Motorcar Parts Reports Fiscal Third Quarter Results

Reports Significant Growth in Operating Income


LOS ANGELES, Feb. 11, 2008 (PRIME NEWSWIRE) -- Motorcar Parts of America, Inc. (Nasdaq:MPAA) today reported results for its fiscal third quarter ended December 31, 2007, reflecting continued progress in its strategic initiatives to reduce manufacturing costs and gain market share in a consolidating industry.

Net loss for the fiscal 2008 third quarter was reduced significantly to $183,000, or $0.02 per diluted share, compared with a net loss of $2.1 million, or $0.25 per diluted share, a year earlier. Operating income for the fiscal 2008 third quarter was $842,000 compared with an operating loss of $94,000 a year ago, supported by increased utilization of the company's manufacturing operations in Mexico and Malaysia. Net sales for the fiscal 2008 third quarter were $28.2 million compared with $33.3 million in the same period last year -- reflecting industry demand.

For the nine months ended December 31, 2007, net income was $1.9 million, or $0.16 per diluted share, compared with a net loss of $2.3 million, or $0.28 per diluted share, for the same period a year ago. Operating income for the nine months was $7.5 million compared with $1.7 million a year earlier. Net sales for the fiscal 2008 nine months were $97.4 million compared with net sales of $104.9 million for the comparable period last year. Excluding the $11.7 million of net sales associated with the discontinuation of the company's pay-on-scan arrangement in August 2006 with an automotive retailer, net sales for the nine months ended December 31, 2007 would have increased by $4.3 million, or approximately five percent compared with the same period last year.

Gross profit for the fiscal 2008 third quarter increased 28 percent to $7.5 million from $5.9 million for the same period a year ago. Gross margin was 27 percent for the fiscal 2008 third quarter compared with 18 percent a year earlier, due to lower manufacturing costs resulting from improvements in manufacturing efficiencies at the company's Mexican facility and decreases in customer marketing allowances during the third quarter of 2008 compared with the prior-year period.

"Results for the quarter reflect the incremental benefits of several key strategic initiatives -- including the company's ongoing focus on margin improvement through the relocation of a majority of manufacturing to Mexico from California and greater utilization of production at our long-time operation in Malaysia. In addition, during the quarter the company was successful in subleasing and closing its distribution facility in the Nashville region -- resulting in an estimated reduction of future expenses on an annualized basis of approximately $1.6 million. Particularly significant was the company's announcement last week of a three-year supply contract extension from a major automotive retailer for new and remanufactured alternators and starters with estimated aggregate net sales of approximately $50 million during the three-year contract extension term. The fourth quarter is off to a strong start and we look forward to reporting ongoing accomplishments for the balance of fiscal 2008," said Selwyn Joffe, chairman, president and chief executive officer of Motorcar Parts of America, Inc.

He also highlighted the company's announcement last week regarding management changes within the finance and accounting areas, with an emphasis on enhancing internal controls and streamlining operations. Joffe reiterated that both David Lee, the company's new chief financial officer, and Kevin Daly, who was promoted to the new position as chief accounting officer, would report to him.

He also noted the engagement of Ernst & Young LLP as the company's new independent registered public accounting firm.

Teleconference and Web Cast

Selwyn Joffe, chairman, president and chief executive officer, and David Lee, chief financial officer, will host an investor conference call today at 9:00 a.m. Pacific time to discuss the company's financial results and operations for the quarter. The call will be open to all interested investors either through a live audio Web broadcast via the Internet at www.motorcarparts.com or live by calling (877)-675-4756 (domestic) or (719)-325-4929 (international). For those who are not available to listen to the live broadcast, the call will be archived for seven days on Motorcar Parts of America's website. A telephone playback of the conference call will also be available from 12:00 p.m. Pacific time Monday, February 11, through 11:59 p.m. Monday, February 18, by calling (888)-203-1112 (domestic) or (719)-457-0820 (international) and using access code: 7884530.

About Motorcar Parts of America

Motorcar Parts of America, Inc. is a remanufacturer of alternators and starters utilized in imported and domestic passenger vehicles and light trucks. Its products are sold to automotive retail outlets and the professional repair market throughout the United States and Canada, with facilities located in California, Tennessee, Mexico, Singapore and Malaysia. Additional information is available at www.motorcarparts.com

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain forward-looking statements. The statements contained in this press release that are not historical facts are forward-looking statements based on the company's current expectations and beliefs concerning future developments and their potential effects on the company, including the expected benefits from its strategic initiatives, the recent extension of a multi-year supply agreement and the impact of future business derived from consolidation within the industry. These forward-looking statements involve significant risks and uncertainties (some of which are beyond the control of the company) and are subject to change based upon various factor. Reference is also made to the Risk Factors set forth in the company's Form 10-K Annual Report filed with the Securities and Exchange Commission (SEC) in June 2007 and in its Form 10-Qs filed with the SEC thereafter for additional risks and uncertainties facing the company. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise.


           MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF OPERATIONS
                              (Unaudited)

                    Three Months Ended          Nine Months Ended
                --------------------------  --------------------------
                        December 31,                December 31,
                    2007          2006          2007          2006
                ------------  ------------  ------------  ------------

 Net sales      $ 28,182,000  $ 33,334,000  $ 97,443,000  $104,924,000
 Cost of
  goods sold      20,694,000    27,479,000    71,509,000    86,955,000
                ------------  ------------  ------------  ------------
 Gross profit      7,488,000     5,855,000    25,934,000    17,969,000
 Operating
  expenses:
 General and
  administrative   5,520,000     4,961,000    15,034,000    12,161,000
 Sales and
  marketing          824,000       614,000     2,551,000     2,940,000
 Research and
  development        302,000       374,000       852,000     1,131,000
                ------------  ------------  ------------  ------------
 Total
  operating
  expenses         6,646,000     5,949,000    18,437,000    16,232,000
                ------------  ------------  ------------  ------------
 Operating
  income (loss)      842,000       (94,000)    7,497,000     1,737,000
 Interest
  expense --
  net of
  interest
  income           1,257,000     1,883,000     4,444,000     4,019,000
                ------------  ------------  ------------  ------------
 Income (loss)
  before income
  tax expense
  (benefit)         (415,000)   (1,977,000)    3,053,000    (2,282,000)
 Income tax
  expense
  (benefit)         (232,000)      151,000     1,179,000        30,000
                ------------  ------------  ------------  ------------
 Net income
  (loss)        $   (183,000) $ (2,128,000) $  1,874,000  $ (2,312,000)
                ============  ============  ============  ============
 Basic net
  income (loss)
  per share     $      (0.02) $      (0.25) $       0.17  $      (0.28)
                ============  ============  ============  ============
 Diluted net
  income (loss)
  per share     $      (0.02) $      (0.25) $       0.16  $      (0.28)
                ============  ============  ============  ============
 Weighted
  average
  number of
  shares
  outstanding:
 -- basic         12,061,087     8,365,288    11,341,291     8,340,731
                ============  ============  ============  ============
 -- diluted       12,061,087     8,365,288    11,724,168     8,340,731
                ============  ============  ============  ============


           MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
                      CONSOLIDATED BALANCE SHEETS

                                            December 31,    March 31,
                                                2007          2007
                                            ------------  ------------
 ASSETS                                     (Unaudited)
 Current assets:
   Cash                                     $    464,000  $    349,000
   Short term investments                      1,055,000       859,000
   Accounts receivable -- net                  2,514,000     2,259,000
   Non-core inventory -- net                  31,129,000    32,260,000
   Inventory unreturned                        4,712,000     3,886,000
   Income tax receivable                           6,000     1,670,000
   Deferred income tax asset                   7,232,000     6,768,000
   Prepaid expenses and other current
    assets                                     1,321,000     1,873,000
                                            ------------  ------------
     Total current assets                     48,433,000    49,924,000
  Plant and equipment -- net                  15,932,000    16,051,000
  Long-term core inventory -- net             45,447,000    42,076,000
  Long-term core inventory deposit            22,278,000    21,617,000
  Deferred income tax asset                    1,817,000     1,817,000
  Other assets                                   445,000       501,000
                                            ------------  ------------
      TOTAL ASSETS                          $134,352,000  $131,986,000
                                            ============  ============
 LIABILITIES AND SHAREHOLDERS' EQUITY
 Current liabilities:
   Accounts payable                         $ 27,974,000  $ 42,756,000
   Accrued liabilities                         1,937,000     1,292,000
   Accrued salaries and wages                  2,836,000     2,780,000
   Accrued workers' compensation claims        2,627,000     3,972,000
   Income tax payable                             66,000       285,000
   Line of credit                                     --    22,800,000
   Deferred compensation                       1,057,000       859,000
   Deferred income                               133,000       133,000
   Other current liabilities                     522,000       225,000
   Current portion of capital lease
    obligations                                1,727,000     1,568,000
                                            ------------  ------------
     Total current liabilities                38,879,000    76,670,000
  Deferred income, less current portion          155,000       255,000
  Deferred core revenue                        2,646,000     1,575,000
  Deferred gain on sale-leaseback              1,470,000     1,859,000
  Other liabilities                              258,000       170,000
  Capitalized lease obligations, less
   current portion                             2,889,000     3,629,000
                                            ------------  ------------
      Total liabilities                       46,297,000    84,158,000
  Commitments and Contingencies
  Shareholders' equity:
    Preferred stock; par value $.01 per
     share, 5,000,000 shares authorized;
     none issued                                      --            --
    Series A junior participating
     preferred stock; par value $.01 per
     share, 20,000 shares authorized;
     none issued                                      --            --
    Common stock; par value $.01 per share,
     20,000,000 shares authorized;
     12,064,263 and 8,373,122 shares
     issued and outstanding at
     December 31, 2007 and March 31, 2007,
     respectively                                121,000        84,000
    Additional paid-in capital-common stock   92,461,000    56,241,000
    Additional paid-in capital-warrant         1,879,000            --
    Shareholder note receivable                 (682,000)     (682,000)
    Accumulated other comprehensive income       257,000        40,000
    Accumulated deficit                       (5,981,000)   (7,855,000)
                                            ------------  ------------
      Total shareholders' equity              88,055,000    47,828,000
                                            ------------  ------------
      TOTAL LIABILITIES & SHAREHOLDERS'
       EQUITY                               $134,352,000  $131,986,000
                                            ============  ============


            

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