Motorcar Parts of America Inc. (MPAA, Financial) filed Quarterly Report for the period ended 2012-09-30.
Motorcar Parts Of America, Inc. has a market cap of $89.9 million; its shares were traded at around $6.57 with and P/S ratio of 0.3.
Sales and Marketing. Our consolidated sales and marketing expenses for the three months ended September 30, 2012 increased $707,000, or 22.1%, to $3,904,000 from $3,197,000 for the three months ended September 30, 2011. The decrease of $173,000 for our rotating electrical business was due primarily to (i) $96,000 of decreased travel incurred in connection with our Fenco operations and (ii) $45,000 of decreased trade shows expense. The increase of $880,000 in sales and marketing expenses for our undercar product line during the three months ended September 30, 2012 was primarily due to (i) $747,000 of severance and (ii) $283,000 of increased travel expenses. These increases were partly offset by a decrease of $140,000 in sales commissions and agent fees.
In addition, our gross profit in our undercar product line during the six months ended September 30, 2012 was further impacted by (i) contractual customer penalties of $1,882,000, (ii) losses of $1,506,000 related to certain unprofitable product lines we stopped selling and supporting in December 2011, (iii) termination fees of $1,402,000 related to an agreement to terminate services with one of our third-party logistics service providers, (iv) severance costs related to our production workforce of $1,272,000, (v) vendor support allowance of $1,145,000, (vi) allowance to a customer of $355,000 in connection with a return of certain products, and (vii) premium freight cost of $125,000 in order to improve our fill rates and ability to service our customers.
Sales and Marketing. Our consolidated sales and marketing expenses for the six months ended September 30, 2012 increased $1,793,000, or 31.7%, to $7,443,000 from $5,650,000 for the six months ended September 30, 2011. The decrease of $235,000 for our rotating electrical business was due primarily to (i) $127,000 of decreased travel incurred in connection with our Fenco operations, (ii) $44,000 of decreased trade shows expense, (iii) $38,000 of decreased advertising expense, and (iv) $28,000 of decreased employee-related expenses. The increase of $2,028,000 in sales and marketing expenses for our undercar product line during the six months ended September 30, 2012 was primarily due to (i) $747,000 of severance, (ii) $655,000 of increased travel expenses, and (iii) $578,000 of increased advertising expense.
In connection with the Second Amendment, we issued the Cerberus Warrant to Cerberus Business Finance, LLC. Pursuant to the Cerberus Warrant, Cerberus Business Finance, LLC, may purchase up to 100,000 shares of our common stock for an initial exercise price of $17.00 per share for a period of five years. The exercise price is subject to adjustments, among other things, for sales of common stock by us at a price below the exercise price. As a result of the issuance of the Supplier Warrant in August 2012 at an initial exercise price of $7.75 per share, the exercise price of the Cerberus Warrant was reduced to $7.75 per share. As the exercise price of the Cerberus Warrant was reduced, the number of shares of our common stock that may be purchased upon the exercise of the Cerberus Warrant was increased to 219,355 so that the aggregate exercise price of the Cerberus Warrant after the adjustment is the same as the aggregate exercise price prior to the adjustment. The fair value of the Cerberus Warrant using the Monte Carlo simulation model was $607,000 at May 24, 2012 and $357,000 at September 30, 2012. This amount was recorded as a warrant liability which is included in other liabilities in the consolidated balance sheet at September 30, 2012. During the three and six months ended September 30, 2012, a gain of $260,000 and $250,000, respectively, was recorded in general and administrative expenses due to the change in the fair value of the warrant liability.
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Motorcar Parts Of America, Inc. has a market cap of $89.9 million; its shares were traded at around $6.57 with and P/S ratio of 0.3.
Highlight of Business Operations:
In addition, our gross loss in our undercar product line during the three months ended September 30, 2012 was further impacted by (i) termination fees of $1,402,000 related to an agreement to terminate services with one of our third-party logistics service providers, (ii) severance costs included in cost of sales related to the production workforce of $1,272,000, (iii) contractual customer penalties of $817,000, (iv) losses of $795,000 related to certain unprofitable product lines we stopped selling and supporting in December 2011, (v) vendor support allowance for a certain product line of $500,000, and (vi) premium freight cost of $80,000 in order to improve our fill rates and ability to service our customers.Sales and Marketing. Our consolidated sales and marketing expenses for the three months ended September 30, 2012 increased $707,000, or 22.1%, to $3,904,000 from $3,197,000 for the three months ended September 30, 2011. The decrease of $173,000 for our rotating electrical business was due primarily to (i) $96,000 of decreased travel incurred in connection with our Fenco operations and (ii) $45,000 of decreased trade shows expense. The increase of $880,000 in sales and marketing expenses for our undercar product line during the three months ended September 30, 2012 was primarily due to (i) $747,000 of severance and (ii) $283,000 of increased travel expenses. These increases were partly offset by a decrease of $140,000 in sales commissions and agent fees.
In addition, our gross profit in our undercar product line during the six months ended September 30, 2012 was further impacted by (i) contractual customer penalties of $1,882,000, (ii) losses of $1,506,000 related to certain unprofitable product lines we stopped selling and supporting in December 2011, (iii) termination fees of $1,402,000 related to an agreement to terminate services with one of our third-party logistics service providers, (iv) severance costs related to our production workforce of $1,272,000, (v) vendor support allowance of $1,145,000, (vi) allowance to a customer of $355,000 in connection with a return of certain products, and (vii) premium freight cost of $125,000 in order to improve our fill rates and ability to service our customers.
Sales and Marketing. Our consolidated sales and marketing expenses for the six months ended September 30, 2012 increased $1,793,000, or 31.7%, to $7,443,000 from $5,650,000 for the six months ended September 30, 2011. The decrease of $235,000 for our rotating electrical business was due primarily to (i) $127,000 of decreased travel incurred in connection with our Fenco operations, (ii) $44,000 of decreased trade shows expense, (iii) $38,000 of decreased advertising expense, and (iv) $28,000 of decreased employee-related expenses. The increase of $2,028,000 in sales and marketing expenses for our undercar product line during the six months ended September 30, 2012 was primarily due to (i) $747,000 of severance, (ii) $655,000 of increased travel expenses, and (iii) $578,000 of increased advertising expense.
In connection with the Second Amendment, we issued the Cerberus Warrant to Cerberus Business Finance, LLC. Pursuant to the Cerberus Warrant, Cerberus Business Finance, LLC, may purchase up to 100,000 shares of our common stock for an initial exercise price of $17.00 per share for a period of five years. The exercise price is subject to adjustments, among other things, for sales of common stock by us at a price below the exercise price. As a result of the issuance of the Supplier Warrant in August 2012 at an initial exercise price of $7.75 per share, the exercise price of the Cerberus Warrant was reduced to $7.75 per share. As the exercise price of the Cerberus Warrant was reduced, the number of shares of our common stock that may be purchased upon the exercise of the Cerberus Warrant was increased to 219,355 so that the aggregate exercise price of the Cerberus Warrant after the adjustment is the same as the aggregate exercise price prior to the adjustment. The fair value of the Cerberus Warrant using the Monte Carlo simulation model was $607,000 at May 24, 2012 and $357,000 at September 30, 2012. This amount was recorded as a warrant liability which is included in other liabilities in the consolidated balance sheet at September 30, 2012. During the three and six months ended September 30, 2012, a gain of $260,000 and $250,000, respectively, was recorded in general and administrative expenses due to the change in the fair value of the warrant liability.
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