LOS ANGELES, June 17, 2013 (GLOBE NEWSWIRE) -- Motorcar Parts of America, Inc. (Nasdaq:MPAA) today reported results for its fiscal 2013 fourth quarter and year ended March 31, 2013 – reflecting record sales for its rotating electrical business offset by the establishment of specific charge-off accruals related to its former undercar business segment.
Rotating electrical net sales for the fiscal 2013 fourth quarter increased 11.8 percent to $58.0 million from $51.9 million for the same period last year. Gross profit for the rotating electrical segment for the fourth quarter was $18.1 million compared with $16.8 million a year earlier. Gross profit as a percentage of sales for the rotating electrical segment was 31.2 percent compared with 32.5 percent last year. Excluding certain undercar-related costs and non-cash expenses noted in the Reconciliation of Non-GAAP Financial Measures tables below, adjusted EBITDA for the company's rotating electrical segment was $10.5 million compared with $10.3 million for the same period a year earlier, and adjusted net income was $3.6 million, or $0.26 per diluted share, compared with $3.7 million, or $0.30 per diluted share, for the same period a year earlier.
The company reported a consolidated net loss for the fiscal 2013 fourth quarter of $73.7 million, or $5.09 per share, compared with a net loss of $12.9 million, or $1.03 per share, a year earlier. Consolidated results include specific charge-off accruals related to the company's investment in its former undercar business segment, and the required impairment of all intangible assets on Fenco's balance sheet as a result of its pending liquidation. On a non-GAAP adjusted basis, consolidated net loss was $2.1 million, or $0.14 per share compared with a net loss of $4.0 million, or $0.32 per share, a year ago.
Rotating electrical net sales for fiscal 2013 increased 18.2 percent to $213.2 million from $180.4 million for the prior fiscal year. Gross profit for the rotating electrical segment for fiscal 2013 was $69.3 million compared with $57.3 million a year earlier. Gross profit as a percentage of sales for the rotating electrical segment was 32.5 percent compared with 31.8 percent last year. Excluding certain undercar-related costs and non-cash expenses noted in the Reconciliation of Non-GAAP Financial Measures tables below, adjusted EBITDA for the company's rotating electrical segment was $41.2 million compared with $32.1 million for the prior fiscal year, and adjusted net income was $13.8 million, or $0.98 per diluted share, reflecting higher interest expense, compared with $13.0 million, or $1.04 per diluted share, for fiscal 2012.
The company reported a consolidated net loss for fiscal 2013 of $91.5 million, or $6.39 per share, compared with a net loss of $48.5 million, or $3.90 per share, a year ago. Consolidated results include specific charge-off accruals related to the company's investment in its former undercar business segment, and the required impairment of all intangible assets on Fenco's balance sheet as a result of its pending liquidation. On a non-GAAP adjusted basis, consolidated net loss was $12.2 million, or $0.85 per share compared with a net loss of $10.4 million, or $0.84 per share for the same period a year earlier.
"While we had made significant progress in our turnaround efforts for Fenco, it became clear that the cost savings and operational efficiencies that we achieved were not sufficient to continue our investment under the existing economic model. However, our rotating electrical business is the cornerstone of our company and it is performing well. We expect continued growth, supported by strong liquidity with a cash position of $19.0 million and approximately $18.0 million available under the company's revolving credit facility at fiscal year end. Our management team is resilient, our customers are supportive and we look forward to the opportunities ahead," said Selwyn Joffe, chairman, president and chief executive officer of Motorcar Parts of America.
Joffe noted that the company expects to realize tax benefits of approximately $30 million as a result of the losses incurred through Fenco, which should further enhance Motorcar Parts of America's liquidity.
He added that during the fourth quarter the company repurchased an aggregate 135, 327 shares and vested options at a weighted average price of $4.84, or a total of $654,675.
Use of Non-GAAP Measures
We define adjusted net loss as net loss adjusted for matters affecting net sales for our undercar product line, financing, consulting and other fees, share-based compensation expense, undercar product lines not supported, and other matters. We define Adjusted EBITDA as adjusted net income (loss), plus interest expense, income tax expense and depreciation and amortization. We calculate those measures for the entire company as well as the rotating electrical segment. Adjusted net loss does not reflect many items that affect the company's net loss, including many items related to Fenco. Adjusted EBITDA does not reflect the impact of a number of items that affect the company's net income, including financing, transition and acquisition-related costs. Adjusted EBITDA and adjusted net loss are not measures of financial performance under GAAP, and should not be considered as alternatives to net income or income from operations as a measure of liquidity. Adjusted EBITDA and adjusted net loss have significant limitations as analytical tools, and should not be considered in isolation, or as a substitute for analysis of the company's results as reported under GAAP. For a reconciliation of net income (loss) to Adjusted EBITDA and adjusted net loss, for the company and the rotating electrical segment, see the financial tables included in the press release.
Teleconference and Web Cast
Selwyn Joffe, chairman, president and chief executive officer, and David Lee, chief financial officer, will host an investor conference call the same day at 10:00 a.m. Pacific time to discuss the company's financial results and operations.
The call will be open to all interested investors either through a live audio Web broadcast at www.motorcarparts.com or live by calling (877)-776-4016 (domestic) or (973)-638-3231 (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 www.motorcarparts.com. A telephone playback of the conference call will also be available from approximately 1:00 p.m. Pacific time on Monday, June 17, 2013 through 8:59 p.m. Pacific time on Monday, June 24, 2013 by calling (855)-859-2056 (domestic) or (404)-537-3406 (international) and using access code: 93948671.
About Motorcar Parts of America
Motorcar Parts of America, Inc. is a remanufacturer of alternators and starters utilized in imported and domestic passenger vehicles, light trucks and heavy duty applications. Motorcar Parts of America's products are sold to automotive retail outlets and the professional repair market throughout the United States and Canada, with remanufacturing facilities located in California, Mexico and Malaysia, and administrative offices 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. 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 factors. 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 September 2012 and in its Forms 10-Q filed with the SEC 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.
