Motorcar Parts of America Inc. (MPAA, Financial) filed Quarterly Report for the period ended 2009-09-30.
Mototcar Parts & Accessories Inc. is a leading manufacturer of replacement alternators and starters for imported and domestic cars and light trucks in the United States and Canada. The company's full line of alternators and starters are remanufactured for vehicles imported from JapanGermanySwedenFrance and Korea. The imported vehicles for which the company remanufactures alternators and starters also include vehicles produced by GMChrysler and Ford. The company also assembles and distributes ignition wire sets for imported and domestic cars and light trucks. Motorcar Parts Of America Inc. has a market cap of $62.44 million; its shares were traded at around $5.22 with a P/E ratio of 13.74 and P/S ratio of 0.46.
Net Sales. Net sales for the six months ended September 30, 2009 increased by $2,985,000, to $72,127,000 compared to net sales for the six months ended September 30, 2008 of $69,142,000. This increase was primarily due to net sales to new customers acquired as a result of our acquisitions partially offset by lower sales to our other existing customers. Our sales in the first two months of the six month period were negatively impacted by an inventory reduction program initiated by one of our largest customers and an understanding with a customer to delay shipments because of its then uncertain financial future. In addition, our net sales for the six months ended September 30, 2009 were positively impacted by the recognition of $845,000 of previously deferred core revenue. We have recognized this revenue because we do not expect to incur any additional sales incentive allowances associated with Remanufactured Core buybacks from this customer.
General and Administrative. Our general and administrative expenses for the six months ended September 30, 2009 were $6,165,000, which represents a decrease of $3,009,000, or 32.8%, from general and administrative expenses for the six months ended September 30, 2008 of $9,174,000. This decrease in general and administrative expenses during the six months ended September 30, 2009 was primarily due to the following: (i) a net gain of $1,460,000 recorded due to the changes in the fair value of foreign exchange contracts, (ii) $439,000 of decreased professional services fees, (iii) $287,000 of decreased stock-based compensation, (iv) $228,000 of decreased general and administrative expenses at our offshore manufacturing facilities, (v) $137,000 of decreased travel expense, and (vi) $93,000 of decreased severance and other related expenses.
At September 30, 2009, we had negative working capital of $5,590,000, a ratio of current assets to current liabilities of 0.91:1, and cash of $1,633,000, compared to negative working capital of $3,569,000, a ratio of current assets to current liabilities of 0.94:1, and cash of $452,000 at March 31, 2009. The change in working capital from March 31, 2009 is primarily the result of an increase in accounts payables balances and increased borrowings on our line of credit, partly offset by (i) increased accounts receivables balances, (ii) increased cash on hand, and (iii) a decrease in other current liabilities as a result of changes in the fair value of our forward foreign currency exchange contracts.
The bank holds a security interest in substantially all of our assets. The balance of the Revolving Loan was $23,700,000 and $21,600,000 at September 30, 2009 and March 31, 2009, respectively. Additionally, we had reserved $2,201,000 of the Revolving Loan for standby letters of credit for workers compensation insurance and $221,000 reserved for commercial letters of credit as of September 30, 2009. As of September 30, 2009, $13,878,000 was available under the Revolving Loan, and of this, $7,500,000 was reserved for use in the event our largest customer discontinued its current practice of having our receivables factored.
In October 2009, we entered into the New Credit Agreement with our lenders. The New Credit Agreement permits us to borrow up to $45,000,000 under the new credit facility (the New Credit Facility). The New Credit Facility, among other things, provides us with a revolving loan (the Revolving Loan) of up to $35,000,000, including obligations under outstanding letters of credit and a borrowing reserve in the amount of $7,500,000 to be reserved by the lenders against our Revolving Loan commitment amount and this borrowing reserve becomes available in the event the receivables from our largest customer are no longer factored, and a term loan (the Term Loan) in the principal amount of $10,000,000.
