Motorcar Parts of America Reports Fiscal 2027 Second-Quarter Results, Updates Full-Year Outlook
Motorcar Parts of America, Inc. has announced its financial results for the second quarter of fiscal 2027, ended September 30, 2026. The company reported lower quarterly sales compared with the previous year, primarily due to delayed customer orders, slower launches of new business programs and reduced tariff-related revenue. Despite these challenges, management remains confident about the company’s long-term growth prospects, supported by new customer awards, expanding North American operations and strategic investments in its automotive aftermarket business.
The latest financial results reflect a challenging operating environment for the automotive aftermarket industry. However, Motorcar Parts of America believes that several recently secured business opportunities will contribute to revenue growth during the second half of fiscal 2027 and beyond.
The company has also revised its full-year financial guidance to reflect the timing of customer orders and new program launches. While its updated sales expectations are lower than previously projected, management anticipates improved sales performance in the second half of the fiscal year compared with the corresponding period last year.
New Customer Awards Create Opportunities for Future Growth
One of the most encouraging developments for Motorcar Parts of America is the approximately $60 million in new annualized customer business awards secured from both existing and new customers.
These awards represent an important opportunity to strengthen the company’s position in the automotive aftermarket sector. Initial shipments associated with some of the new programs have already started, while the majority are expected to begin shipping before the end of fiscal 2027.
In addition to the business already secured, the company expects to obtain approximately $25 million in additional annualized customer awards by the end of the current fiscal year.
The anticipated awards could provide additional revenue opportunities as new programs move from development and preparation into regular production and distribution.
The company is also pursuing several longer-term growth initiatives. These include expanding its operations in Mexico and Canada, relaunching the Centric Parts brand, increasing the utilization of existing brake-related manufacturing capacity and growing its rotating electrical diagnostic testing equipment business.
Together, these initiatives are expected to support the company’s competitive position and improve its ability to serve automotive aftermarket customers across North America and international markets.
Second-Quarter Fiscal 2027 Financial Performance
For the three months ended September 30, 2026, Motorcar Parts of America reported net sales of $169.2 million, compared with $221.5 million in the corresponding quarter of the previous fiscal year.
The decline was primarily associated with delayed customer orders and lower tariff pass-through revenue.
The previous year’s quarterly sales also included approximately $14.8 million in core revenue associated with inventory realignment at certain customer distribution centers. After accounting for this amount, the remaining $37.5 million decline primarily reflected the timing of customer orders and reduced tariff pass-throughs.
Although the sales performance was weaker than the previous year, management expects business activity to improve during the second half of fiscal 2027 as delayed orders are fulfilled and recently awarded programs begin contributing more substantially to revenue.
Gross Profit and Margin Performance
Gross profit for the second quarter was $40.9 million, compared with $42.7 million in the prior-year period.
However, the company’s gross margin improved significantly, reaching 24.2%, compared with 19.3% in the same quarter last year.
Several factors influenced the reported margin performance.
Gross margin included non-cash expenses equivalent to approximately 2.8 percentage points. At the same time, the company benefited from one-time items equivalent to a net 5.7 percentage points.
One of the most significant benefits came from approximately $11.1 million in tariff refunds associated with the International Emergency Economic Powers Act (IEEPA).
Foreign currency movements also affected profitability. Unfavorable foreign exchange fluctuations negatively impacted gross profit by approximately $2.4 million, equivalent to 1.4 percentage points of gross margin.
These factors demonstrate that the improvement in reported gross margin was supported partly by temporary benefits and should be considered alongside the company’s underlying operating performance.
Operating Income and Interest Expense
Operating income for the second quarter of fiscal 2027 was $10.0 million, compared with $16.4 million in the previous-year quarter.
The reported operating income included approximately $11.2 million in non-cash expenses and benefited from a net $9.1 million in one-time items.
Interest expense decreased to $11.3 million from $12.7 million in the corresponding quarter of the previous year.
The reduction in interest expense was primarily attributable to lower sales activity, which resulted in reduced utilization of accounts receivable discount programs.
The company continues to focus on managing operating expenses, improving manufacturing efficiency and strengthening its financial position while preparing for the launch of new customer programs.
Net Income and Earnings Per Share
Motorcar Parts of America reported net income of approximately $1.4 million for the second quarter.
On a per-share basis, the company reported basic net income of $0.07, while diluted results reflected a loss of $0.03 per share.
This compared with a net loss of $2.1 million, or $0.11 per share, in the prior-year quarter.
Net income for the latest quarter was affected by approximately $6.0 million in non-cash expenses, equivalent to $0.27 per diluted share.
The results also benefited from net one-time items totaling approximately $6.9 million, equivalent to $0.30 per diluted share.
These adjustments are important when evaluating the company’s quarterly profitability because certain non-cash expenses and one-time benefits do not necessarily reflect its ongoing business performance.
