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MOTORCAR PARTS OF AMERICA INC (MPAA)·Q2 2026 Earnings Summary

Executive Summary

  • Q2 FY26 revenue was $221.5M, up 6.4% YoY and above consensus $208.0M; EPS was -$0.11, a significant miss versus consensus $0.38; EBITDA was $16.5M, below consensus $25.8M .*
  • Gross profit reached a second-quarter record $42.7M; gross margin was 19.3% vs. 19.8% last year, pressured by $3.6M non-cash items (3.0% margin impact) and $0.7M one-time cash items (0.3%) .
  • Cash from operations was $21.9M and net bank debt fell $17.7M sequentially to $56.7M; liquidity stood at ~$161M; 90,114 shares were repurchased for $1.4M .
  • Management confirmed FY26 guidance (sales $800–$820M; operating income $86–$91M; D&A ~$11M), noting Q2 included a one-time $14.8M core revenue offset by deferred purchasing from a large customer (expected to normalize in H2) .
  • Near-term stock drivers: revenue beat vs. estimates juxtaposed with EPS miss, strong cash generation and deleveraging, and commentary that deferred customer orders should return in H2 FY26 .*

What Went Well and What Went Wrong

What Went Well

  • Record Q2 gross profit ($42.7M) and strong operating cash flow ($21.9M), supporting $17.7M net debt reduction and buybacks: “generated cash of approximately $21.9 million… reduced net bank debt by $17.7 million to $56.7 million… repurchased 90,114 shares” .
  • Revenue beat and product momentum: brake-related offerings gaining traction; heavy-duty and Mexico markets growing. “Our brake-related products are… picking up momentum… sales in the Mexico market are growing nicely” .
  • Strategic focus and confidence: “We remain laser-focused on further efficiencies… liquidity is strong… leverage is low” .

Quotes:

  • CEO: “Results for the fiscal second quarter reflect continued success at leveraging the company’s prominent position within the non-discretionary automotive aftermarket…” .
  • CFO: “Operating income… increased 30.8% to $16.4 million…” .
  • CEO: “We are excited about… future opportunities and that we are confirming our guidance for fiscal 2026.” .

What Went Wrong

  • EPS miss driven by non-cash and one-time items: net loss -$2.1M (-$0.11) versus consensus $0.38; gross margin down 50 bps YoY due to $3.6M non-cash and $0.7M cash items .*
  • Customer deferral offset one-time core revenue: $14.8M core revenue recognition reduced gross margin by 1.1% and contributed $0.643M to profitability, but a major customer delayed purchases by a similar amount; expected to recover in H2 .
  • EBITDA undershot expectations: $16.5M vs. $25.8M consensus as margin pressures and FX impacts remained factors .*

Financial Results

Summary vs Prior Periods and YoY

MetricQ2 2025Q1 2026Q2 2026
Revenue ($USD Millions)$208.186 $188.364 $221.470
Gross Profit ($USD Millions)$41.277 $33.917 $42.727
Gross Margin (%)19.8% 18.0% 19.3%
Operating Income ($USD Millions)$12.5 $20.1 $16.4
EBITDA ($USD Millions)$14.741 $20.728 $16.484
EBITDA Margin (%)7.1% 11.0% 7.4%
Net Income ($USD Millions)-$2.954 $3.042 -$2.149
Diluted EPS ($)-$0.15 $0.15 -$0.11
Cash from Operations ($USD Millions)$22.852 $10.028 $21.865
Net Bank Debt ($USD Millions)$—$74.4 $56.7

Actual vs S&P Global Consensus (Q2 2026)

MetricConsensusActualSurprise
Revenue ($USD Millions)$208.0*$221.47 +$13.47M; +6.5% — bold revenue beat*
Primary EPS ($)$0.38*-$0.11 -$0.49 — bold EPS miss*
EBITDA ($USD Millions)$25.8*$16.48 -$9.32M — miss*

Values marked with * retrieved from S&P Global.

