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MOTORCAR PARTS OF AMERICA INC (MPAA)·Q1 2026 Earnings Summary

Executive Summary

  • Record Q1 FY2026 net sales of $188.4M (+10.9% YoY) and gross profit of $33.9M; operating income swung to $20.1M from a loss; EBITDA of $20.7M, with strong $10.0M operating cash flow and net bank debt reduced to $74.4M .
  • Sales guidance raised to $800–$820M (from $780–$800M) on strong start and tariff passthroughs; operating income guidance reaffirmed at $86–$91M; D&A ~$11M .
  • Versus Wall Street: Revenue beat ($188.4M vs $172.0M*) while EPS missed ($0.15 vs $0.18*), with limited coverage (# of estimates = 1) and non-cash/cash items impacting margins and EPS . Values retrieved from S&P Global*.
  • Management highlighted market-share gains in brakes, sustained demand for non-discretionary parts, and strategic tariff mitigation via pricing and supply chain actions; reduced reliance on China (<25% of sourcing) .
  • Near-term stock reaction catalysts: raised sales guidance, strong cash generation and deleveraging, and narrative of tariff pass-throughs offset by an EPS miss and gross margin headwinds from non-cash core amortization and revaluation .

What Went Well and What Went Wrong

What Went Well

  • Record first-quarter sales ($188.4M, +10.9% YoY) and gross profit ($33.9M, +16.3% YoY); operating income inflected to $20.1M from a loss a year ago .
  • Solid cash execution: $10.0M generated from operating activities; net bank debt cut by $7.0M to $74.4M; share repurchase of 197,796 shares for $2.0M at $9.94 .
  • Strategic positioning amid tariffs: raised FY26 sales guidance; management emphasized reduced reliance on China (<25%) and USMCA-compliant footprint; “we’re record sales… majority of our sales increase is not tariffs” .

What Went Wrong

  • Gross margin at 18.0% (up 80 bps YoY) was impacted by 2.1% non-cash items (core amortization and shelf revaluation) and 0.8% cash tariff timing costs; EPS of $0.15 missed consensus $0.18* . Values retrieved from S&P Global*.
  • Continued FX-related volatility: large non-cash mark-to-market foreign exchange impacts on Mexico lease liabilities and forward contracts, influencing operating expenses and reported results .
  • Tariff timing still a near-term headwind: CFO cited $1.426M net tariff costs in Q1 and expects some impact in Q2 (though sequentially less), adding uncertainty to margin trajectory .

Financial Results

Core Financials by Quarter (oldest → newest)

MetricQ3 FY2025Q4 FY2025Q1 FY2026
Revenue ($USD)$186.176M $193.105M $188.364M
Gross Profit Margin %24.1% 19.9% 18.0%
EBITDA ($USD)$20.373M $16.296M $20.728M
Net Income ($USD)$2.291M $(0.722)M $3.042M
Diluted EPS ($)$0.11 $(0.04) $0.15

Q1 vs Prior Year and Prior Quarter

  • YoY: Revenue +10.9%; gross margin +80 bps to 18.0%; EPS improved from $(0.92) to $0.15; EBITDA improved from $(1.147)M to $20.728M .
  • QoQ (vs Q4): Revenue down $4.7M; gross margin down 190 bps; EPS improved from $(0.04) to $0.15; EBITDA up $4.4M .

Consensus vs Actual (Q1 FY2026)

MetricConsensusActualResult vs Consensus
Revenue ($USD)$172.0M*$188.364M Beat
EPS ($)$0.18*$0.15 Miss
# of Estimates (Revenue/EPS)1 / 1*——

Values retrieved from S&P Global*.

KPIs (Q1 FY2026)

KPIValue
Cash from Operations ($USD)$10.0M
Net Bank Debt ($USD)$74.4M
Interest Expense ($USD)$12.8M
Share Repurchases197,796 shares; $2.0M at $9.94
GM non-cash impact (bps)210 bps
GM cash impact (tariffs, bps)80 bps

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales ($USD)FY2026$780M–$800M $800M–$820M Raised
Operating Income ($USD)FY2026$86M–$91M $86M–$91M Maintained
Depreciation & Amortization ($USD)FY2026~$11M ~$11M Maintained
Tariff TreatmentFY2026Excludes recent tariffs due to uncertainty Incorporates passthroughs enacted as of Aug 11, 2025 Clarified

