Motorcar Parts Of America (NASDAQ:MPAA)

LOS ANGELES, Feb. 7, 2011 (GLOBE NEWSWIRE) -- Motorcar Parts of America, Inc. today reported solid results for its fiscal 2011 third quarter and nine months ended December 31, 2010.

• Net income for the fiscal 2011 third quarter increased 75.3 percent to $3.8 million, or $0.30 per diluted share, from net income of $2.1 million, or $0.18 per diluted share, for the comparable period a year earlier.
• Gross profit for the fiscal 2011 third quarter was $13.2 million compared with $10.9 million for the same period a year ago.
• Operating income for the fiscal 2011 third quarter increased 27.6 percent to $6.6 million from $5.2 million in the same period a year ago.
• Net income for the fiscal 2011 nine-month period increased 44.4 percent to $9.8 million, or $0.80 per diluted share, from $6.8 million, or $0.56 per diluted share, a year earlier.
• Gross profit for the fiscal 2011 nine-month period was $37.4 million compared with $28.9 million in the same period in fiscal 2010.
• Operating income for the nine months increased 44.4 percent to $19.5 million from $13.5 million for the same period in fiscal 2010.

"The company's record results for the fiscal third quarter reflect continued solid growth and strong operating performance in our base business. It is a great tribute to an excellent team of people working passionately to build value for our shareholders. We look forward to expanding the company's product line to include fast-growing under-the-car products through our anticipated acquisition of Fenwick Automotive early in the upcoming fiscal year," said Selwyn Joffe, chairman, president and chief executive officer of Motorcar Parts.

Portfolio Manager urges Motorcar Parts America to take steps to increase shareholder value:

We are writing to you on behalf of Wynnefield Partners Small Cap Value, L.P., Wynnefield Partners Small Cap Value, L.P. I and Wynnefield Small Cap Value Offshore Fund, which collectively own, or have an economic interest equivalent to 3.5% of the common stock of Motorcar Parts of America.

We applaud the recent $5 million stock buyback program announced on March 16th and management’s successful repayment of the company’s line of credit. Management has successfully built an efficient low-cost remanufacturing platform in Mexico and Malaysia, and counts all major US aftermarket retailers as their end customers. The company now enjoys 50% capacity availability on their remanufacturing platform, a complete US-based distribution network of aftermarket retailers, a reduced debt-load, and positive free cash flow generation.

However, the company’s revenues have stalled over the past 4 years and the company’s stock price has not recovered from the mid-to-low teen dollar per share stock level reached when the company closed on a private placement on May 24th, 2007. All this time, Mr. Selwyn Joffe, Chairman and CEO, received an average total compensation of $1,685,000, Mr. David Lee, CFO, received an average total compensation of $375,000, Mr. Michael Umansky, Secretary and General Council, received an average total compensation of $551,000, and Mr. Mel Marks, a Director, continued to receive a $350,000 per year consulting fee. These four salaries accounted for over 11% of total operating expenses in fiscal year 2009.

We ask the Board of Directors to begin the process to explore strategic alternatives in order to enhance shareholder value including, but not limited to, a potential sale of the Company. A successful strategic acquirer of the company would receive an efficient low-cost remanufacturing platform with available capacity, a distribution network of all major aftermarket retailers, and a company that enjoys EBITDA margins in the low teens. The successful strategic acquirer could also enjoy immediate operating expense synergies of over 11%, or about $3,000,000 per year.

Very truly yours,
Dwight Mamanteo

Portfolio Manager
Nelson Obus President

Source: Business Wire (March 22, 2010)