Motorcar Parts of America(MPAA) - 2024 Q4 - Annual Report

Financial Performance - Sales increased by 5.1 percent to a record $717.7 million in fiscal 2024[149] - Gross profit rose 16.3 percent to$132.6 million, with gross margin increasing by 1.8 percentage points to 18.5 percent[149] - Operating income increased 26.5 percent to $46.1 million[149] - Consolidated net sales for fiscal 2024 were$717,684,000, an increase of $34,610,000, or 5.1$683,074,000 due to strong demand for rotating electric and brake-related product lines[200] - Consolidated gross margin improved to 18.5% in fiscal 2024 from 16.7% in fiscal 2023, attributed to better facility utilization and price increases[201] - Operating income for fiscal 2024 was $46,120,000, an increase of$9,674,000, or 26.5%, from $36,446,000 in fiscal 2023[209] Cash Flow and Debt Management - Cash generated from operating activities was approximately$39.2 million[149] - Cash flows provided by operations for fiscal 2024 were $39,172,000, a significant improvement from$(21,754,000) in fiscal 2023[199] - Net bank debt was reduced by $32.5 million to$114.0 million[149] - The outstanding balance under the Revolving Facility was $128,000,000 as of March 31, 2024, compared to$145,200,000 in 2023[227] - The company issued $32,000,000 in convertible notes due in 2029, bearing an interest rate of 10.0$17,372,000 at March 31, 2024, from $16,436,000 at March 31, 2023, primarily due to excess finished goods inventory[173] - Customer finished goods returns accrual was$38,312,000 at March 31, 2024, compared to $37,984,000 at March 31, 2023, reflecting changes in returned goods authorizations[193] - Finished goods turnover for fiscal 2024 was 3.7, slightly down from 3.6 in fiscal 2023, indicating a stable ability to convert inventory into revenue[199] Expenses and Cost Management - General and administrative expenses increased by$3,013,000, or 5.5%, to $57,769,000 in fiscal 2024 from$54,756,000 in fiscal 2023[204] - Research and development expenses decreased by $327,000, or 3.2$9,995,000 in fiscal 2024 from $10,322,000 in fiscal 2023[207] - Interest expense rose to$60,040,000 in fiscal 2024, an increase of $20,485,000, or 51.8$39,555,000 in fiscal 2023, primarily due to higher interest rates[210] Market and Operational Developments - A new facility was opened in Malaysia to support manufacturing of wheel hub products[149] - Market share for brake-related product lines increased, particularly in the professional installer market[149] - Sales growth in the Mexican market continued to accelerate, driven by market share gains[149] Financial Position and Risks - The company had working capital of $156,034,000 with a current ratio of 1.4:1.0 as of March 31, 2024[216] - The company recorded a discrete non-cash valuation allowance of$38,009,000 on deferred tax assets during fiscal 2024, leading to an effective tax rate of (276.8)%[213] - The company maintains an allowance for credit losses deemed adequate to cover potential losses from accounts receivable[255] - The company is exposed to foreign currency exchange risks primarily from the Mexican peso and Chinese yuan, and uses forward contracts to mitigate these risks[253] - The company’s financial position could be adversely affected if customers experience significant cash flow problems, impacting the outstanding receivable balance and the value of Remanufactured Cores[255] Future Outlook and Investments - Total capital expenditures for fiscal 2024 were $1,755,000, with an expected increase to approximately$7,000,000 for fiscal 2025 to support global growth initiatives[246] - The company has contractual obligations totaling $369,712,000, with significant payments due in the next 1 to 3 years amounting to$56,504,000[247] - The company has not repurchased any shares during fiscal 2024 and 2023, with $18,255,000 remaining available under the share repurchase program as of March 31, 2024[245]