Motorcar Parts of America Reports Record Fiscal Q2 2026 Results Driven by Strong Sales, Cash Flow, and Debt Reduction
Motorcar Parts of America, Inc. (Nasdaq: MPAA) announced its financial results for the fiscal 2026 second quarter, marking a period of record sales and record gross profit for a second quarter in the company’s history. The results underscore the company’s strength in the automotive aftermarket and its continued focus on financial discipline, operational efficiency, and shareholder value creation.
Record-Breaking Quarter Highlights
For the fiscal second quarter ended September 30, 2025, Motorcar Parts of America achieved:
- Net sales of $221.5 million, up 6.4% from $208.2 million in the prior year.
- Gross profit of $42.7 million, a second-quarter record, up 3.5% from $41.3 million.
- Operating income of $16.4 million, up 30.8% year-over-year.
- Cash flow from operations totaling $21.9 million, enabling the company to reduce net bank debt by $17.7 million to $56.7 million.
- Share repurchases of 90,114 shares for $1.4 million at an average price of $15.41.
These milestones reflect continued strength in the company’s core business segments and the benefits of strong cost management, despite temporary timing effects in customer purchasing patterns.
Detailed Financial Performance
Net Sales:
Revenue for the quarter rose by $13.3 million, or 6.4%, reaching $221.5 million. The increase included $14.8 million in core revenue linked to realignment of inventory at customer distribution centers. This was partly offset by the timing of purchases from one of the company’s largest customers.
Gross Profit and Margin:
Gross profit set a new second-quarter record at $42.7 million compared to $41.3 million in fiscal 2025. Gross margin stood at 19.3%, slightly below 19.8% a year earlier. The margin was impacted by non-cash expenses of $3.6 million (3.0%) and one-time cash expenses of $698,000 (0.3%), largely related to operational adjustments.
Operating Income:
Operating income surged 30.8% to $16.4 million from $12.5 million last year, reflecting better cost management and increased productivity across operations.
Interest Expense:
Interest expenses fell $1.5 million to $12.7 million from $14.2 million in the prior-year quarter, due to lower average outstanding debt balances and lower interest rates on the company’s credit facility.
Net Income/Loss:
Motorcar Parts reported a net loss of $2.1 million, or $0.11 per share, compared to a net loss of $3.0 million, or $0.15 per share, in the prior year. The results were affected by non-cash expenses of $4.8 million ($0.25 per share) and one-time cash expenses of $523,000 ($0.03 per share).
CEO Commentary: Industry Strength and Financial Discipline
Selwyn Joffe, Chairman, President, and Chief Executive Officer of Motorcar Parts of America, attributed the company’s strong results to its enduring position within the non-discretionary automotive aftermarket and its expanding North American footprint.
Our fiscal second-quarter performance demonstrates the resilience of our business model and the benefits of disciplined financial management,” said Joffe.
“The ongoing increase in vehicles on the road and the aging car parc—now averaging 12.8 years in the U.S.—continue to serve as tailwinds for aftermarket demand. These industry dynamics, combined with our strong financial position and ongoing debt reduction, position us well for continued growth.
Joffe emphasized that the company’s focus on cash generation, operational efficiency, and strategic investments would enhance competitiveness amid a rapidly evolving automotive landscape.
During the quarter, Motorcar Parts generated $21.9 million in operating cash flow, reducing net bank debt by $17.7 million, down to $56.7 million from $74.4 million a year earlier. For the first half of fiscal 2026, the company generated $31.9 million in cash flow, compared with just $2.0 million in the prior year, while reducing total debt by $24.6 million.
Six-Month Fiscal 2026 Results
For the six months ended September 30, 2025, the company achieved record sales and gross profit, reflecting consistent execution and market resilience.
- Net Sales: Up 8.4% to $409.8 million, compared to $378.1 million in the previous year.
- Gross Profit: Increased to a record $76.6 million, versus $70.5 million last year.
- Gross Margin: Stable at 18.7%, slightly up from 18.6% a year earlier.
- Interest Expense: Decreased $3.1 million to $25.5 million, reflecting lower debt levels and reduced borrowing costs.
- Net Income: Improved significantly to $893,000, or $0.04 per diluted share, versus a net loss of $21.0 million ($1.07 per share) in the prior year.
The six-month performance included non-cash expenses of $7.4 million (2.5%) and one-time cash expenses of $2.1 million (0.5%), detailed in the company’s financial exhibits.
Joffe said the improvement in profitability and liquidity demonstrates the company’s success in aligning its operations for sustainable growth while maintaining flexibility to navigate market fluctuations.
Share Repurchase Program: Reinforcing Shareholder Value
The company continues to prioritize shareholder returns through its active share repurchase program, supported by strong operating cash flow.
- Q2 FY2026: Repurchased 90,114 shares for $1.4 million at an average price of $15.41.
- First Six Months FY2026: Repurchased 287,910 shares for $3.4 million at an average price of $11.65.
Motorcar Parts of America emphasized that ongoing cash generation will enable it to pursue further buybacks, strengthen balance sheet flexibility, and enhance long-term shareholder value.
Our consistent cash generation provides the capacity to repurchase shares and reinvest strategically,” Joffe added. “We remain committed to creating long-term value for our shareholders through disciplined capital allocation and operational excellence.
Outlook: Positioned for Growth in the Automotive Aftermarket
Motorcar Parts of America expects continued strength across its business segments, supported by favorable aftermarket demand drivers such as:
- The growing average age of vehicles, driving replacement part demand.
- Expansion in the electric and hybrid vehicle segment requiring new remanufacturing technologies.
- Ongoing supply chain normalization, improving inventory management and distribution efficiency.
- Investments in technology and process automation to improve margins and scalability.
The company’s diversified portfolio across rotating electrical products, wheel hub assemblies, and brake-related components continues to provide resilience amid broader industry fluctuations. Its North American manufacturing and distribution network positions it well to capitalize on the ongoing shift toward domestic sourcing and sustainability-focused operations.
Use of Non-GAAP Measures
Motorcar Parts of America continues to use EBITDA as a supplemental financial metric to evaluate operational performance. While EBITDA is not a GAAP measure, the company believes it provides valuable insights into underlying business trends, excluding the effects of non-cash and one-time items.
However, management cautions that EBITDA should not be considered a substitute for net income under GAAP and may not be directly comparable to similarly titled measures reported by other companies. Detailed reconciliations of EBITDA to net income are available in the financial tables accompanying the company’s press release and Form 8-K filing with the U.S. Securities and Exchange Commission (SEC).
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