(Financial tables follow)
| MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES | ||||
| Consolidated Statements of Income | ||||
| Three Months Ended | Twelve Months Ended | |||
| March 31, | March 31, | |||
| 2013 | 2012 | 2013 | 2012 | |
| (Unaudited) | ||||
| Net sales | $ 89,336,000 | $ 101,464,000 | $ 406,266,000 | $ 363,687,000 |
| Cost of goods sold | 86,486,000 | 94,188,000 | 350,538,000 | 335,980,000 |
| Gross profit | 2,850,000 | 7,276,000 | 55,728,000 | 27,707,000 |
| Operating expenses: | ||||
| General and administrative | 8,990,000 | 9,108,000 | 44,526,000 | 38,881,000 |
| Sales and marketing | 2,583,000 | 3,785,000 | 12,713,000 | 12,804,000 |
| Research and development | 924,000 | 495,000 | 2,628,000 | 1,765,000 |
| Impairment of goodwill and intangible assets | 84,686,000 | -- | 84,686,000 | -- |
| Impairment of plant and equipment | -- | -- | -- | 1,031,000 |
| Acquisition costs | -- | -- | -- | 713,000 |
| Total operating expenses | 97,183,000 | 13,388,000 | 144,553,000 | 55,194,000 |
| Operating (loss) income | (94,333,000) | (6,112,000) | (88,825,000) | (27,487,000) |
| Other expense: | ||||
| Interest expense, net | 7,271,000 | 5,690,000 | 24,406,000 | 14,255,000 |
| (Loss) income before income tax expense | (101,604,000) | (11,802,000) | (113,231,000) | (41,742,000) |
| Income tax expense | (27,953,000) | 1,141,000 | (21,720,000) | 6,772,000 |
| Net (loss) income | $ (73,651,000) | $ (12,943,000) | $ (91,511,000) | $ (48,514,000) |
| Basic net (loss) income per share | $ (5.09) | $ (1.03) | $ (6.39) | $ (3.90) |
| Diluted net (loss) income per share | $ (5.09) | $ (1.03) | $ (6.39) | $ (3.90) |
| Weighted average number of shares outstanding: | ||||
| Basic | 14,462,457 | 12,519,421 | 14,327,310 | 12,442,684 |
| Diluted | 14,462,457 | 12,519,421 | 14,327,310 | 12,442,684 |
| MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES | ||
| Consolidated Balance Sheets | ||
| March 31, | ||
| 2013 | 2012 | |
| ASSETS | ||
| Current assets: | ||
| Cash | $ 19,434,000 | $ 32,617,000 |
| Short-term investments | 411,000 | 342,000 |
| Accounts receivable — net | 14,311,000 | 20,036,000 |
| Inventory— net | 61,090,000 | 95,071,000 |
| Inventory unreturned | 12,150,000 | 9,819,000 |
| Deferred income taxes | 34,885,000 | 3,793,000 |
| Prepaid expenses and other current assets | 10,350,000 | 6,553,000 |
| Total current assets | 152,631,000 | 168,231,000 |
| Plant and equipment — net | 14,083,000 | 12,738,000 |
| Long-term core inventory — net | 158,476,000 | 194,406,000 |
| Long-term core inventory deposits | 27,610,000 | 26,939,000 |
| Long-term deferred income taxes | 2,546,000 | 1,857,000 |
| Goodwill | -- | 68,356,000 |
| Intangible assets — net | 3,983,000 | 22,484,000 |
| Other assets | 7,745,000 | 6,887,000 |
| TOTAL ASSETS | $ 367,074,000 | $ 501,898,000 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Accounts payable | $ 113,753,000 | $ 126,100,000 |
| Accrued liabilities | 14,856,000 | 19,379,000 |
| Customer finished goods returns accrual | 24,978,000 | 21,695,000 |
| Other current liabilities | 3,009,000 | 2,745,000 |
| Current portion of term loan | 3,900,000 | 500,000 |
| Revolving loan - in default | 49,277,000 | -- |
| Term loan - in default | 10,000,000 | -- |
| Total current liabilities | 219,773,000 | 170,419,000 |
| Term loan, less current portion | 80,110,000 | 84,500,000 |
| Revolving loan | -- | 48,884,000 |
| Deferred core revenue | 12,014,000 | 9,775,000 |
| Customer core returns accrual | 50,414,000 | 113,702,000 |
| Other liabilities | 8,277,000 | 999,000 |
| Total liabilities | 370,588,000 | 428,279,000 |
| 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; 14,460,979 and 12,533,821 shares issued; 14,460,979 and 12,519,421 outstanding at March 31, 2013 and 2012, respectively | 145,000 | 125,000 |
| Treasury stock, at cost, none at March 31, 2013 and 14,400 shares of common stock at March 31, 2012 | -- | (89,000) |
| Additional paid-in capital | 114,737,000 | 98,627,000 |
| Additional paid-in capital-warrant | -- | 1,879,000 |
| Accumulated other comprehensive loss | (846,000) | (884,000) |
| Accumulated deficit | (117,550,000) | (26,039,000) |
| Total shareholders' (deficit) equity | (3,514,000) | 73,619,000 |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 367,074,000 | $ 501,898,000 |
| MOTORCAR PARTS OF AMERICA, INC. | ||||
| Consolidating Statement of Operations | ||||
| Year Ended March 31, 2013 | ||||
| MPA (1) | Fenco (2) | Eliminations | Consolidated | |
| Net sales | $ 213,151,000 | $ 193,115,000 | $ -- | $ 406,266,000 |
| Cost of goods sold | 143,810,000 | 206,728,000 | -- | 350,538,000 |
| Gross profit (loss) | 69,341,000 | (13,613,000) | -- | 55,728,000 |
| Operating expenses: | ||||
| General and administrative | 107,602,000 | 18,719,000 | (81,795,000) | 44,526,000 |
| Sales and marketing | 7,290,000 | 5,423,000 | -- | 12,713,000 |
| Research and development | 1,930,000 | 698,000 | -- | 2,628,000 |
| Impairment of goodwill and intangible assets | -- | 84,686,000 | -- | 84,686,000 |
