, customers, opportunities, the an more in Additionally, in us whether we plan industry emphasized as to and we significant have Fourth, pursue supporting leader size. are they or our are industry. small in clearly before, I this acquisition distinguishes strategic

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

best In and the long-term establishing to in there gaining in cars increased up ever relationships and in customers. we Miles customer than are these for our business road prices on increase, are continues areas investments have summary, remain relatively our before. have Our industry. with inexpensive. instrumental Gasoline products inched more the but driven the base

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

well electric legacy hybrid diagnostic and we opportunities new addition, our business. grow exciting as business, as both have In our vehicle to diagnostic

our contributor this We be by presence the are emerging market, electrical ahead. and excited in vehicle strong the will a in believe years

accretive remains position strong, is excellent. for capacity our financial and further Our growth

we believe flow addition, approximately that enhance cash effective other reduced things, from tax In income. XX% significantly XX%, will, net free rate and will approximately be among which to our

incremental the flow to over the for anticipate more we and David call existing I quarter then we $X the forward, and questions. open of Jobs Act will will our the based the cash to third of in review profits, for & million business. David? turn results detail, Cuts call Going Tax now fiscal on have the an to effect

David Lee

fiscal Thank you, for third quarter. Selwyn. the I XXXX highlights will now the review financial

of quarter Before with I third XX, Adjusted $X.X this later million sales December the $XXX.X to for pickup profit a estimate the quarter. X-K million quarter third recognizing begin, which filed XXXX, fiscal year. earnings non-GAAP year the the reconciliation compared change for fiscal sales prior third more the XX-Q, will of measures, to detailed The prior compared I everyone filed financial stock the to net the for sales the GAAP performance to for million and XXXX $XXX.X $XXX.X encourage for prior respect were returns. million third million $XXX.X our adjustment quarter, Net read be net including today. morning results, sales our with release for explanations of a and press benefits revenue due with in were for reflects

$XX.X adjustment a Excluding the customer a Wheel to for following, decrease sales for net million estimate our million million third electrical $X.X third of sales net reflecting the million for sales and earlier. million due the in quarter, a $X.X the due the to change year, $X.X the from quarter to industry due year prior pickup $XX.X to million $X.X year for third decreased to in approximately million Brake returns from bearings million the for the reduction million adjusted revenue from slower-than-expected unusually quarter ago. third $XXX,XXX hub programs. stock the fiscal increased rotating master decreased was to inventory quarter net cylinder $X.X assemblies soft sales $X.X demand sales million net $XX.X $XX.X and prior for

as part the new business to customer the percentage million $X.X related of of product mix. and a the year net combined to realizable for sales. sales impacted as compared quarter, year finished are year quarter profit related year expansion a brake percentage was ago returns compared net testers Gross million with profit net or third quarter as shelves. in for operations third realizable by gross earlier. million or a Mexico, boosters, gross percentage Additionally, allowances $XX.X The as Adjusted shelves connection compared percentage customer as for prior higher by lower transition no with sales of mentioned compared the increased the earlier. period for are the had $XX.X of of $X.X value part XX.X% Adjusted on million quarter. and the the the of higher adjusted customer year. third expenses to business, a XX.X% profit that of margin same sales cores adjusted of with earlier. from $XX.X net a goods Adjusted net gross part Gross percentage overhead $X.X sales with in absorption, for was was was new prior a finished Gross as net profit, customer revaluation the turbochargers was XX.X% returns sales, goods adjusted cost for profit was the third lower previously, of with on of and million our allowances tester a of revaluation product absorption, margin a XX.X% was year year third million prior of million lower overhead for in by cores $XX.X third for sales, a that impacted quarter mix. impacted cost and lower quarter Gross