Financial Position and Share Repurchase Program
As of September 30, 2026, Motorcar Parts of America reported revolving credit facility borrowings of $126.6 million and cash holdings of $20.8 million.
The company’s combined revolving credit availability and cash position totaled approximately $104.8 million.
Maintaining access to liquidity is important as the company prepares for increased production requirements, customer program launches and continued investment in its manufacturing operations.
Motorcar Parts of America also continues to maintain an authorized share repurchase program.
As of September 30, 2026, approximately $20.1 million remained available under the program for potential share repurchases.
The authorization provides the company with flexibility to consider returning capital to shareholders while balancing its operational investment requirements and financial priorities.
Strategic Expansion Across North America
Geographic expansion represents an important part of Motorcar Parts of America’s longer-term business strategy.
The company sees opportunities to increase its presence in Mexico and Canada as major automotive aftermarket customers expand their regional operations.
Mexico Expansion and Manufacturing Efficiency
Mexico continues to play an important role in the company’s manufacturing strategy.
Motorcar Parts of America has completed the relocation of its heavy-duty program into its existing manufacturing operations in Mexico.
The relocation allows the company to utilize established infrastructure, manufacturing resources and operational capabilities rather than relying on separate facilities for the program.
Management expects this transition to reduce manufacturing costs and improve operational competitiveness.
The company believes that a more efficient production structure will strengthen its ability to pursue additional heavy-duty aftermarket business.
Mexico also offers opportunities to support the expansion plans of major existing customers, potentially creating additional demand for the company’s automotive replacement parts and related products.
Opportunities in Canada
Canada represents another potential growth market.
Major customers are expanding their geographical presence, creating opportunities for Motorcar Parts of America to support their operations and increase its business relationships in the region.
By working closely with established customers, the company aims to strengthen its distribution reach and participate in additional aftermarket business opportunities.
These developments could contribute to longer-term revenue growth as customer expansion plans progress.
Centric Parts Relaunch Supports Brake Aftermarket Growth
The relaunch of the Centric Parts brand represents another significant strategic opportunity for Motorcar Parts of America.
The company expects the brand to strengthen its position in the automotive braking aftermarket and provide additional opportunities to serve customers seeking replacement brake components.
The changing competitive environment has created opportunities for Motorcar Parts of America following the bankruptcy of First Brands.
Although the liquidation of existing First Brands inventory has temporarily affected the timing of certain new customer orders, the company believes the evolving market conditions could create opportunities to expand its braking business.
Management has indicated that the Centric Parts relaunch is not included in the company’s current growth estimates.
This means that any future revenue contribution from the brand could represent additional growth potential beyond the expectations currently reflected in management’s financial outlook.
The company also sees opportunities to improve margins through increased utilization of its existing brake-related manufacturing capacity.
Higher utilization could help spread production costs across larger volumes, improve manufacturing efficiency and strengthen profitability as demand increases.
Rotating Electrical Diagnostics Business Continues to Expand
Motorcar Parts of America is also investing in its rotating electrical diagnostic testing equipment business.
This business supports automotive aftermarket customers by providing diagnostic equipment and testing capabilities related to rotating electrical components.
The company’s diagnostic equipment program continues to expand through relationships with major automotive aftermarket customers in North America and international markets.
As automotive electrical systems become increasingly important to vehicle operation and maintenance, diagnostic testing capabilities remain relevant to repair facilities, distributors and aftermarket service providers.
Motorcar Parts of America sees opportunities to expand its customer base and increase the international reach of this business.
The continued development of this program provides another potential source of revenue diversification alongside the company’s established replacement parts operations.
Six-Month Financial Results Show Lower Revenue
For the six months ended September 30, 2026, Motorcar Parts of America reported net sales of $337.2 million, compared with $409.8 million in the corresponding period of the previous fiscal year.
The prior-year period included approximately $14.8 million in core revenue associated with inventory realignment at certain customer distribution centers.
Excluding this amount, the remaining $57.8 million decline was primarily related to delayed customer orders and lower tariff pass-through revenue.
Gross profit for the six-month period was $68.1 million, compared with $76.6 million a year earlier.
Despite the reduction in gross profit, gross margin improved to 20.2%, compared with 18.7% in the prior-year period.
Gross margin included non-cash expenses equivalent to approximately 2.6 percentage points. One-time cash items provided a net benefit equivalent to approximately 2.1 percentage points, including the $11.1 million in IEEPA tariff refunds.
Unfavorable foreign currency fluctuations negatively affected gross profit by approximately $5.9 million, equivalent to 1.8 percentage points of gross margin.
Operating income for the six-month period declined to $13.5 million from $36.4 million in the previous year.