| Total operating expenses | 116,822,000 | 109,526,000 | (81,795,000) | 144,553,000 |
| Operating loss | (47,481,000) | (123,139,000) | 81,795,000 | (88,825,000) |
| Other expense: | ||||
| Interest expense, net | 12,324,000 | 12,082,000 | -- | 24,406,000 |
| Loss before income tax (benefit) expense | (59,805,000) | (135,221,000) | 81,795,000 | (113,231,000) |
| Income tax (benefit) expense | (21,759,000) | 39,000 | -- | (21,720,000) |
| Net loss | $ (38,046,000) | $ (135,260,000) | $ 81,795,000 | $ (91,511,000) |
| (1) MPA includes Motorcar Parts of America, Inc., MVR Products Pte Limited, Unijoh Sdn. Bhd., Motorcar Parts de Mexico, S.A. de C.V., Central Auto Parts Co. Ltd., and Motorcar Parts of Canada, Inc. | ||||
| (2) Fenco includes Fenwick Automotive Products Limited, Introcan, Inc., and Fapco S.A. de C.V. | ||||
| MOTORCAR PARTS OF AMERICA, INC. | ||||
| Consolidating Balance Sheets | ||||
| March 31, 2013 | ||||
| MPA (1) | Fenco (2) | Eliminations | Consolidated | |
| ASSETS | ||||
| Current assets: | ||||
| Cash | $ 19,346,000 | $ 88,000 | $ -- | $ 19,434,000 |
| Short-term investments | 411,000 | -- | -- | 411,000 |
| Accounts receivable — net | 3,884,000 | 12,550,000 | (2,123,000) | 14,311,000 |
| Inventory— net | 33,139,000 | 29,252,000 | (1,301,000) | 61,090,000 |
| Inventory unreturned | 6,981,000 | 5,169,000 | -- | 12,150,000 |
| Deferred income taxes | 30,075,000 | 4,810,000 | -- | 34,885,000 |
| Prepaid expenses and other current assets | 8,195,000 | 2,155,000 | -- | 10,350,000 |
| Total current assets | 102,031,000 | 54,024,000 | (3,424,000) | 152,631,000 |
| Plant and equipment — net | 10,036,000 | 4,047,000 | -- | 14,083,000 |
| Investment in Fenco | 4,946,000 | -- | (4,946,000) | -- |
| Long-term core inventory — net | 118,211,000 | 40,265,000 | -- | 158,476,000 |
| Long-term core inventory deposits | 27,610,000 | -- | -- | 27,610,000 |
| Long-term deferred income taxes | 2,546,000 | -- | -- | 2,546,000 |
| Intangible assets — net | 3,983,000 | -- | -- | 3,983,000 |
| Other assets | 7,723,000 | 22,000 | -- | 7,745,000 |
| TOTAL ASSETS | $ 277,086,000 | $ 98,358,000 | $ (8,370,000) | $ 367,074,000 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
| Current liabilities: | ||||
| Accounts payable | $ 40,009,000 | $ 106,332,000 | $ (32,588,000) | $ 113,753,000 |
| Accrued liabilities | 9,326,000 | 5,530,000 | -- | 14,856,000 |
| Customer finished goods returns accrual | 14,289,000 | 10,689,000 | -- | 24,978,000 |
| Other current liabilities | 1,192,000 | 1,817,000 | -- | 3,009,000 |
| Current portion of term loan | 3,900,000 | -- | -- | 3,900,000 |
| Revolving loan - in default | 49,277,000 | -- | 49,277,000 | |
| Term loan - in default | -- | 10,000,000 | -- | 10,000,000 |
| Total current liabilities | 68,716,000 | 183,645,000 | (32,588,000) | 219,773,000 |
| Term loan, less current portion | 80,110,000 | -- | -- | 80,110,000 |
| Deferred core revenue | 12,014,000 | -- | -- | 12,014,000 |
| Debenture loan to MPA | -- | 52,631,000 | (52,631,000) | -- |
| Customer core returns accrual | -- | 50,414,000 | -- | 50,414,000 |
| Other liabilities | 3,481,000 | 4,796,000 | 8,277,000 | |
| Total liabilities | 164,321,000 | 291,486,000 | (85,219,000) | 370,588,000 |
| 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; 14,460,979 and 12,533,821 shares issued; 14,460,979 and 12,519,421 outstanding at March 31, 2013 and 2012, respectively | 145,000 | -- | -- | 145,000 |
| Treasury stock, at cost, none at March 31, 2013 and 14,400 shares of common stock at March 31, 2012 | -- | -- | -- | -- |
| Additional paid-in capital | 114,737,000 | 4,946,000 | (4,946,000) | 114,737,000 |
| Accumulated other comprehensive loss | (846,000) | -- | -- | (846,000) |
| Accumulated deficit | (1,271,000) | (198,074,000) | 81,795,000 | (117,550,000) |
| Total shareholders' equity (deficit) | 112,765,000 | (193,128,000) | 76,849,000 | (3,514,000) |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 277,086,000 | $ 98,358,000 | $ (8,370,000) | $ 367,074,000 |
| (1) MPA includes Motorcar Parts of America, Inc., MVR Products Pte Limited, Unijoh Sdn. Bhd., Motorcar Parts de Mexico, S.A. de C.V., Central Auto Parts Co. Ltd., and Motorcar Parts of Canada, Inc. | ||||
| (2) Fenco includes Fenwick Automotive Products Limited, Introcan, Inc., and Fapco S.A. de C.V. | ||||
Reconciliation of Non-GAAP Financial Measures
To supplement the consolidated financial statements presented in accordance with U.S. generally accepted accounting principles ("GAAP"), the Company has included the following non-GAAP adjusted financial measures in this press release and in the webcast to discuss the Company's financial results for the fiscal year 2013 and fiscal 2012 fourth quarter and twelve-month period. Each of these non-GAAP adjusted financial measures is adjusted from results based on GAAP to exclude certain expenses and gains. Among other things, the Company uses such non-GAAP adjusted financial measures in addition to and in conjunction with corresponding GAAP measures to help analyze the performance of its business.