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Mototcar Parts & Accessories Inc. is a leading manufacturer of replacement alternators and starters for imported and domestic cars and light trucks in the United States and Canada. The company's full line of alternators and starters are remanufactured for vehicles imported from JapanGermanySwedenFrance and Korea. The imported vehicles for which the company remanufactures alternators and starters also include vehicles produced by GMChrysler and Ford. The company also assembles and distributes ignition wire sets for imported and domestic cars and light trucks. Motorcar Parts Of America Inc. has a market cap of $62.44 million; its shares were traded at around $5.22 with a P/E ratio of 13.74 and P/S ratio of 0.46.
Highlight of Business Operations:
General and Administrative. Our general and administrative expenses for the three months ended September 30, 2009 were $3,653,000, which represents a decrease of $1,319,000, or 26.5%, from general and administrative expenses for the three months ended September 30, 2008 of $4,972,000. This decrease in general and administrative expenses during the three months ended September 30, 2009 was primarily due to the following: (i) a net gain of $699,000 recorded due to the changes in the fair value of foreign exchange contracts, (ii) $179,000 of decreased professional services fees, (iii) $115,000 of decreased stock-based compensation, (iv) $87,000 of decreased general and administrative expenses at our offshore manufacturing facilities, and (v) $48,000 of decreased travel expense.Net Sales. Net sales for the six months ended September 30, 2009 increased by $2,985,000, to $72,127,000 compared to net sales for the six months ended September 30, 2008 of $69,142,000. This increase was primarily due to net sales to new customers acquired as a result of our acquisitions partially offset by lower sales to our other existing customers. Our sales in the first two months of the six month period were negatively impacted by an inventory reduction program initiated by one of our largest customers and an understanding with a customer to delay shipments because of its then uncertain financial future. In addition, our net sales for the six months ended September 30, 2009 were positively impacted by the recognition of $845,000 of previously deferred core revenue. We have recognized this revenue because we do not expect to incur any additional sales incentive allowances associated with Remanufactured Core buybacks from this customer.
General and Administrative. Our general and administrative expenses for the six months ended September 30, 2009 were $6,165,000, which represents a decrease of $3,009,000, or 32.8%, from general and administrative expenses for the six months ended September 30, 2008 of $9,174,000. This decrease in general and administrative expenses during the six months ended September 30, 2009 was primarily due to the following: (i) a net gain of $1,460,000 recorded due to the changes in the fair value of foreign exchange contracts, (ii) $439,000 of decreased professional services fees, (iii) $287,000 of decreased stock-based compensation, (iv) $228,000 of decreased general and administrative expenses at our offshore manufacturing facilities, (v) $137,000 of decreased travel expense, and (vi) $93,000 of decreased severance and other related expenses.
At September 30, 2009, we had negative working capital of $5,590,000, a ratio of current assets to current liabilities of 0.91:1, and cash of $1,633,000, compared to negative working capital of $3,569,000, a ratio of current assets to current liabilities of 0.94:1, and cash of $452,000 at March 31, 2009. The change in working capital from March 31, 2009 is primarily the result of an increase in accounts payables balances and increased borrowings on our line of credit, partly offset by (i) increased accounts receivables balances, (ii) increased cash on hand, and (iii) a decrease in other current liabilities as a result of changes in the fair value of our forward foreign currency exchange contracts.
The bank holds a security interest in substantially all of our assets. The balance of the Revolving Loan was $23,700,000 and $21,600,000 at September 30, 2009 and March 31, 2009, respectively. Additionally, we had reserved $2,201,000 of the Revolving Loan for standby letters of credit for workers compensation insurance and $221,000 reserved for commercial letters of credit as of September 30, 2009. As of September 30, 2009, $13,878,000 was available under the Revolving Loan, and of this, $7,500,000 was reserved for use in the event our largest customer discontinued its current practice of having our receivables factored.
In October 2009, we entered into the New Credit Agreement with our lenders. The New Credit Agreement permits us to borrow up to $45,000,000 under the new credit facility (the New Credit Facility). The New Credit Facility, among other things, provides us with a revolving loan (the Revolving Loan) of up to $35,000,000, including obligations under outstanding letters of credit and a borrowing reserve in the amount of $7,500,000 to be reserved by the lenders against our Revolving Loan commitment amount and this borrowing reserve becomes available in the event the receivables from our largest customer are no longer factored, and a term loan (the Term Loan) in the principal amount of $10,000,000.
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