Motorcar Parts of America Reports Fiscal 2027 First-Quarter Results
Motorcar Parts of America, Inc. a major supplier to the automotive aftermarket, has reported its financial results for the first quarter of fiscal 2027, with management maintaining its full-year outlook despite lower first-quarter sales and profitability.
The company said results for the three months ended June 30, 2026, were affected primarily by the timing of customer orders, temporary inventory conditions in the market, and the planned relocation of certain Canadian heavy-duty operations to manufacturing facilities in Mexico. Despite these short-term factors, Motorcar Parts of America continues to expect fiscal 2027 net sales and operating income to remain within its previously established guidance ranges.
Management also pointed to significant new business commitments, the potential contribution from the relaunch of the Centric Parts brand, and increasing utilization of brake-related manufacturing capacity as important drivers of future growth.
Full-Year Fiscal 2027 Outlook Remains Unchanged
Motorcar Parts of America reaffirmed its fiscal 2027 guidance, calling for net sales between $780 million and $800 million and operating income between $86 million and $91 million.
The guidance excludes certain non-cash expenses and one-time items that can affect reported results but are not considered representative of the company’s underlying operating performance.
Management also expects to add more than $100 million in annualized net sales by the end of fiscal 2027. If achieved, annualized net sales are expected to exceed $900 million by the end of the fiscal year.
The company believes its growth pipeline remains strong, supported by new business wins and additional opportunities across its product portfolio. The relaunch of the Centric Parts brand is expected to provide another avenue for expansion, particularly within the braking products market.
Motorcar Parts of America also sees increasing utilization of its brake-related manufacturing capacity as an opportunity to improve margins. Greater production volumes across existing infrastructure can help spread fixed costs over a larger revenue base and potentially generate additional operating leverage.
First-Quarter Sales Reflect Timing of Customer Orders
Net sales for the fiscal 2027 first quarter were $168.0 million, compared with $188.4 million during the same period a year earlier.
The approximately $20.4 million year-over-year decline was largely consistent with the company’s expectations and was primarily attributable to the timing of customer orders.
Management emphasized that the lower quarterly sales figure should not necessarily be interpreted as a deterioration in the company’s long-term business prospects. Instead, several temporary factors affected the timing of shipments and customer purchasing activity during the period.
One of those factors involved inventory liquidations connected to the bankruptcy of a competitor. Some customers took advantage of discounted inventory available through the liquidation process, temporarily affecting demand for certain new business opportunities involving Motorcar Parts of America.
According to the company, this dynamic has begun to reverse, providing an opportunity for business volumes to recover as customers move beyond the temporary inventory situation.
Sales were also delayed by the company’s strategic relocation of its Canadian heavy-duty operations. Motorcar Parts of America is moving these operations to its manufacturing facilities in Mexico as part of its broader strategy to optimize its manufacturing footprint.
The company expects the relocation to support operational efficiency over time, although the transition affected the timing of sales during the first quarter.
Gross Profit and Margin Performance
Gross profit for the fiscal 2027 first quarter was $27.2 million, compared with $33.9 million in the prior-year quarter.
Reported gross margin declined to 16.2 percent from 18.0 percent a year earlier.
Motorcar Parts of America said reported gross margin was affected by several non-cash and one-time items. Non-cash expenses represented approximately 2.4 percent of sales, while one-time items represented approximately 1.6 percent.
When these non-cash expenses and certain one-time cash items are excluded, adjusted gross margin was approximately 20.2 percent.
Foreign currency movements also had a meaningful impact on profitability during the quarter. The company estimated that currency fluctuations reduced gross margin by approximately two percentage points, representing an unfavorable impact of about $3.5 million.
The currency headwind demonstrates the impact that international operations can have on the company’s reported financial performance. However, management’s adjusted results suggest that underlying gross-margin performance remained stronger than the headline figure indicates.
As the company increases utilization of its brake-related manufacturing capacity and progresses with its strategic initiatives, management expects opportunities to improve margins and strengthen profitability.
Operating Income Declines From Prior-Year Period
Operating income for the first quarter of fiscal 2027 was $3.5 million, compared with $20.1 million in the prior-year period.
The decline reflected the combination of lower sales, foreign currency headwinds, and non-cash and one-time expenses.
Motorcar Parts of America recorded $4.7 million in non-cash expenses and $3.0 million in one-time items during the quarter.
For comparison, the prior-year quarter included $3.5 million of non-cash items, partially offset by $1.4 million of one-time cash expenses.
After excluding the applicable non-cash and certain one-time cash items, operating income for the latest quarter was $11.2 million. That adjusted figure includes the approximately $3.5 million unfavorable impact from foreign currency fluctuations.
Adjusted operating income in the prior-year period was $18.0 million.
The results highlight the effect that sales timing and currency movements can have on quarterly profitability. Nevertheless, management continues to believe that the company’s full-year outlook remains achievable.
Interest Expense Declines
Interest expense for the fiscal 2027 first quarter decreased to $12.0 million from $12.8 million in the year-ago period.
The $768,000 reduction was primarily attributed to lower sales and the resulting decrease in utilization of accounts receivable discount programs.
Lower interest expense provided some relief amid the weaker operating results. The company continues to focus on strengthening its balance sheet and maintaining access to capital as it pursues its growth strategy.
Net Loss Reported for the Quarter
Motorcar Parts of America reported a net loss of $13.4 million, or $0.71 per share, for the fiscal 2027 first quarter.
That compares with net income of $3.0 million, or $0.15 per diluted share, during the same quarter of the previous fiscal year.