The latest operating income included approximately $15.9 million in non-cash expenses and benefited from net one-time items totaling approximately $6.1 million.
Interest expense decreased to $23.3 million from $25.5 million in the prior-year period.
However, the company reported a net loss of $12.1 million, or $0.64 per share, compared with net income of $893,000, or $0.04 per diluted share, in the previous year.
The six-month net loss included approximately $10.6 million in non-cash expenses, equivalent to $0.56 per share. The company also benefited from net one-time cash items totaling approximately $4.6 million, equivalent to $0.24 per share.
These results highlight the impact of lower sales volumes, delayed customer orders and other operating factors during the first half of fiscal 2027.
Management Highlights Confidence in Long-Term Opportunities
Selwyn Joffe, chairman, president and chief executive officer of Motorcar Parts of America, acknowledged that the second-quarter results reflected delayed customer orders and some softness across the industry.
However, he emphasized that the company remains confident in the underlying automotive aftermarket business and its ability to generate future growth.
Joffe highlighted the approximately $60 million in annualized new business awards secured from existing and new customers.
Initial shipments have already commenced, and the company expects the remaining programs to begin shipping during the second half of fiscal 2027.
He also reiterated the company’s target of securing approximately $25 million in additional annualized customer business awards before the end of the fiscal year.
According to management, the changing competitive environment following First Brands’ bankruptcy has created meaningful opportunities to expand the company’s braking business.
Although existing inventory liquidation has temporarily affected the timing of some orders, Motorcar Parts of America believes it is increasingly well positioned to capture additional business.
Joffe also highlighted the importance of the Centric Parts relaunch, geographic expansion across North America, diagnostic equipment growth and manufacturing cost improvements.
He noted that completing the heavy-duty program relocation to Mexico would help the company improve manufacturing competitiveness and pursue further business opportunities.
Management believes these initiatives will strengthen the company’s market position and support improved profitability as new programs mature.
Revised Fiscal 2027 Financial Guidance
In response to delayed customer orders and changes in the expected launch schedule for new business awards, Motorcar Parts of America has revised its financial guidance for the fiscal year ending March 31, 2027.
The company now expects full-year net sales between $715 million and $740 million.
This represents a reduction from its previous sales guidance of $780 million to $800 million.
The revised outlook reflects the slower timing of customer orders and the expected contribution from recently secured business awards.
Operating income for fiscal 2027 is now estimated to range between $37 million and $44 million.
The operating income forecast includes approximately $30 million in estimated non-cash expenses and approximately $5 million in transition expenses associated with relocating heavy-duty operations to Mexico.
The company also reported approximately $11 million in IEEPA tariff refunds for the three months ended September 30, 2026.
Depreciation and amortization expenses for fiscal 2027 are estimated to be approximately $9 million.
Expected Second-Half Sales Performance
Based on the revised full-year guidance and actual results through September 30, 2026, the company expects net sales for the six months ending March 31, 2027, to range between $378 million and $403 million.
This represents a potential decline of approximately 0.5% to growth of 6.1% compared with the previous-year period, when sales totaled $380.0 million.
The prior-year comparison period included approximately $19.9 million in core revenue.
Excluding that amount, the company expects second-half fiscal 2027 net sales to increase between 5.0% and 11.9%.
Operating income for the second half of fiscal 2027 is estimated to range between $23 million and $30 million.
This forecast includes approximately $14 million in estimated non-cash expenses.
Depreciation and amortization expenses for the second half are expected to total approximately $5 million.
The anticipated improvement in second-half performance is expected to be supported by delayed customer orders being fulfilled and new business awards moving into regular shipments.
The Automotive Aftermarket Industry
Motorcar Parts of America’s latest results reflect the challenges that automotive aftermarket suppliers can face when customer purchasing patterns change and new business programs experience delayed launches.
However, the company’s strategy demonstrates a continued focus on expanding its product portfolio, strengthening customer relationships and improving manufacturing efficiency.
The approximately $60 million in annualized new business awards, together with the targeted additional $25 million, provides a foundation for future revenue opportunities.
The Centric Parts relaunch could further strengthen the company’s braking aftermarket presence, while expansion in Mexico and Canada offers opportunities to support customers across a wider geographical market.
The growth of its rotating electrical diagnostic testing equipment business also provides an opportunity to expand beyond traditional replacement parts.
Although the revised fiscal 2027 guidance reflects a more cautious outlook than previously anticipated, management expects stronger sales performance during the second half of the year.
As the company moves forward, its ability to convert new business awards into shipments, manage manufacturing costs and improve operational efficiency will be important factors in determining its financial performance.
Motorcar Parts of America remains focused on building sustainable growth through customer partnerships, product development, geographic expansion and manufacturing improvements. These initiatives are expected to support its competitive position in the automotive aftermarket and create opportunities for improved financial performance over the longer term.
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