$X.X quarter stock primarily in X.X% third sales. due the amortization a period. returns as a for year Adjusted pickup million revenue quarter, For Tax gross adjustment $X.X the quarter in the borrowings $X.X the margin. the build anticipated Depreciation positive On operating fiscal for by the support to and change Act estimate customer increased prior December Operating was to Cuts expense expenses increase Electronics, compared impacted to receivable impact $X.X million $X.X increased accounts contracts from million third D&V and adjusted customer on compared year. was had and million million prior for the $XX.X EBITDA income $X.X increased third Total for enacted law, to The expenses. with our for expense Adjusted quarter was Income expense year, currency third million an for income Interest $X.X of changed $XX.X Tax from we million tax the among third million & into year, value-added XXXX. period expenses programs, for was Electronics million our January which tax of discount expenses year prior programs $XX.X effective third $XX.X year of corporate third programs debt and warrant ago. provisions. for $X.X value-added a for other third due in due the to U.S. XX%, higher for for prior value write-off inventory for by the for with X, rate $XX.X quarter. increase various with compared XXXX, interest service average growth, increase liability, XX, D&V things, the was Act, losses The mark-to-market the $X our the net $XX.X the Jobs and support million impacted quarter million prior Reform exchange quarter. quarter expenses from to of XX% operating to changes lowered year the $XXX,XXX to forward in service tax the levels the XXXX million the $X.X issuance was use was the $XX.X million million outstanding million and the foreign million compared with fair for million and costs, growth. increased last our expense corporate operating fiscal

noncash As a result, book deferred of charge a to one-time we revaluation $X.X assets. tax of million related recorded tax

XX a charge impacted of diluted a accumulated income XXXX were prorated In tax on to is addition, the fiscal income. rate as result per of corporate share Reform tax quarter years foreign The Tax deemed repatriation payable over Act. one-time third of eight year $X.XX the commencing there tax XXXX A negatively transition in results by federal $XXX,XXX due of XX%, commencing approximately rate apply a the be impact effective The rate fiscal Reform full full fiscal X, year. company's reduction Tax effective prior will the in XX.X% April XXXX the will to in for the points year. of tax The resulting be XXXX. of fiscal fiscal will Act

$X.XX year, year for prorated last based tax the $XX.X For third the a XX% share full is quarter X was fiscal Net for first tax and months share includes per or XXXX loss the net explained Tax with per share $X.XX the $X.XX of income net $X.XX net years, charge, a the per to ago. a one-time compared months, or for per million diluted $X.XX rate diluted quarter which on the a transition tax $X.X as rate noncash million payable previously. compared or rate diluted tax Reform million $XXX,XXX $XX.X $X.XX million Adjusted XX% X $X.X The book XX.X%. of tax the loss income related and Act, year. $X.X was $X.X share per over with million tax or prior share or per or is million share, charge third recently for enacted X for

share. now stock pickup For for compared per $XXX X estimate third of of compared I a months sales fiscal for revenue ended the in Net sales the X returns the will prior $XXX.X for discuss year $X.X a adjusted with year. $X.XX for sales the December $XXX.X quarter, diluted impact positive million had net the million for million million the due results change net XX, adjustment of net months. were $XXX.X sales with prior last Adjusted months X million XXXX. to were

per X period with with compared Net diluted share year, $X.XX was for months the X-month a a change for the benefits returns. a million adjustment previously, for million year the sales $XX.X income noted and pickup estimate $X.X prior $X.X due million revenue to ago. X-month and the was of the the reflects fiscal for for prior year profit compared earnings stock period $X.XX performance As recognizing in

as diluted related $X.X were includes ago, $X.XX compared net Act -- approximately X-month last earnings X previously and year. income payable book tax and charge Adjusted year a one-time Reform was over $XXX,XXX income period million tax transition the Tax the $X.XX adjusted discussed with X of for net share with current compared million As the noncash a enacted for $XX.X million separate previously, per charge to years. months $XX.X recently a

$X.X X-month $XX.X positive pickup earlier. $XX.X compared to revenue year fiscal the million million impact prior a period, diluted in Adjusted adjustment per EBITDA due million the for for a the of change was had with period X-month stock $X.XX estimate share. a For