Additional KPIs and Cash/Liquidity

KPIQ2 2025Q1 2026Q2 2026
Interest Expense ($USD Millions)$14.182 $12.812 $12.699
Liquidity (Cash + Availability, $USD Millions)$—~$147 ~$161
Share Repurchases (Shares / $USD Millions)$—197,796 / $2.0 90,114 / $1.4

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net SalesFY 2026$780–$800M (June 2025) $800–$820M (Aug 11, 2025; reaffirmed Nov 10) Raised in Aug; Maintained in Nov
Operating IncomeFY 2026$86–$91M (June 2025) $86–$91M (Aug 11; reaffirmed Nov 10) Maintained
Depreciation & AmortizationFY 2026~$11M (June 2025) ~$11M (Aug 11; reaffirmed Nov 10) Maintained
Revenue Guidance TreatmentFY 2026N/AOne-time $14.8M core revenue excluded from guidance Clarified

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 FY25 and Q1 FY26)Current Period (Q2 FY26)Trend
Brake product momentumEmphasized margin tailwinds as brakes scale “Brake-related products… picking up momentum faster than others” Strengthening
Mexico market & FX hedgingReduce reliance on Chinese sourcing; fund MX ops with pesos; reduce forward contracts Continued growth in Mexico; progress reducing FX exposure Improving
Heavy-duty rotating electricGrowth opportunities gaining momentum “Increasingly important supplier… opportunities to expand” Expanding
Working capital neutralization & deleveragingStrong cash generation, debt reduction in FY25 and Q1 FY26 $21.9M CFO in Q2; net bank debt $56.7M; liquidity ~$161M Positive
Tariffs & cost mitigationPrice passthroughs raised FY26 sales guidance Small one-time tariff costs ($0.698M) and continued mitigation Less impactful
Customer order deferralNot cited previouslyLarge customer deferred purchases; expected H2 catch-up Temporary headwind

Management Commentary

  • CEO strategic positioning: “The company’s solid financial position, cash flow generation and continued net debt reduction should continue to enhance our competitive position….” .
  • Market tailwinds: “Average age of U.S. light vehicles has risen to 12.8 years… vehicles on the road 293.5 million… We expect increased replacement opportunities” .
  • One-time items and guidance: “This one-time core revenue is not included in our revenue guidance” and “we are confirming our guidance for fiscal 2026” .
  • Liquidity & capital allocation: “Our liquidity remains very strong, with total cash and availability of approximately $161 million” and repurchased shares in Q2 .

Q&A Highlights

  • Customer deferral: Management confirmed a major customer delayed purchases offsetting the $14.8M core revenue; expects recovery in H2 FY26; excluding core revenue, performance aligns with guidance .
  • Consumer deferral: Some discretionary repair deferral in the industry, but impact on MPAA limited as products are non-discretionary (start/stop) .
  • Market share and industry dynamics: Brakes gaining share; commentary on industry events (First Brands) implies opportunity for reliable suppliers without specific impact quantified .
  • Capital allocation: Continued willingness to repurchase shares given liquidity and perceived undervaluation; ongoing debt reduction targeted .

Estimates Context

  • Revenue beat: $221.47M actual vs $208.0M consensus (+6.5%); strength aided by core realignment revenue and underlying demand .*
  • EPS miss: -$0.11 actual vs $0.38 consensus; miss driven by non-cash items ($0.25/share) and one-time cash costs ($0.03/share), plus higher tax expense and FX impacts .*
  • EBITDA miss: $16.48M actual vs $25.8M consensus; margin impact from non-cash items and small tariff-related cash expense .*
  • Near-term estimate revisions: Street likely to lower EPS and EBITDA for FY26 while keeping sales broadly intact given guidance reaffirmation and expected H2 order normalization .*

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue momentum intact with a clear beat; expect H2 revenue tailwind as the deferred customer purchases normalize; watch order cadence updates in Q3 call .*
  • EPS and EBITDA misses tied to identifiable non-cash and one-time items; monitor FX impacts and progress funding MX operations with local currency to reduce volatility .
  • Strong cash generation ($21.9M CFO) and deleveraging ($56.7M net bank debt) provide flexibility for buybacks and strategic initiatives; liquidity ~$161M .
  • Guidance maintained despite Q2 anomalies; FY26 sales $800–$820M and OI $86–$91M remain credible given product momentum (brakes, heavy-duty) and Mexico growth .
  • Near-term trading: Potential pressure from EPS miss could be offset by cash flow/debt reduction and management’s confirmation of guidance; catalyst is H2 order recovery .
  • Medium-term: Margin enhancement from scale in brakes and supply chain initiatives; continued tariff passthroughs; working capital neutralization supports FCF durability .
  • Risk monitor: FX mark-to-market, tariff policy changes, and timing of customer purchasing behavior; non-GAAP adjustments remain material to reported results .

Additional Documents Read:

  • Q2 FY26 8-K and press release with exhibits (financial statements, non-GAAP reconciliations) .
  • Q2 FY26 earnings call transcript (prepared remarks and Q&A) .
  • Q1 FY26 press release and call for trend context .
  • FY25 results press release for prior-year baseline .

S&P Global consensus data used for estimates and marked with * (Revenue, EPS, EBITDA, estimate counts). Values retrieved from S&P Global.*