These non-GAAP adjusted financial measures reflect an additional way of viewing aspects of the Company's operations that, when viewed with the GAAP results and the reconciliations to corresponding GAAP financial measures, provide a more complete understanding of the Company's results of operations and the factors and trends affecting the Company's business. However, these non-GAAP adjusted financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.
Beginning with the first quarter of fiscal year 2012, the Company has begun providing segment information. The two segments are defined as rotating electrical and acquired Fenco products, also referred to as the undercar segment. Income statement information relating to the Company's reportable segments for the three months and twelve months ended March 31, 2013 is as follows:
| Reconciliation of Non-GAAP Financial Measures | Exhibit 1 | |||||||
| Three months ended March 31, 2013 (Unaudited) | ||||||||
| Adjusted | ||||||||
| Rotating | Undercar | As Reported | Adjustment | Consolidated | ||||
| Income statement | Electrical | Product Line | Eliminations | Consolidated | (Non-GAAP) | (1) | (Non-GAAP) | |
| Net sales | $ 58,042,000 | $ 31,294,000 | $ -- | $ 89,336,000 | $ (5,095,000) | (2) | $ 84,241,000 | |
| Cost of goods sold | 39,942,000 | 46,544,000 | -- | 86,486,000 | (15,518,000) | (3) | 70,968,000 | |
| Gross profit (loss) | 18,100,000 | (15,250,000) | -- | 2,850,000 | 10,423,000 | 13,273,000 | ||
| Gross margin | 31.2% | -48.7% | 3.2% | 15.8% | ||||
| Operating expenses: | ||||||||
| General and administrative | 88,448,000 | 2,337,000 | (81,795,000) | 8,990,000 | (802,000) | (4) | 8,188,000 | |
| Sales and marketing | 1,811,000 | 772,000 | -- | 2,583,000 | -- | 2,583,000 | ||
| Research and development | 588,000 | 336,000 | -- | 924,000 | (75,000) | (5) | 849,000 | |
| Impairment of goodwill and intangible assets | -- | 84,686,000 | -- | 84,686,000 | (84,686,000) | -- | ||
| Total operating expenses | 90,847,000 | 88,131,000 | (81,795,000) | 97,183,000 | (85,563,000) | 11,620,000 | ||
| Operating income (loss) | (72,747,000) | (103,381,000) | 81,795,000 | (94,333,000) | 95,986,000 | 1,653,000 | ||
| Interest expense, net | 3,951,000 | 3,320,000 | -- | 7,271,000 | (1,683,000) | (6) | 5,588,000 | (B) |
| Income (loss) before income tax expense (benefit) | (76,698,000) | (106,701,000) | 81,795,000 | (101,604,000) | 97,669,000 | (3,935,000) | ||
| Income tax expense (benefit) | (27,996,000) | 43,000 | -- | (27,953,000) | 30,320,000 | (7) | 2,367,000 | (B) |
| Net income (loss) | $ (48,702,000) | $ (106,744,000) | $ 81,795,000 | $ (73,651,000) | $ 67,349,000 | $ (6,302,000) | (A) | |
| Undercar product lines not supported | 4,230,000 | (8) | 4,230,000 | |||||
| Net income (loss) - Adjusted | $ 71,579,000 | $ (2,072,000) | ||||||
| Diluted net income (loss) per share | $ (5.09) | $ 4.66 | $ (0.44) | |||||
| Undercar product lines not supported | $ 0.29 | (8) | $ 0.29 | |||||
| Diluted net income (loss) per share - Adjusted | $ 4.95 | $ (0.14) | ||||||
| Weighted average number of shares outstanding: | ||||||||
| Diluted | 14,462,457 | 14,462,457 | 14,462,457 | |||||
| Depreciation and amortization | 1,294,000 | (B) | ||||||
| Adjusted EBITDA - Sum of (A) and (B) | $ 2,947,000 | |||||||
| Undercar product lines not supported | 4,230,000 | |||||||
| Adjusted EBITDA total | $ 7,177,000 | |||||||
| (1) See following Exhibits for detailed segment analysis of results of operations. | ||||||||
| Rotating | Undercar | |||||||
| Electrical | Product Line | Total | ||||||
| (2) Contractual customer penalties/unique customer allowances | -- | 436,000 | 436,000 | |||||
| Stock adjustment - sales/warranty adjustment | -- | (5,531,000) | (5,531,000) | |||||
| Total | -- | (5,095,000) | (5,095,000) | |||||
| (3) Unusual inventory purchases and freight expenses | -- | 38,000 | 38,000 | |||||
| Stock adjustment - cost of goods sold | -- | 2,831,000 | 2,831,000 | |||||
| Inventory obsolescence/write-down/inefficiency | -- | 12,649,000 | 12,649,000 | |||||
| Total | -- | 15,518,000 | 15,518,000 | |||||
| (4) Financing, severance, professional and other fees | 1,402,000 | 185,000 | 1,587,000 | |||||
| Share-based compensation expense | 93,000 | -- | 93,000 | |||||
| Mark-to-market (gain)/loss | (878,000) | -- | (878,000) | |||||
| Total | 617,000 | 185,000 | 802,000 | |||||
| (5) Consulting fees | 75,000 | -- | 75,000 | |||||
| (6) Intersegment interest income for the rotating electrical segment and intersegment interest expense for the Undercar product line segment is $1,513,000, so eliminates in consolidation. | ||||||||
| Reflects $1,683,000 adjustment for one-time bank interest charges related to Fenco. | ||||||||
| (7) Tax effected for Rotating Electrical at 39% tax rate and Undercar product line at 0% tax rate after further adjusting for intercompany interest income and expense. | ||||||||