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

facility $XXX finished loans XXXX, months margin in currently X facility $XX.X XXXX, million MPA was activities debt cash XX, $XXX bank and December had million in on an LIBOR the cash Net excuse million adjusted by December during reflects $XXX to Our $X.X long-term assets business $XX.X total operating at -- accounts at million. million outstanding $XXX divide had the of million, anticipation XX-month At the and XX, approximately the December bear payable. for a used is of activities core in revolver plus consisting approximately and increase At approximately of in assets. X.XX%, with goods we in debt The plus $XX period. inventory Current cash of equity XX loan operating method totaled million, million interest million. net million. reduction for company trailing our under me, of and $X.X of ended producing new months inventory XX, at used of current locations $XXX liabilities core of XXXX, net $XX.X X.XX% ROIC approximately balance Currently, credit XXXX. availability term EBITDA the was average Total December revolver of XX, a million X.XX%. the calculating

to of million Board million. approved company's $XX week, utilized, program XX, to of authorization the program. $X.X the As by million with has of and available repurchase of Board million shares Directors under Last the from common been program $XX XXXX, share Directors authorized million increased of of the remains December availability repurchase $X.X $XX share stock repurchase stock, $XX the current repurchase approximately million

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

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

will We for questions. call the now open

Operator

Instructions]. [Operator

comes first question of Roth Our Koranda Capital. Matt line of from the

Matthew Koranda

one QX or implied few sort the things. you that of like guidance guys gave looks suggests It maybe

parse So a you slower guide you us rotating electrical thought, a expected. existing less the the implied category, rates just business Could in is for new the guess, ramp-up programs growth kind underlying maybe for steep help little than that out its of little or QX? I understand and what's maybe than driving

Selwyn Joffe

at guidance revenue. an end quarter look, the for all-time includes Well, low record fourth the

So to significant rates able those we're get certainly to, to that type them while weather I We're and back replenishment Replenishment happy be move contributor helping right evolving are of is seen in the think, of direction sort right discussion. the now. a to rates. a

as they customers end that's I than for have next is inventory got think year -- programs I I going or into come going And have the I have based part, slowdown to have inventory November-December the to a liked to to sell-through. But going think coming caught an to that are had. on the end. most think couple reduction they out an fiscal the still with setup be would very some reverse more the of strong. think

So don't need But accelerate the the I in we seeing within be a quarter, just orders. up mean, demand. a increasing car products March from able we're -- direct fails. we'll believe complete the revenue. weather And can't on of it's on November-December loss we the effect pick and the I to basis your when sell

that in think over picked but not will March right it's to I going the get X quarter. the months, next back up come

can fairly continuously update orders even be, pretty been been update a in so have up on orders orders, with much demand are because update is will cautious be while is monthly basis. last the replenishment digits, think what flat year. uncertainty added the there's fine, because some think the double Which I updates I

to point are I ordering levels the I'm hit seeing -- hearing confidence rates, pivot clearly the renewed replenishment into think on and based just where I as comes of starting think see coming to So back. back a which but marketplace, we're and historical we've back

Matthew Koranda

we the 'XX reasonable a I to helpful. just excluding in same-store guess, you we at So I orders. at kind have most from business? the replenishment have the cold there's fiscal that of look that's it revenue, items referenced, definitely look growth new swing rate on if in. programs your What's if at help existing some look you expect Okay, low And rates, of, single recent sell sales inventory guides initiatives weather reduction in growth your sort but digit you favor. obviously, of implies, customers, then if that

So to your right the what's way existing programs existing about rate the think on growth customers? with underlying

Selwyn Joffe

Yes.

heard all next But So There's the for new opened opening this major lot from we stores. haven't from year. customers additional about a new one the new heard opening new be XXX going certainly customer yesterday up of plans stores stores. we to

market I of because again, vibrancy of continue I new think and that. turn going store the openings think, the the is to will

same-store I So growth, sales you have store besides growth. think the new

because I'm I too -- but opportunity for don't Certainly, we still of to share formal double-digit the where still not going of in still our want -- our got we give ahead things small. within haven't very we there's -- We target. are year, next get haven't lines our We've great we think a decided all think lot for happening us are on to company. guidance increases what are revenue really which I customers. much skis of with we number product a of

I the think the on of indicative momentum is internally. that's going quarter not

sticking we've we're the for So with same while. had a story

optimistic, too I that get think maybe and want something is to little optimistic. we don't low a to double think but digits it's I

Matthew Koranda

million. one that queue. sequentially stuff think, there just then electrical Or rotating long-term core quick as business and is into feeds are well? related I'll that I to $XX ramping The maybe a in more other Okay. new jump Is the 'XX on? that about there then And in you up was fiscal inventory, back all

