The share price Motorcar Parts of America Inc. has been on an upward trend of late.
Despite falling by 0.8% after releasing its fiscal first quarter financials on Aug. 8, the stock of the Torrance-based car parts manufacturer and distributor has since seen an increase.
On Aug. 12, for instance, the stock price rose by nearly 6% from the closing price of the previous trading day of $6.02. It then dropped by 3.6% to close the following day – Aug. 13. – at $6.15 before recovering to close at $6.28 on Aug. 16.
The share price closed at $6.50 on Aug. 22.
Selwyn Joffe, the chief executive of the company, also known as MPA, said in its earnings release that as Motorcar begins a new fiscal year, he remained optimistic about its year-over-year outlook and the company’s ability to further leverage its leadership position in the non-discretionary aftermarket parts industry.
“We anticipate meaningful improvements to gross margins, gross profit and cash flow in the quarters ahead, supported by ongoing strategic actions throughout the entire organization, such as the realignment of resources,” Joffe said in a statement.
“While there are a variety of factors related to financial performance beyond our control, such as non-cash items and interest rates, we are determined to enhance shareholder value through improved operational efficiencies, a critical evaluation of our electric vehicle offerings, and rational pricing,” he added.
Reporting a net loss
For the quarter ending June 30, Motorcar reported before the market opened on Aug. 8 a net loss of $18.1 million (-92 cents a share), compared with a net loss of $1.4 million (-7 cents) in the same period of the previous year. Revenue increased by 6% from the first quarter of the prior year to $170 million.
During a conference call with analysts to discuss the first quarter financials, Joffe said that he and the team at Motorcar are “laser-focused” on further efficiencies and fully benefitting from a not easily duplicated global platform where the company can meet the demand for non-discretionary products as well as from diagnostic testing capabilities.
“We have the resources, capacity and professional expertise to capitalize on significant market opportunities in all of our product lines, particularly our brake related businesses, which are gaining solid momentum,” Joffe said.
Joffe said he expects MPA to sell more than $100 million of diagnostic equipment within the next three years with further opportunities pending.
“We expect additional service revenue as more testers are deployed,” he added. “We expect more opportunities outside North America as the business evolves.”
Joffe, however, added that the electric vehicle testing business was moving slower than anticipated.
“We’re going to look at what to do strategically with that business, but that’s a little bit slower for us,” he said, adding that it was a “very, very small part of our business.”
Recent stories in the Wall Street Journal and the car magazines told of how car companies are now rethinking scrapping their combustion engine lines and trying to revamp them and put them back in place, Joffe said.
“And so, the combustion engine, hybrid technology arena seems to be gaining far more momentum and the electric vehicle arena seems to be losing a lot of momentum,” he added. “And so that bodes well for us at the end of the day.”
