Motorcar Parts of America, Inc. (MPA) reported its financial results for the three and six months ended September 30, 2024, showing a notable increase in net sales but a significant decline in profitability compared to the previous fiscal period.

For the three months ended September 30, 2024, MPA achieved net sales of $208.2 million, a 5.9% increase from $196.6 million in the same period of 2023. The six-month net sales also rose to $378.1 million, up 6.1% from $356.3 million year-over-year. The growth was primarily driven by strong demand for rotating electrical and brake-related products, as well as test solutions and diagnostic equipment.

Despite the increase in sales, the company reported a net loss of $2.95 million for the third quarter of 2024, compared to a loss of $1.96 million in the same quarter of 2023. For the six months, the net loss escalated to $21.04 million from $3.37 million in the prior year. The decline in profitability was attributed to one-time onboarding expenses of $2.69 million and transition expenses of $1.30 million, alongside increased general and administrative costs, which rose by 17.8% to $31.72 million due to severance costs and foreign currency exchange losses.

Operating income for the third quarter decreased to $12.52 million from $13.94 million in the prior year, while for the six months, it fell sharply to $6.06 million from $24.38 million. The gross profit margin also contracted, with gross profit for the three months at $41.28 million (19.8% of net sales) compared to $41.15 million (20.9% of net sales) in the previous year.

The company’s total assets decreased to $986.2 million as of September 30, 2024, from $1.01 billion at the end of March 2024. Total liabilities also saw a slight reduction to $722.3 million from $726.9 million. Cash and cash equivalents fell to $10.41 million from $13.97 million during the same period.

Strategically, MPA ceased manufacturing operations at its Torrance, California facility and implemented a cash sweep feature with lenders to reduce interest expenses on its revolving loan facility. The company has also made significant investments in distribution and remanufacturing facilities to enhance operational efficiencies. As of September 30, 2024, MPA had utilized $18.75 million of its $37 million share repurchase program, with $18.25 million remaining available.

Overall, while MPA experienced growth in sales, the financial results reflect challenges in maintaining profitability amid rising costs and operational transitions.