Selwyn Joffe

business. and most relating all -- some then believe the is that I without is at years, first disappointment rotating that the behind off the full There's For of there an a part, think us new for the point. pay we business that and so the our that's to I And it's the part of new had we've in purchase seen new that accrual number ramp-up expense that that's business. it business. -- full for new benefit been of accrual having all electrical of this that But of

Operator

line is of Dyer Our the next question from Steve Craig-Hallum. of

Steven Dyer

You remind is terms sweet you vehicles touched you the or in park that and to two? on us what next vehicle talked of the in expect -- car age that a of little Selwyn, you do what the number bit. window Can year spot over

Selwyn Joffe

Yes.

think, had I we XXXX, sales. car through XXXX reduced new some

-- at new it's evolving and of let's to this spot on hitting million same think, the now we if categories. all sweet sort have I between the right electrical, product are of categories we just rotating to a XXXX the product the X- them -- I sales, new record old, think car the look seven-year you on at very aged I lines lines have But now. And we X-year-old the think say varies point, for new little, right it on it's XXX is product vehicles, ones those sales. XXXX because

that's grow, the the is technology, average that, price alternators with new warranty, in to up in couple of which 'XX prime spot in X cars see growth. in beginning of stage that electrical, and 'XX. going which points making a We're things, are go There's rotating starters lot particular of I so, a we're of of out growth there's sets those significant of for because to reversal XX-plus on of well. more at going and higher. stuck to then the have, to inflation there's going coming got as much hopefully, that And that you've to the a in be number the significant certainly got a the category the to continues a technology X, lot higher-voltage think applications, line that's see seeing that applications And the applications, some category,

unit there's growth. So only don't think I

going think be growth. price I there's to some

Steven Dyer

-- Great. think about of is that as electrical going of slower Is thinking? you ramped other stuff couple about last Or little think seems categories do maybe, products, should over would a then And you share the bit some have you I this years, anticipated? how of than is we those then like that And non-rotating your anticipated. growth what stuff launched in that I guess, forward?

Selwyn Joffe

I agree.

I think of there's they're momentum no seen. slower have But them. have than certainly liked would we to in lack

I think growth them. in to significant going we're see

smaller Some of are categories. them

some we there's all product to our to -- categories. And to going fairly the growth going think I growth of initiatives accelerate but which be soon. those are significantly, in of announce new hope

to there's challenges on to have product in able us I the think, facility there momentum go that's go real I We'd new but And of some think being it combine the sales a Customers love get under we're purchase there's that. orders, all going had enough enables Mexico lot everything of to so lines. seeing away. one faster, and growth, to see going roof. for

Steven Dyer

line? me, new for and at track we and sales, And do for guys Are grow operating continue jumped. percent that this like than Or to so level expenses investing initiatives forth. about expect next Good. on to then a that lastly are safe year? I lot faster year. XX-or-so feels you some in It's Looks a they were for know you

Selwyn Joffe

acquisition. expenses part significant the most the of growth in D&V The is operating

separately run it's from consolidated. While us, it's

hope But are any big And part. give tax up we showing provisions, is a further numbers we And right even new of some the in that side it's the us R&D -- is tax making then will expense. other with D&V now. not So that relief. the

it's electric vehicle but of the to We space time OE vehicle at And I a offering going really, had the the inroads there things car very world -- certainly having I the companies electric space. vehicle who you're cutting on the some focused tell tell there. It's exciting would we've are number are and hybrid the us see think some us few a are is a electric on new the disproportionate in our an growth point market. in which it not because and in great and significant the vehicle out in this OE for and going technology. coming OEs vehicles. I And electric we've us we that on early, back us little come leading with hybrid and out to a that puts technology very making companies you into of area, have got edge

testing -- in of the generator the in and belt one diagnostics world. are start leaders We

And So -- way. stop/start is technology. technology stop/start evolving. This to whole a and significant in relates hybrid technology that also,

-- statistics, probably are had XXX. but forget you using, the technology have is on if before, these in I that. on At making leading, depending upon that You starter or we your I'm again, and least alternator the stop/start XX stop/starts your diagnostics a And of maybe, XXx you're going and but day in up, that. to had

have that product offering, and coming. We that's

going are up. rates go to replacement so And

that product I have think to failure rates on the those on you tear and wear are to because of these up have of going amount go lines.