| (8) Certain Undercar product lines not supported resulted in a loss for the period from January 1, 2013 to March 31, 2013 of $4,230,000 - ($0.29) per share. | ||||||||
| Reconciliation of Non-GAAP Financial Measures | Exhibit 2 | ||||||||
| Twelve months ended March 31, 2013 (Unaudited) | |||||||||
| Adjusted | |||||||||
| Rotating | Undercar | As Reported | Adjustment | Consolidated | |||||
| Income statement | Electrical | Product Line | Eliminations | Consolidated | (Non-GAAP) | (1) | (Non-GAAP) | ||
| Net sales | $ 213,151,000 | $ 193,115,000 | $ -- | $ 406,266,000 | $ (43,806,000) | (2) | $ 362,460,000 | ||
| Cost of goods sold | 143,810,000 | 206,728,000 | -- | 350,538,000 | (48,536,000) | (3) | 302,002,000 | ||
| Gross profit (loss) | 69,341,000 | (13,613,000) | -- | 55,728,000 | 4,730,000 | 60,458,000 | |||
| Gross margin | 32.5% | -7.0% | 13.7% | 16.7% | |||||
| Operating expenses: | |||||||||
| General and administrative | 107,602,000 | 18,719,000 | (81,795,000) | 44,526,000 | (10,828,000) | (4) | 33,698,000 | ||
| Sales and marketing | 7,290,000 | 5,423,000 | -- | 12,713,000 | (747,000) | (5) | 11,966,000 | ||
| Research and development | 1,930,000 | 698,000 | -- | 2,628,000 | (75,000) | (6) | 2,553,000 | ||
| Impairment of goodwill and intangible assets | -- | 84,686,000 | -- | 84,686,000 | (84,686,000) | -- | |||
| Total operating expenses | 116,822,000 | 109,526,000 | (81,795,000) | 144,553,000 | (96,336,000) | 48,217,000 | |||
| Operating income (loss) | (47,481,000) | (123,139,000) | 81,795,000 | (88,825,000) | 101,066,000 | 12,241,000 | |||
| Interest expense, net | 12,324,000 | 12,082,000 | -- | 24,406,000 | (1,683,000) | (7) | 22,723,000 | (B) | |
| Income (loss) before income tax expense (benefit) | (59,805,000) | (135,221,000) | 81,795,000 | (113,231,000) | 102,749,000 | (10,482,000) | |||
| Income tax expense (benefit) | (21,759,000) | 39,000 | -- | (21,720,000) | 30,552,000 | (8) | 8,832,000 | (B) | |
| Net income (loss) | $ (38,046,000) | $ (135,260,000) | $ 81,795,000 | $ (91,511,000) | $ 72,197,000 | $ (19,314,000) | (A) | ||
| Undercar product lines not supported | 7,115,000 | (9) | 7,115,000 | ||||||
| Net income (loss) - Adjusted | $ 79,312,000 | $ (12,199,000) | |||||||
| Diluted net income (loss) per share | $ (6.39) | $ 5.04 | $ (1.35) | ||||||
| Undercar product lines not supported | $ 0.50 | (9) | $ 0.50 | ||||||
| Diluted net income (loss) per share - Adjusted | $ 5.54 | $ (0.85) | |||||||
| Weighted average number of shares outstanding: | |||||||||
| Diluted | 14,327,310 | 14,327,310 | 14,327,310 | ||||||
| Depreciation and amortization | 5,285,000 | (B) | |||||||
| Adjusted EBITDA - Sum of (A) and (B) | $ 17,526,000 | ||||||||
| Undercar product lines not supported | 7,115,000 | ||||||||
| Adjusted EBITDA total | $ 24,641,000 | ||||||||
| (1) See following Exhibits for detailed segment analysis of results of operations. | |||||||||
| Rotating | Undercar | ||||||||
| Electrical | Product Line | Total | |||||||
| (2) Contractual customer penalties/unique customer allowances | -- | 4,587,000 | 4,587,000 | ||||||
| Stock adjustment - sales/warranty adjustment | -- | 2,390,000 | 2,390,000 | ||||||
| Core revenue - discontinued customer | -- | (50,783,000) | (50,783,000) | ||||||
| Total | -- | (43,806,000) | (43,806,000) | ||||||
| (3) Third-party warehouse exit termination fees | -- | 1,402,000 | 1,402,000 | ||||||
| Severance | -- | 1,272,000 | 1,272,000 | ||||||
| Unusual inventory purchases and freight expenses | -- | 512,000 | 512,000 | ||||||
| Stock adjustment - cost of goods sold | -- | (2,285,000) | (2,285,000) | ||||||
| Inventory obsolescence/write-down/inefficiency | -- | 15,986,000 | 15,986,000 | ||||||
| Core cost of revenue - discontinued customer | -- | 31,649,000 | 31,649,000 | ||||||
| Total | -- | 48,536,000 | 48,536,000 | ||||||
| (4) Financing, severance, professional and other fees | 3,384,000 | 6,824,000 | 10,208,000 | ||||||
| Share-based compensation expense | 1,010,000 | 24,000 | 1,034,000 | ||||||
| Mark-to-market (gain)/loss | (414,000) | -- | (414,000) | ||||||
| Total | 3,980,000 | 6,848,000 | 10,828,000 | ||||||
| (5) Severance and professional fees | -- | 747,000 | 747,000 | ||||||
| (6) Consulting fees | 75,000 | -- | 75,000 | ||||||
| (7) Intersegment interest income for the rotating electrical segment and intersegment interest expense for the Undercar product line segment is $5,182,000, so eliminates in consolidation. | |||||||||
| Reflects $1,683,000 adjustment for one-time bank interest charges related to Fenco. | |||||||||
| (8) Tax effected for Rotating Electrical at 39% tax rate and Undercar product line at 0% tax rate after further adjusting for intercompany interest income and expense. | |||||||||