The reported net loss was affected by $4.6 million of non-cash expenses, equivalent to approximately $0.25 per share, and $2.3 million of one-time items, equivalent to approximately $0.12 per share.
Management’s emphasis remains on the company’s underlying operating performance rather than quarterly results affected by these special items. The company believes that sales growth, improved production utilization, new business awards and the continued development of its product portfolio can support stronger results as fiscal 2027 progresses.
Management Remains Confident in Full-Year Targets
Selwyn Joffe, chairman, president and chief executive officer of Motorcar Parts of America, said the company remains confident in its ability to achieve its annual guidance despite the sales headwinds experienced during the first quarter.
Joffe acknowledged that the company and the broader automotive aftermarket industry encountered some expected challenges during the period. However, he emphasized that the company’s long-term growth opportunities remain significant.
A major source of optimism is the company’s growing pipeline of new business commitments in North America.
Management also sees strength across the company’s product lines, with particular attention focused on its Centric Parts brake business.
Centric Parts Creates Additional Growth Opportunity
The Centric Parts brand represents an important component of Motorcar Parts of America’s growth strategy.
The company has highlighted significant customer interest in Centric Parts following its recent announcement regarding the brand and its brake product portfolio.
Joffe pointed to the historical scale of the Centric Parts brake business, with estimated historical gross sales reaching as high as $400 million at the supplier level.
The company’s strategy is to leverage its existing manufacturing capabilities, customer relationships and distribution network to expand the opportunity associated with Centric Parts.
The relaunch could help Motorcar Parts of America strengthen its position in the automotive aftermarket while expanding its addressable market in braking products.
Management believes customer interest following the announcement demonstrates the potential of the brand and its product portfolio.
New Business Commitments Support Future Growth
Beyond Centric Parts, Motorcar Parts of America continues to secure significant new business commitments.
These awards are expected to contribute to future revenue growth as production ramps up and customer programs move into full commercialization.
The company expects more than $100 million of additional annualized net sales to be added by the end of fiscal 2027.
That growth would bring annualized sales above $900 million by the end of the fiscal year, representing an important step toward the company’s longer-term expansion objectives.
The company is focused on converting its business pipeline into actual production and revenue while simultaneously improving manufacturing efficiency.
Credit Facility Extended Through 2031
Another important development during the period was the renewal of the company’s loan agreement and the extension of the maturity date of its revolving credit facility to August 2031.
The facility is led by PNC Bank, N.A.
Management said the renewal reflects the company’s progress, its established position within the automotive aftermarket and its commitment to strategic growth and profitability.
Extending the maturity of the revolving credit facility provides Motorcar Parts of America with additional financial flexibility as it invests in manufacturing capacity, supports new business programs and manages its working capital requirements.
As of June 30, 2026, net bank debt was $99.7 million. This consisted of a revolver loan of $118.8 million, offset by $19.1 million in cash.
The company’s debt position also reflects the impact of its recent acquisition of Centric Parts brake brands and its share repurchase activity.
Share Repurchase Program Continues
Motorcar Parts of America continued its share repurchase program during the fiscal 2027 first quarter.
The company repurchased 129,523 shares for approximately $1.9 million. The average purchase price was $14.98 per share.
Following these purchases, the company had approximately $20.1 million remaining under its current authorized share repurchase program.
Share repurchases are part of the company’s broader strategy to create value for shareholders. Management expects shareholder value creation to be supported by a combination of revenue growth, improved profitability and stronger cash generation.
The company will have flexibility to determine the pace of future repurchases based on market conditions, capital requirements and other strategic priorities.
Focus on Margin Expansion and Cash Generation
Motorcar Parts of America enters the remainder of fiscal 2027 with several important growth initiatives underway.
While the first quarter was affected by order timing and other temporary factors, management continues to see opportunities to increase sales and improve profitability.
Higher utilization of brake-related manufacturing capacity is expected to play a key role in margin expansion. The company can potentially benefit from greater economies of scale as production volumes increase.
The company is also working to capture the benefits of new business awards and the Centric Parts brand relaunch.
At the same time, the relocation of Canadian heavy-duty operations to Mexico is expected to support the company’s manufacturing strategy over the longer term.
Outlook for Fiscal 2027
Motorcar Parts of America believes the first-quarter results do not change its expectations for the full fiscal year.
The company continues to target net sales of $780 million to $800 million and operating income of $86 million to $91 million, excluding certain non-cash and one-time expenses.
Achieving these targets will depend on the timing of customer orders, successful implementation of new business programs, recovery from temporary inventory disruptions, increased manufacturing utilization and the company’s ability to manage foreign currency and other cost pressures.
Management remains optimistic that the business can gain momentum as the fiscal year progresses.
The company expects its growing pipeline of new business, expanded brake-related opportunities and increased production utilization to provide the foundation for improved financial performance.
With annualized sales expected to exceed $900 million by the end of fiscal 2027, Motorcar Parts of America is positioning itself for continued expansion in the automotive aftermarket.
Despite the weaker first-quarter comparison, management’s reaffirmation of its full-year guidance signals confidence in the company’s ability to execute its strategic plan.
The combination of new customer commitments, the Centric Parts opportunity, manufacturing optimization, extended credit facilities and continued attention to shareholder returns gives Motorcar Parts of America several potential avenues for growth.
As the company moves through fiscal 2027, investors and industry observers will be watching the pace at which delayed orders return, new programs ramp up and brake manufacturing capacity is increasingly utilized. These factors could be important in determining whether the company can convert its current growth opportunities into higher sales, stronger margins and improved cash generation during the remainder of the fiscal year.
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