WEB NEWS Deal Flow
LOS ANGELES, Aug. 23, 2012 (GLOBE NEWSWIRE ) -- Motorcar Parts of America, Inc. (Nasdaq:MPAA) today announced its Fenco subsidiary has signed a multi-faceted strategic cooperative agreement with one of the world's largest automotive manufacturers of new undercar products -- including a $20 million trade line of credit for Fenco, joint sourcing and quality commitments, as well as expected joint product development and marketing initiatives.
"This strategic cooperative agreement will greatly enhance the liquidity of our Fenco subsidiary and should provide a strong strategic alliance for new product development for both our undercar and under-hood product lines. In conjunction with this agreement, M&T Bank, the current lender for Fenco, will extend the Fenco line of credit maturity until October 2014 and increase its line of credit by $5 million," said Selwyn Joffe, chairman, president and chief executive officer of Motorcar Parts.
"This alliance is expected to greatly enhance the aftermarket industry position of Motorcar Parts of America and its subsidiaries for new and remanufactured units," Joffe added.
In connection with the agreement and pursuant to a fully subordinated guaranty associated with the $20 million line of credit, Motorcar Parts of America has agreed to guarantee these obligations and provide the supplier with the right after July 1, 2014 to sell up to $8.0 million of outstanding obligations to the company in exchange, at the company's option, for shares of common stock valued at $7.75 per share, subject to certain adjustments, or cash in an amount of 135 percent of the amount of the outstanding obligations being sold to Motorcar Parts of America. The exercise of these options will reduce the company's liability with respect to the guaranty of the obligations.
In connection with the line of credit agreement, the company has also agreed to issue a warrant to purchase 516,126 shares at an exercise price of $7.75 per share. The warrant is proportionately forfeited if the right to convert the loan is exercised.
Additional details are outlined in the company's Form 8-K filing associated with this transaction.
Comments & Business Outlook
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.
GeoSpecial Notes
On May 3, 2010 Motorcar Parts America issued preliminary fourth quarter fiscal 2010 results which call for revenues to come in at around $37.0 million vs. an estimate of $34.6 million. We like MPAA as a play on the consumers trend to delay purchase of new cars during a weak economy in a recession.
Its products are sold to automotive retail outlets and the professional repair market throughout the United States.
2011 EPS growth is expected to come in at 15%, but we feel this could be conservative as the company has been exceeding estimates in recent quarters. The stock is selling at a P/E of 15. Please note that sub par revenue growth may limit P/E expansion. But investors may see reason to take company shares to at least its book value of $8.34. Coding as a GeoSpecial at $6.30.
Comments & Business Outlook
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,
Source: Business Wire (March 22, 2010 )
Research
Excerpt From GeoBargain & GeoSpecial Review article, November 17, 2009 .
Motorcar Parts America (NASDAQ:MPAA) Closing Price Nov. 16, 2009: $5.28
Added to the GeoBargain on the Radar List on August 18, 2009 at $4.99.
Reached a high of $5.51 on Nov. 4, 2009, an increase of 10% since placement on the list
Motercar, a remanufacturer of alternators and starters utilized in imported and domestic passenger vehicles, light trucks and heavy duty applications, reported second quarter 2010 EPS of $0.21, easily surpassing analyst estimates of $0.13. Updated analyst estimates have not been provided yet. They had been forecasting $0.51 for the full fiscal 2010 year ending in March. At the very minimum, the new 2010 estimate will likely be $0.59, giving the stock a modest P/E of 8.83. For fiscal 2011, analysts are currently forecasting an EPS of $0.69.
Motercar is an intriguing recession play as it should benefit from consumers delaying new car purchases. Management was bullish on the conference call, indicating that sales may benefit from this trend going forward.
Research
Motorcar Parts America (NASDAQ:MPAA) reported 2009 first quarter financial results ended June, exceeding analyst estimates by 67 % . The GeoTeam ® is speculating that the company may actually be benefiting from the current recession as consumers opt to buy used vehicles or maintain their current vehicles as opposed to purchasing new ones. Motorcar Parts markets its products to the professional repair market and automotive retail outlets.
Comments from the Company's 2009 first quarter press release are encouraging:
"The company experienced a significant pick-up of sales in the third month of the quarter from existing customers that gives us optimism that our base revenue is very strong. Sales in the first month of the current quarter continued to be strong," said Selwyn Joffe, chairman, president and chief executive officer of Motorcar Parts. "The volume of anticipated business from existing and new customers is encouraging. Enhanced utilization of manufacturing capacity and our ability to leverage the company's low-cost manufacturing structure and produce quality products are key components of the company's growth strategy,"
"Industry statistics related to replacement rates for alternators and starters continue to be positive. "With approximately 240 million vehicles currently on the road and 130 million vehicles at least nine years old, we are currently seeing and anticipate improved demand for our products"
Source: GlobeNewswire (August 10, 2009)
We have added the stock to the GeoBargain on the Radar list due to fiscal year 2011 (ending March) analyst estimates of $0.70, showing earnings per share growth of 32%. However, sales growth is forecast to be under 5% and fiscal 2010 non- GAAP earnings per share is expected to stay relatively flat as compared with the prior year. Consequently, it may be a little too early to code Motorcar Parts America as a GeoBargain . We are also considering adding the company to the GeoSpecial list .
More details will be provided if warranted.