| (9) Certain Undercar product lines not supported resulted in a loss for the period from April 1, 2012 to March 31, 2013 of $7,115,000 - ($0.50) per share. | |||||||||
| Reconciliation of Non-GAAP Financial Measures | Exhibit 3 | ||||
| Three months ended March 31, 2013 (Unaudited) | |||||
| Adjusted | |||||
| As Reported | Undercar | ||||
| Undercar | Adjustment | Product Line | |||
| Income statement | Product Line | (Non-GAAP) | (Non-GAAP) | ||
| Net sales | $ 31,294,000 | $ (5,095,000) | (2) | $ 26,199,000 | |
| Cost of goods sold | 46,544,000 | (15,518,000) | (3) | 31,026,000 | |
| Gross profit (loss) | (15,250,000) | 10,423,000 | (4,827,000) | ||
| Gross margin | -48.7% | -18.4% | (1) | ||
| Operating expenses: | |||||
| General and administrative | 2,337,000 | (185,000) | (4) | 2,152,000 | |
| Sales and marketing | 772,000 | -- | 772,000 | ||
| Research and development | 336,000 | 336,000 | |||
| Impairment of goodwill and intangible assets | 84,686,000 | (84,686,000) | -- | ||
| Total operating expenses | 88,131,000 | (84,871,000) | 3,260,000 | ||
| Operating income (loss) | (103,381,000) | 95,294,000 | (8,087,000) | ||
| Interest expense, net | 3,320,000 | (1,513,000) | (5) | 1,807,000 | (B) |
| Income (loss) before income tax expense (benefit) | (106,701,000) | 96,807,000 | (9,894,000) | ||
| Income tax expense (benefit) | 43,000 | -- | (6) | 43,000 | (B) |
| Net income (loss) | $ (106,744,000) | $ 96,807,000 | $ (9,937,000) | (A) | |
| Undercar product lines not supported | 4,230,000 | (7) | |||
| Net income (loss) - Adjusted | $ (5,707,000) | ||||
| Diluted net income (loss) per share | $ (0.69) | ||||
| Undercar product lines not supported | $ 0.29 | (7) | |||
| Diluted net income (loss) per share - Adjusted | $ (0.39) | ||||
| Weighted average number of shares outstanding: | |||||
| Diluted | 14,462,457 | ||||
| Depreciation and amortization | 582,000 | (B) | |||
| Adjusted EBITDA - Sum of (A) and (B) | $ (7,505,000) | ||||
| Undercar product lines not supported | 4,230,000 | ||||
| Adjusted EBITDA total | $ (3,275,000) | ||||
| (1) Adjusted further for the impact on gross margins from the loss from Undercar product lines not supported of 16.1%, total gross margin would have been negative (2.3%) for the Undercar product line segment. | |||||
| (2) Contractual customer penalties/unique customer allowances | 436,000 | ||||
| Stock adjustment - sales/warranty adjustment | (5,531,000) | ||||
| Total | (5,095,000) | ||||
| (3) Unusual inventory purchases and freight expenses | 38,000 | ||||
| Stock adjustment - cost of goods sold | 2,831,000 | ||||
| Inventory obsolescence/write-down/inefficiency | 12,649,000 | ||||
| Total | 15,518,000 | ||||
| (4) Financing, severance, professional and other fees | 185,000 | ||||
| (5) Intersegment interest expense for the Undercar product line segment is $1,513,000. | |||||
| (6) Tax effected for Undercar product line at 0% tax rate. | |||||
| (7) Certain Undercar product lines not supported resulted in a loss for the period from January 1, 2013 to March 31, 2013 of $4,230,000 - ($0.29) per share. | |||||
| Reconciliation of Non-GAAP Financial Measures | Exhibit 4 | ||||
| Twelve months ended March 31, 2013 (Unaudited) | |||||
| Adjusted | |||||
| As Reported | Undercar | ||||
| Undercar | Adjustment | Product Line | |||
| Income statement | Product Line | (Non-GAAP) | (Non-GAAP) | ||
| Net sales | $ 193,115,000 | $ (43,806,000) | (2) | $ 149,309,000 | |
| Cost of goods sold | 206,728,000 | (48,536,000) | (3) | 158,192,000 | |
| Gross profit (loss) | (13,613,000) | 4,730,000 | (8,883,000) | ||
| Gross margin | -7.0% | -5.9% | (1) | ||
| Operating expenses: | |||||
| General and administrative | 18,719,000 | (6,848,000) | (4) | 11,871,000 | |
| Sales and marketing | 5,423,000 | (747,000) | (5) | 4,676,000 | |
| Research and development | 698,000 | -- | 698,000 | ||
| Impairment of goodwill and intangible assets | 84,686,000 | (84,686,000) | -- | ||
| Total operating expenses | 109,526,000 | (92,281,000) | 17,245,000 | ||
| Operating income (loss) | (123,139,000) | 97,011,000 | (26,128,000) | ||
| Interest expense, net | 12,082,000 | (5,182,000) | (6) | 6,900,000 | (B) |
| Income (loss) before income tax expense (benefit) | (135,221,000) | 102,193,000 | (33,028,000) | ||
| Income tax expense (benefit) | 39,000 | -- | (7) | 39,000 | (B) |
| Net income (loss) | $ (135,260,000) | $ 102,193,000 | $ (33,067,000) | (A) | |
| Undercar product lines not supported | 7,115,000 | (8) | |||
| Net income (loss) - Adjusted | $ (25,952,000) | ||||
| Diluted net income (loss) per share | $ (2.31) | ||||
| Undercar product lines not supported | $ 0.50 | (8) | |||
| Diluted net income (loss) per share - Adjusted | $ (1.81) | ||||
| Weighted average number of shares outstanding: | |||||
| Diluted | 14,327,310 | ||||
| Depreciation and amortization | 2,436,000 | (B) | |||