year and, So a while been well. think it's very weathered I for I the tough we've for us, the fundamentals quite industry it think,

but and rolled value quarter, strong what for I battery next said battery I I think hesitancy year into The growth starter out say technology. for fiscal have I technology, in electric that years the yet. been I ever the belt haven't between fundamentals are our and our for we they've five our hybrid for creation we technology the over new lithium-ion of next it have capabilities stop/start the that as company. outlook technology, -- fundamentals generator and bit because the last believe a as -- us with little really of looking

comfortable this Our tech have, will talk pretty labs we and just different product all that quarter, a you heartbreaking company feel we've got -- and great see about it's a a the about the I'd for got quarter just this breath we take we're and and tell -- I starting our soon. story testing look coming. you, and deep applications entries great but environmental new you've past that that numbers to to

Operator

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

Christopher Van Horn

when that you and about factors in at organic Just more said baked on know know you're in do acquisitions? of talked hoping, what there you potential is planning growth share your a bit -- lot side? with the for mainly the you there. you you and a it conservatism some look process, Or gains little seeing But do I is -- I and double-digit that include there's

Selwyn Joffe

or get fiscal grow know come think but shares. we to Again, with replenishment picked X% question back. just got think we've me X% I organically significant grown been we track up to down what aggressive, last growth are we've -- back business and new we lot If rates, we've -- have it's to rates XX%, if a up can year's time And replenishment I this to and of includes we're XX%. if organically was rates. well that that picked at We've -- on the the

replenishment fiscal that that big accomplishable. right and I be think get them next summer, these get So experts in for and we've is patterns that believe the the should listen failures and is, The the harsh of that share everybody in, be on in the going I And most question year? now, there winter kicks come now, tear seen industry you this sustainable are once certainly don't out failures it to vehicle. sits the it based very that of only to over the on of because winter, the wear weather and weather you rates

So season snow. had hub road last hubs we in and the driven years, had a snow no years. Wheel almost three salt wheel the on we've three are by and haven't

all All we of snowstorms a sudden, over the got place.

season whole the should I better think affects So wheel the and be vehicle. hub it

a be hopefully, you have have it'll gives we but bit, months basic growth So difficult, continue we still do that, don't little a little to be if maybe growth If fundamentals replenishment very more rates, XX% back flavor. we should [indiscernible] get still we can a accomplishable. the saw that to ago, we the organic that rates XX the and but

Christopher Van Horn

more seeing, that look you absolutely. bit maybe just jump When no, little share you're No, gaining the out share gains surprising? any line at you product originally a as Or at thought? than

Selwyn Joffe

Well, to look, to all their there, customers We've continues share. their us. to of support us, to and be I we gain and continuing our rotating and share gain thank electrical continued for are commitment for amazing

even can hey, business. while people that besides already growth. allowed grow? said, continue many have And And so incremental you high before to you additional can't we've we share We expectations more the before share growth -- -- have grow how much

were the other lines market at not been It's more tough smaller have just grow popped. haven't focusing they people categories. to conservative been the a bigger product maybe slower, the categories, but on them much looking So so industry in where

lower in I But well of they're think categories, as we get a perform more percentage, think vibrant, so categories momentum and coming see see I off the as the a and other well. as other you'll I base. a lot certainly

Christopher Van Horn

cylinders And you sense. know similar -- one pass for what makes new I'll you to like go you me, complementary at what But and you off the product can product -- hubs, that strength D&V have When that, Okay, and last you builds were master that your wheel it boosters, maybe on. I and look did thinking with complement or or you mentioned do into opportunities, and is you of others. about? categories turbo, anything do

Selwyn Joffe

opportunities. some Absolutely. And about some evolving jump we want capabilities the to we're don't I excited while think great we've strength. but great got and And gun,

Operator

[Operator Instructions].

