Motorcar Parts of America Delivers Record Fiscal First Quarter 2026 Results, Boosts Sales Outlook Amid Strong Industry Tailwinds
Motorcar Parts of America, has started its fiscal 2026 year with a robust performance, reporting record sales and gross profit for a fiscal first quarter, supported by improved operating efficiency, reduced debt, and healthy cash flow generation.
The Los Angeles-based automotive aftermarket parts manufacturer and distributor — known for supplying rotating electrical, wheel hub, brake, and other non-discretionary components — reported double-digit sales growth, significant improvements in profitability, and continued progress in its strategic initiatives to strengthen its supply chain and market position.
Financial Highlights at a Glance
For the fiscal first quarter ended June 30, 2025, Motorcar Parts of America delivered:
- Net sales up 10.9% year-over-year to a record $188.4 million, compared to $169.9 million in the prior year.
- Gross profit up 16.3% to a first-quarter high of $33.9 million, versus $29.2 million a year earlier.
- Operating income of $20.1 million, compared to an operating loss of $6.5 million in the year-ago quarter.
- Cash from operating activities of $10.0 million, versus a cash use of $20.8 million last year.
- Net bank debt reduced by $7.0 million to $74.4 million.
- Share repurchases totaling 197,796 shares for $2.0 million at an average price of $9.94.
Sales and Profitability Trends
The company’s first quarter sales of $188.4 million represent its strongest fiscal Q1 in history. Growth was fueled by continued demand for non-discretionary automotive parts — a segment that tends to perform well regardless of broader economic cycles due to the essential nature of vehicle maintenance and repair.
Gross profit reached $33.9 million, also a first-quarter record, with gross margin improving to 18.0%, up from 17.2% in the prior year. The margin improvement was achieved despite the inclusion of non-cash expenses of $3.9 million (2.1% of sales) and cash expenses of $1.4 million (0.8% of sales).
Operating performance showed an even more striking turnaround. Motorcar Parts of America generated operating income of $20.1 million, a substantial improvement from last year’s $6.5 million operating loss. On an adjusted basis — excluding the impact of non-cash foreign exchange effects related to lease liabilities and forward contracts — operating income rose 153.6% to $11.7 million, compared with $4.6 million in the prior year.
Lower Financing Costs Support Earnings Recovery
Interest expense for the quarter was $12.8 million, down $1.6 million from $14.4 million a year earlier. The decrease was driven by lower average borrowings under the company’s credit facility and more favorable interest rates.
Net income for the fiscal first quarter was $3.0 million, or $0.15 per diluted share, compared to a net loss of $18.1 million, or $0.92 per diluted share, in the same period last year. Net income included non-cash benefits of $1.3 million (or $0.07 per diluted share), partially offset by $1.1 million in cash expenses (or $0.05 per diluted share).
CEO Commentary: Industry Tailwinds and Supply Chain Strength
Chairman, President, and CEO Selwyn Joffe expressed satisfaction with the company’s performance, noting that the record first quarter results follow a strong fiscal 2025.
“We remain focused on enhancing our supply chain and operating efficiencies as we continue to capitalize on the company’s prominent position within the non-discretionary automotive aftermarket business,” Joffe said.
He highlighted that macro trends are working in the company’s favor — notably, the growing number of vehicles on the road and the rising average age of the U.S. car parc, which has now reached 12.8 years. These factors generally translate to higher demand for replacement parts, as older vehicles require more maintenance and repairs.
Strategic Supply Chain Initiatives
A key element of Motorcar Parts of America’s operational strategy has been reducing dependency on Chinese suppliers. According to Joffe, the company has been working toward this goal for several years, and China now accounts for less than 25% of its parts and components sourcing.
“We remain optimistic about a successful resolution of current global economic events related to tariffs,” Joffe stated, adding that the company’s North American footprint offers strategic advantages. “We see further potential to reduce reliance on overseas supply sources and offset tariff costs.”
The company continues to collaborate closely with both suppliers and customers to achieve operational efficiencies and strengthen supply chain resilience.
Cash Flow and Debt Reduction
The company’s financial discipline was evident in its improved cash generation. In the first quarter, operating activities generated $10.0 million in cash, a sharp turnaround from the $20.8 million cash outflow in the prior year.
Net bank debt declined by $7.0 million, falling to $74.4 million from $81.4 million at the end of the prior quarter. This debt reduction reflects the company’s commitment to balance sheet improvement while still returning capital to shareholders.
Share Repurchase Program
During the quarter, Motorcar Parts of America repurchased nearly 198,000 shares for $2.0 million at an average price of $9.94 per share. The buybacks, funded by operating cash flow, are part of the company’s broader capital allocation strategy aimed at enhancing shareholder value.
Upgraded Fiscal 2026 Guidance
Following the strong start to the year, the company has raised its full-year sales guidance. It now expects fiscal 2026 net sales in the range of $800 million to $820 million, representing year-over-year growth of 5.6% to 8.3%. The increase reflects not only the robust first-quarter performance but also the anticipated benefits of tariff pass-through pricing.
The company reaffirmed its operating income guidance of $86 million to $91 million, which represents growth of 4.3% to 10.4% versus fiscal 2025. This projection incorporates both the positive effects of tariff recovery and ongoing cost mitigation initiatives.
Depreciation and amortization for the year are expected to be around $11 million. The guidance accounts for tariffs in effect as of August 11, 2025, but excludes certain non-cash items and one-time expenses.
Use of Non-GAAP Metrics
As in prior quarters, Motorcar Parts of America reported EBITDA (earnings before interest, taxes, depreciation, and amortization) as a supplemental, non-GAAP performance measure. Management believes EBITDA provides additional insight into underlying business performance, especially when compared alongside GAAP results.
However, the company cautioned that EBITDA is not a substitute for GAAP measures and may not be directly comparable to similar metrics used by other companies due to differences in calculation methods. Full reconciliations between GAAP net income and EBITDA are included in the financial tables accompanying the release and in the company’s Form 8-K filing with the U.S. Securities and Exchange Commission.