| Adjusted EBITDA - Sum of (A) and (B) | $ (23,692,000) | ||||
| Undercar product lines not supported | 7,115,000 | ||||
| Adjusted EBITDA total | $ (16,577,000) | ||||
| (1) Adjusted further for the impact on gross margins from the loss from Undercar product lines not supported of 4.7%, total gross margin would have been negative (1.2%) for the Undercar product line segment. | |||||
| (2) Contractual customer penalties/unique customer allowances | 4,587,000 | ||||
| Stock adjustment - sales/warranty adjustment | 2,390,000 | ||||
| Core revenue - discontinued customer | (50,783,000) | ||||
| Total | (43,806,000) | ||||
| (3) Third-party warehouse exit termination fees | 1,402,000 | ||||
| Severance | 1,272,000 | ||||
| Unusual inventory purchases and freight expenses | 512,000 | ||||
| Stock adjustment - cost of goods sold | (2,285,000) | ||||
| Inventory obsolescence/write-down/inefficiency | 15,986,000 | ||||
| Core cost of revenue - discontinued customer | 31,649,000 | ||||
| Total | 48,536,000 | ||||
| (4) Financing, severance, professional and other fees | 6,824,000 | ||||
| Share-based compensation expense | 24,000 | ||||
| Total | 6,848,000 | ||||
| (5) Severance | 747,000 | ||||
| (6) Intersegment interest expense for the Undercar product line segment is $5,182,000. | |||||
| (7) Tax effected for Undercar product line at 0% tax rate. | |||||
| (8) Certain Undercar product lines not supported resulted in a loss for the period from April 1, 2012 to March 31, 2013 of $7,115,000 - ($0.50) per share. | |||||
| Reconciliation of Non-GAAP Financial Measures | Exhibit 5 | ||||
| Three months ended March 31, 2013 (Unaudited) | |||||
| Adjusted | |||||
| As Reported | Rotating | ||||
| Rotating | Adjustment | Electrical | |||
| Income statement | Electrical | (Non-GAAP) | (Non-GAAP) | ||
| Net sales | $ 58,042,000 | $ -- | $ 58,042,000 | ||
| Cost of goods sold | 39,942,000 | -- | 39,942,000 | ||
| Gross profit | 18,100,000 | -- | 18,100,000 | ||
| Gross margin | 31.2% | 31.2% | |||
| Operating expenses: | |||||
| General and administrative | 88,448,000 | (82,412,000) | (1) | 6,036,000 | |
| Sales and marketing | 1,811,000 | -- | 1,811,000 | ||
| Research and development | 588,000 | (75,000) | (2) | 513,000 | |
| Total operating expenses | 90,847,000 | (82,487,000) | 8,360,000 | ||
| Operating income (loss) | (72,747,000) | 82,487,000 | 9,740,000 | ||
| Interest expense, net | 3,951,000 | (170,000) | (3) | 3,781,000 | (B) |
| Income (loss) before income tax expense (benefit) | (76,698,000) | 82,657,000 | 5,959,000 | ||
| Income tax expense (benefit) | (27,996,000) | 30,320,000 | (4) | 2,324,000 | (B) |
| Net income (loss) | $ (48,702,000) | $ 52,337,000 | $ 3,635,000 | (A) | |
| Diluted net income per share | $ 0.26 | ||||
| Weighted average number of shares outstanding: | |||||
| Diluted | 14,131,232 | (5) | |||
| Depreciation and amortization | 712,000 | (B) | |||
| Adjusted EBITDA - Sum of (A) and (B) | $ 10,452,000 | ||||
| (1) Financing, severance and other fees | 1,402,000 | ||||
| Reserve for Fenco investment | 81,795,000 | ||||
| Share-based compensation expense | 93,000 | ||||
| Mark-to-market (gain)/loss | (878,000) | ||||
| Total | 82,412,000 | ||||
| (2) Consulting fees | 75,000 | ||||
| (3) Intersegment interest income from the Undercar product line segment is $1,513,000 | |||||
| offset by an adjustment for $1,683,000 for one-time bank interest charges related to Fenco. | |||||
| (4) Tax effected for Rotating Electrical at 39% tax rate. | |||||
| (5) Excludes the impact of 360,000 shares in connection with the consideration for the May 6, 2011 Fenco acquisition. | |||||
| Reconciliation of Non-GAAP Financial Measures | Exhibit 6 | ||||
| Twelve months ended March 31, 2013 (Unaudited) | |||||
| Adjusted | |||||
| As Reported | Rotating | ||||
| Rotating | Adjustment | Electrical | |||
| Income statement | Electrical | (Non-GAAP) | (Non-GAAP) | ||
| Net sales | $ 213,151,000 | $ -- | $ 213,151,000 | ||
| Cost of goods sold | 143,810,000 | -- | 143,810,000 | ||
| Gross profit | 69,341,000 | -- | 69,341,000 | ||
| Gross margin | 32.5% | 32.5% | |||
| Operating expenses: | |||||
| General and administrative | 107,602,000 | (85,775,000) | (1) | 21,827,000 | |
| Sales and marketing | 7,290,000 | -- | 7,290,000 | ||
| Research and development | 1,930,000 | (75,000) | (2) | 1,855,000 | |
| Total operating expenses | 116,822,000 | (85,850,000) | 30,972,000 | ||
| Operating income (loss) | (47,481,000) | 85,850,000 | 38,369,000 | ||
| Interest expense, net | 12,324,000 | 3,499,000 | (3) | 15,823,000 | (B) |
| Income (loss) before income tax expense (benefit) | (59,805,000) | 82,351,000 | 22,546,000 | ||
| Income tax expense (benefit) | (21,759,000) | 30,552,000 | (4) | 8,793,000 | (B) |
| Net income (loss) | $ (38,046,000) | $ 51,799,000 | $ 13,753,000 | (A) | |
