Motorcar Parts of America, Inc. Q1 FY2026 earnings call

• Started fiscal 2026 with solid performance, recording record net sales and gross profits. - Generated solid cash flow from operating activities, reduced net debt, and repurchased shares. - Encouraged by industry trends like aging U.S. light vehicles (average age 12.8 years) and increased vehicle count (293.5 million). - Brake offerings and heavy-duty business showing growth; leveraging North American operational and distribution footprint. - Mitigating tariffs through customer price increases and cost reduction initiatives, including supply chain changes. - Diagnostic business with JBT-1 tester has a growing installed base and expected international expansion.

Net sales for the fiscal 2026 first quarter increased 10.9% to a record $188.4 million. Gross profit rose 16.3% to a record $33.9 million. The hard parts business, led by the rotating electrical category, performed solidly. The brake offerings segment, including calipers manufactured in Mexico, is growing. The heavy-duty business leverages its position in supplying alternators and starters to heavy-duty aftermarket leaders. The diagnostic business with the JBT-1 Bench Top tester has a growing installed base and expected additional service-related revenue as testers are deployed.

• Increased sales guidance for fiscal 2026 to between $800 million and $820 million, representing 5.6% to 8.3% year-over-year growth. - Reaffirmed operating income guidance range to between $86 million and $91 million, reflecting tariff pass-throughs and cost mitigation measures. - Estimates depreciation and amortization will be approximately $11 million.

• Uncertainties regarding future growth and opportunities not being achieved. - Impact of tariffs and foreign exchange fluctuations on financial performance.

Q: Derek Soderberg asks about tariff impact compared to prior quarter and assumptions on tariffs for full year.

A: David Lee states Q1 tariff impact was $1.4 million vs $4.6 million in the prior March quarter, expects less impact in future quarters; sales guidance increase includes tariff pass-throughs but details are confidential.

Q: Derek Soderberg inquires about next major growth opportunities in rotating electric and braking segments.

A: Selwyn Joffe mentions opportunity in the pure professional installer market for branded products, the brake pad business has potential, and global expansion as a key growth area