Motorcar Parts Cuts 2027 Sales Outlook to $715–740 Million
Key Facts
Motorcar Parts of America reported results for its fiscal second quarter of 2027, ended September 30, on November 9, and cut its fiscal-year sales outlook to $715–740 million from $780–800 million previously. The company said in its filing that the revised outlook reflects delayed customer orders related to existing business and new awards. Quarterly sales were $169.2 million, compared with $221.5 million in the same period a year earlier. The company attributed the remaining $37.5 million of the sales decline mainly to order delays and lower tariff pass-through. In premarket trading on November 9, the stock fell 24.33% to $7.96, compared with a previous close of $10.52, according to an Investing.com report attributed to Reuters.
Sales in the comparable quarter included $14.8 million in core revenue related to inventory realignment at some customers’ distribution centers, putting part of the year-over-year comparison under the influence of that item. Still, the company linked the remaining decline in the current period to order timing and lower tariff pass-through, not to any announced cancellation of new business. Chief Executive Selwyn Joffe said customers’ depletion of inventories previously purchased from First Brands temporarily affected the timing of some new orders. He added that the company had begun to see the benefits of this phase and pointed to opportunities to expand its brake business, including the relaunch of Centric Parts. These factors show that timing delays were part of the company’s explanation for the decline in orders, alongside its move to launch recently won business.
On profitability, the company reported net income of $1.4 million, or $0.07 per share on a basic earnings-per-share basis, but posted a diluted loss of $0.03 per share. The company had reported a net loss of $2.1 million in the comparable quarter a year earlier. Gross margin rose to 24.2% from 19.3% a year earlier, but the company said one-time items provided a net 5.7 percentage-point boost. Those items included about $11.1 million in refunds of fees related to the International Emergency Economic Powers Act, while the margin was also affected by non-cash expenses equivalent to 2.8 percentage points. The margin improvement therefore came with an exceptional impact, while the diluted loss per share remained evident in the quarterly results.
Operating income was $10.0 million, compared with $16.4 million in the comparable prior-year quarter. The company said the figure was affected by $11.2 million in non-cash expenses and, in turn, benefited from net one-time items worth $9.1 million. The company also cut its fiscal 2027 operating-income outlook to a range of $37–44 million. The estimate includes about $30 million in non-cash expenses, as well as nearly $5 million in transition costs for moving heavy-duty truck operations to Mexico. These items show that the annual operating-income estimate combines transition costs and non-cash expenses with the expected impact of business over the remainder of the period.
By contrast, the company said initial shipments for newly won business had already begun. Most of the new awards are worth about $60 million annually, alongside $25 million in expected incremental business, with most set to begin later in the fiscal year. It estimated second-half 2027 sales at between $378 million and $403 million. Second-half sales in the prior year were $380.0 million, including $19.9 million in core revenue related to inventory realignment. Excluding that item, the company expected second-half sales growth of 5.0% to 11.9%, making the timing of new award launches a key factor in its outlook for the period.
Chief Financial Officer David Lee said October sales rose compared with the end-of-quarter sales trend in the fiscal second quarter, and that the company expected the trend to continue. This follows the company’s attribution of its annual outlook cut to delayed customer orders for existing and new business, while it said initial shipments for new awards had begun. The company’s second-half estimates remain tied to most new business launching later in the fiscal year. The comparison it used for the prior second half also included revenue from inventory realignment, which it cited when calculating expected growth after excluding the item. Fiscal 2027 ends on March 31, 2027.