| Diluted net income per share | $ 0.98 | ||||
| Weighted average number of shares outstanding: | |||||
| Diluted | 13,967,310 | (5) | |||
| Depreciation and amortization | 2,849,000 | (B) | |||
| Adjusted EBITDA - Sum of (A) and (B) | $ 41,218,000 | ||||
| (1) Financing, severance and other fees | 3,384,000 | ||||
| Reserve for Fenco investment | 81,795,000 | ||||
| Share-based compensation expense | 1,010,000 | ||||
| Mark-to-market (gain)/loss | (414,000) | ||||
| Total | 85,775,000 | ||||
| (2) Consulting fees | 75,000 | ||||
| (3) Intersegment interest income from the Undercar product line segment is $5,182,000 | |||||
| offset by an adjustment for $1,683,000 for one-time bank interest charges related to Fenco. | |||||
| (4) Tax effected for Rotating Electrical at 39% tax rate. | |||||
| (5) Excludes the impact of 360,000 shares in connection with the consideration for the May 6, 2011 Fenco acquisition. | |||||
| Reconciliation of Non-GAAP Financial Measures | Exhibit 7 | ||||
| Three months ended March 31, 2012 (Unaudited) | |||||
| Adjusted | |||||
| As Reported | Rotating | ||||
| Rotating | Adjustment | Electrical | |||
| Income statement | Electrical | (Non-GAAP) | (Non-GAAP) | ||
| Net sales | $ 51,903,000 | $ 51,903,000 | |||
| Cost of goods sold | 35,054,000 | 35,054,000 | |||
| Gross profit | 16,849,000 | -- | 16,849,000 | ||
| Gross margin | 32.5% | 32.5% | |||
| Operating expenses: | |||||
| General and administrative | 3,812,000 | 1,253,000 | (1) | 5,065,000 | |
| Sales and marketing | 1,870,000 | 1,870,000 | |||
| Research and development | 495,000 | -- | 495,000 | ||
| Total operating expenses | 6,177,000 | 1,253,000 | 7,430,000 | ||
| Operating income | 10,672,000 | (1,253,000) | 9,419,000 | ||
| Interest expense, net | 2,569,000 | 802,000 | (2) | 3,371,000 | (B) |
| Income before income tax expense | 8,103,000 | (2,055,000) | 6,048,000 | ||
| Income tax expense | 2,083,000 | 276,000 | (3) | 2,359,000 | (B) |
| Net income | $ 6,020,000 | $ (2,331,000) | $ 3,689,000 | (A) | |
| Diluted net income per share | $ 0.30 | ||||
| Weighted average number of shares outstanding: | |||||
| Diluted | 12,278,948 | (4) | |||
| Depreciation and amortization | 832,000 | (B) | |||
| Adjusted EBITDA - Sum of (A) and (B) | $ 10,251,000 | ||||
| (1) Fenco, financing, professional and other fees | (330,000) | ||||
| Mark-to-market (gain)/loss | (923,000) | ||||
| Total | (1,253,000) | ||||
| (2) Intersegment interest income from the Undercar product line segment is $802,000. | |||||
| (3) Tax effected for Rotating Electrical at 39% tax rate. | |||||
| (4) Excludes the impact of 360,000 shares in connection with the consideration for the May 6, 2011 Fenco acquisition. | |||||
| Reconciliation of Non-GAAP Financial Measures | Exhibit 8 | ||||
| Twelve months ended March 31, 2012 (Unaudited) | |||||
| Adjusted | |||||
| As Reported | Rotating | ||||
| Rotating | Adjustment | Electrical | |||
| Income statement | Electrical | (Non-GAAP) | (Non-GAAP) | ||
| Net sales | $ 180,404,000 | $ (1,853,000) | (1) | $ 178,551,000 | |
| Cost of goods sold | 123,072,000 | -- | 123,072,000 | ||
| Gross profit | 57,332,000 | (1,853,000) | 55,479,000 | ||
| Gross margin | 31.8% | 31.1% | |||
| Operating expenses: | |||||
| General and administrative | 20,621,000 | (2,970,000) | (2) | 17,651,000 | |
| Sales and marketing | 7,659,000 | (238,000) | (3) | 7,421,000 | |
| Research and development | 1,765,000 | -- | 1,765,000 | ||
| Acquisition costs | 713,000 | (713,000) | (4) | -- | |
| Total operating expenses | 30,758,000 | (3,921,000) | 26,837,000 | ||
| Operating income | 26,574,000 | 2,068,000 | 28,642,000 | ||
| Interest expense, net | 4,841,000 | 2,529,000 | (5) | 7,370,000 | (B) |
| Income before income tax expense | 21,733,000 | (461,000) | 21,272,000 | ||
| Income tax expense | 7,433,000 | 864,000 | (6) | 8,296,000 | (B) |
| Net income | $ 14,300,000 | $ (1,325,000) | $ 12,976,000 | (A) | |
| Diluted net income per share | $ 1.04 | ||||
| Weighted average number of shares outstanding: | |||||
| Diluted | 12,429,756 | (7) | |||
| Depreciation and amortization | 3,466,000 | (B) | |||
| Adjusted EBITDA - Sum of (A) and (B) | $ 32,108,000 | ||||
| (1) Intersegment revenue, net of cost of goods sold | 1,853,000 | ||||
| (2) Fenco, financing, professional and other fees | 2,494,000 | ||||
| Mark-to-market (gain)/loss | 476,000 | ||||
| Total | 2,970,000 | ||||
| (3) Fenco related sales and marketing expenses | 238,000 | ||||
| (4) Fenco related acquisition costs | 713,000 | ||||
| (5) Intersegment interest income from the Undercar product line segment is $2,529,000 | |||||
| (6) Tax effected for Rotating Electrical at 39% tax rate. | |||||
| (7) Excludes the impact of 324,590 shares in connection with the consideration for the May 6, 2011 Fenco acquisition. | |||||