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 FY2025 and Q4 FY2025)Current Period (Q1 FY2026)Trend
Tariffs/macroImplementing surcharges; reducing China dependence; uncertainties on timing; majority of price increases accepted Sequential tariff impact lower in Q1 ($1.426M) vs Q4 ($4.607M); expect some impact in Q2 but coming down; sales guidance raised with passthroughs Improving mitigation; pricing offsets
Supply chain/ChinaLess than 25% sourcing from China; USMCA footprint; direct factory shipping reduces tariff cash burden vs peers Reiterated <25% China and strategic North America footprint; continued supplier/customer efficiency gains Structural advantage sustained
Brake categoryRamping brake calipers; efficiency improving with scale; capacity exceeded initial plans Brake offerings gaining share; efficiency/margin expected to improve as volumes increase Scaling up; margin accretive
Mexico & regional growthMexico sales momentum; reduce FX forward usage with peso funding Continued demand growth in Mexico; expanding support across LatAm Positive regional expansion
DiagnosticsJBT-1 tester success; aiming toward $100M milestone over time Installed base growth to drive service revenues; expansion outside North America Steady build; recurring revenue potential
Working capital & cashStrong cash generation; net debt down; vendor finance rate sensitivity $10M operating CF; net bank debt down to $74.4M; liquidity ~$147M availability Ongoing deleveraging
MarginsQ3 gross margin 24.1% via efficiencies; Q4 impacted by tariffs (2.4% GM hit) Q1 GM 18.0% with 2.1% non-cash and 0.8% cash impacts; expecting further margin growth with efficiencies/scale Near-term headwinds; medium-term expansion focus

Management Commentary

  • “We’re encouraged by our first quarter performance, reflecting record net sales and gross profits… generated solid cash flow, reduced net bank debt and continued to repurchase shares” .
  • “We have been focused on executing strategies designed to be less dependent on Chinese supply chain… favorable long-term industry dynamics continue to bode well for the company” .
  • “Gross margin… increased… despite headwinds related to tariffs… increasing market share gains particularly for brake related products should continue to enhance our gross margin” .
  • CFO: “Net sales increased 10.9%… Gross margin was 18%… EBITDA was $20.7M… operating income increased to $20.1M… cash from operations $10M; net bank debt down to $74.4M” .

Q&A Highlights

  • Tariffs impact: Q1 tariff impact ($1.426M) was much lower than Q4; Q2 expected to see “a little bit more impact” but sequential declines; pricing passthrough assumptions embedded in guidance though not broken out .
  • Growth vectors: Significant opportunity in the pure professional installer market for Quality-Built brand across categories; brake pads business “just beginning,” with expected efficiency gains as volume scales .
  • Guidance clarity: Raised sales guidance reflects both strong demand and tariff passthroughs; majority of sales increase is unrelated to tariffs .

Estimates Context

  • Revenue beat and EPS miss: Q1 FY2026 revenue $188.364M vs consensus $172.0M* (beat); EPS $0.15 vs $0.18* (miss), with only one estimate for both metrics, implying limited sell-side coverage and potentially higher variance . Values retrieved from S&P Global*.
  • Drivers for potential estimate revisions: Raised FY26 sales guidance ($800–$820M) and strong cash generation may push revenue/EBITDA estimates higher; EPS estimates may adjust for continued non-cash core amortization and FX, tariff timing costs, and tax rate dynamics .

Key Takeaways for Investors

  • Strong operational start to FY26 with record Q1 sales/gross profit, EBITDA rebound, and cash generation supporting deleveraging and buybacks .
  • Guidance raised on sales with tariff passthroughs; operating income range reaffirmed—narrative suggests continued margin improvement as brake volumes scale and efficiencies accrue .
  • Tariff headwinds are moderating sequentially; structural advantages (USMCA footprint, <25% China sourcing, direct factory shipping) may support relative share gains vs peers .
  • Near-term watch: Q2 tariff timing and gross margin impacts; FX mark-to-market on Mexico leases/forwards remains noisy but is being reduced via peso funding strategy .
  • Medium-term: Brake category scaling and professional installer penetration are core growth engines; diagnostics provides recurring service revenue optionality .
  • Trading setup: Raised sales guidance and revenue beat vs a single estimate are positive catalysts; EPS miss and GM headwinds may cap near-term multiple expansion until margin trajectory visibly improves .
  • Liquidity/interest sensitivity: ~$147M total cash and availability; every 100 bps rate reduction meaningfully reduces AR discount program costs, supporting EPS leverage .

Notes: All document-based figures cited from the Q1 FY2026 press release/8-K and earnings call; consensus values marked with * are retrieved from S&P Global.