MOTORCAR PARTS OF AMERICA REPORTS FISCAL THIRD QUARTER RESULTS (Form 8-K)

MOTORCAR PARTS OF AMERICA REPORTS FISCAL THIRD QUARTER RESULTS

- Sales Impacted by Reduced Ordering Activity by a Large Customer, Now Rebounding;

Net Sales Up with Cash Generation for Nine-Month Period -

LOS ANGELES, CA - February 9, 2026 - Motorcar Parts of America, Inc. (Nasdaq: MPAA) today reported results for its fiscal 2026 third quarter -- reflecting a large customer ordering reduction in the quarter, primarily due to its closure of stores and consolidation of distribution centers, with sales to this customer now increasing in the current fiscal fourth quarter.

Positive Drivers and Initiatives Include:

Net sales for the fiscal 2026 third quarter were $167.7 million compared with $186.2 million in the prior year - reflecting an approximately $17 million sales decrease to one of the company's large customers as explained previously, with sales to this customer now increasing in the current fiscal fourth quarter.

Gross profit for the fiscal 2026 third quarter was $32.9 million compared with $44.9 million a year earlier, impacted by the sales decrease previously discussed. Gross margin for the same period was 19.6 percent compared with 24.1 percent a year earlier, impacted by this large sales decrease. Gross margin on a sequential basis increased to 19.6 percent for the quarter compared with 18.0 percent for the fiscal first quarter and 19.3 percent for the fiscal second quarter. Gross margin is expected to continue to improve in the current fiscal fourth quarter, benefiting from increased ordering activity from this large customer on a sequential basis and related increased sales.

Operating income for the fiscal 2026 third quarter was $8.3 million compared with $17.6 million in the prior year, impacted by lower sales.

Interest expense for the fiscal 2026 third quarter decreased by $3.5 million to $10.9 million from $14.4 million a year ago, reflecting lower average outstanding balances under the company's credit facility, lower utilization of accounts receivable discount programs, and lower interest rates.

Net income for the fiscal 2026 third quarter was $1.8 million, or $0.09 per diluted share, compared with net income of $2.3 million, or $0.11 per diluted share, for the prior year. Net income was impacted by non-cash and one-time expenses of $611,000, or $0.03 per diluted share, as detailed in Exhibit 1, as well as the factors previously noted.

"Notwithstanding our short-term revised guidance, our outlook remains positive and ordering activity by a large customer is beginning to return to more normalized levels. Equally important, we anticipate favorable benefits due to the changing competitive landscape, as evidenced by our new business commitments and opportunities," said Selwyn Joffe, chairman, president and chief executive officer.

He noted the company's accelerated brake-related sales momentum, which will benefit overall gross profits.

Joffe also highlighted the company's commitment to enhancing shareholder value through opportunities to divest non-strategic assets, expanding its business in Latin America, and leveraging the company's solid financial position, cash flow generation and continued year-to-date net bank debt reduction.

Joffe added that for the nine-month period the company generated cash of approximately $23.7 million and net bank debt decreased by $10.9 million, after share repurchases of $8.4 million, to $70.5 million from $81.4 million. The company currently has $25.1 million remaining available to repurchase shares under its authorized share repurchase program.

The company used cash of approximately $8.2 million from operating activities for the fiscal 2026 third quarter, primarily attributable to the build-up of inventory for new business. The company's net bank debt was $70.5 million as of December 31, 2025. Cash and revolver availability was approximately $146 million as of December 31, 2025 which supports new business opportunities, share repurchases and related initiatives to enhance shareholder value.

Nine-Month Results

Net sales for the fiscal 2026 nine-month period increased $13.3 million, or 2.4 percent, to $577.5 million from $564.2 million, despite a decrease of approximately $40 million from the previously noted customer.

Gross profit for the fiscal nine-month period was $109.5 million compared with $115.3 million a year earlier and gross margin for the nine months was 19.0 percent compared with 20.4 percent a year earlier, impacted by the sales decrease from the large customer previously referenced.

Net income for the fiscal 2026 nine-month period was $2.7 million, or $0.13 per diluted share, impacted by non-cash expenses of $3.8 million, or $0.19 per diluted share, and one-time cash expenses of $1.9 million, or $0.09 per diluted share, compared with a net loss of $18.7 million, or $0.95 per share, a year ago, impacted by various items detailed in Exhibit 2. Net income for the nine-month period reflects the items impacting the fiscal 2026 third quarter explained above.

Share Repurchase

For the fiscal 2026 nine-month period, the company repurchased 669,472 shares for $8.4 million at an average share price of $12.47. During the fiscal 2026 third quarter, the company repurchased 381,562 shares for $5.0 million at an average share price of $13.10 under its current authorization program.

The company anticipates further opportunities to build shareholder value through enhanced profitability and strong cash generation, supported by an anticipated return to more normal ordering activity and sales growth.

Revised Fiscal 2026 Guidance

The company is revising its fiscal 2026 sales guidance to between $750 million and $760 million, impacted by the previously noted reduced ordering by a large customer, due to its closure of stores and consolidation of distribution centers. Operating income is expected to be between $72 million and $79 million, with depreciation and amortization of approximately $10 million. These estimates reflect the expected impact of tariffs enacted as of February 9, 2026, and do not include certain non-cash items and one-time expenses.

Use of Non-GAAP Measure