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

Scott Stember

flat. was that. guess, one I replenishment just digits, one one up so was missed give double that Can about, far the again? or talked versus you when you update in maybe up January, X I was orders, -- So

Selwyn Joffe

Yes.

was guidance. for quarter, question, the because where the reduced our we I think, think I are So revolving we around

up think the were come seeing But double with quarter? digits, update was, which flat March replenishment good, last implied year, we're by question seeing up the way. in you I the how couldn't but orders catch we're rates it

an And hopefully, coming we're at when $XXX $XXX bad, quarter. then low base is the So million higher see that they're that around on very million. concept should, think all-time was now, we're on the high going us. the third for simple be we've in doesn't I replenishment quarter. can reducing with you while and given flat, -- -- we lower low -- off low what of arithmetic, to can that very beat a the in guidance, do So guidance we okay? can can simple arithmetic mean a beat will guidance the a say the hopefully we but We the But which experiencing end, we're end. be the

know that so if I this, was And don't Scott, or explains -- that not.

Scott Stember

going the to margin No, gross that's to fine. just want sure not make I I And understand. just guidance,

XX.X% the year that end? the for towards saying to expect You're the the you higher year full to be full XX.X%

Selwyn Joffe

end. come and come higher back the orders Look, if back, revenues at we'll be

on in cost levels, was has don't adjust normally, on we I been adjustments production unfortunately, level-loaded -- included some But And it production level We think strategy. the intentionally had a X that And we've -- year margin crazy We were absorption. I to data I to our some us reduction make run X% production. loaded. this overhead production. with so points.

points and while of we we we're in us X our up, end And of If production, upper be can down points we no now -- so, margin. towards we pick cost so again, pricing changes, the gross as should that in it certainly two think and guidance. have that

Scott Stember

interest assume the going of margin off of I at and what be you I quarters. you go would guess would if end XX%. and done offset really this shortfall to off expenses go sales, assuming the much the the would thinking that is just getting which fourth nice that a really, expense, operating is probably of quarter to was Am correctly? what high about of from if year, gross that and I other of you've quarter rebound, far so X And map the that lead around first

Selwyn Joffe

I time dramatically. We're gross too on on takes wouldn't XX.X% to little be the production bit of but levels, XX%, back a think to gross love sort a But margin too optimistic ramping to you're I ramp would correct. of more the margin. is possibility. I the think gross the but to so, be that I'd It midpoint, aggressive for get production theoretical there we margins.

XX.X%, we into the comfortable with quarter. very around feel XX%, I think, going again, the fourth

Scott Stember

quarter. one be the they'll hybrid you And for about tax you again David, quarter? guess Great. talked question. like the transition, fourth would did for What last a rate say the be that fourth I just

David Lee

the That will 'XX. be XX.X%. for full And fiscal that's

Selwyn Joffe

drop to that into rate year April new to X, expect starts we XX%. we as then which And go fiscal our

David Lee

correct. That's

Scott Stember

Got XX% booked, a adjusted? it. third you the was that And flat quarter

David Lee

for The full the for is proration for 'XX, third quarter proration on XX% is first rate, fiscal the months, last months. tax reflects The third the XX% based and that including a XX.X% on the X which XX.X% X quarter. of

Selwyn Joffe

that business, I think not know I the for is, we said Obviously, up. you're based that. when around Scott, flow, really incremental this, thing while of clarify, but grow one we other that business. today's on of levels we as million everybody, looking asking cash were you're I go at $X to just wanted the will

Operator

this Joffe remarks. And conference turn at I'd time. closing back to I'm showing over no Selwyn for the to further like questions

Selwyn Joffe

Amanda. you so much, Thank Okay.

shareholders plans our we push in and team build I customer-centric always, products thank their services exceptional team and our The commitment and pride the customer their for we focus of on to for service, for significant times through our thank as some And of but sell opportunities some to all I remains the energy members to want provide. We our you. execute June, all As look conferences, call we the and expect year-end and exciting their value we we for them sky-high contributions And continued joining Their for tough for service future. in when the for our call. appreciate at and speaking they interim. make And support. support. our and the We appreciate the and is us communities Thank also their host we to forward shareholders' continued efforts obviously, in to their thank there. again reflected in wonderful to XXXX various with you you our we commitment fiscal quality society,

Operator

Ladies and conclude conference. the gentlemen, participation today's does for your program. you This thank in

You a have may now day. great Everyone, disconnect.

Motorcar Parts of America (MPAA) 9 Feb 182018 Q3 Earnings call transcript