Motorcar Parts of America, Inc. (MPAA) reported fiscal 2026 second‑quarter results that included a 6.4% year‑over‑year increase in net sales to $221.5 million, a record gross profit of $42.7 million, and operating income of $16.4 million. The company posted a net loss of $2.1 million, translating to a GAAP earnings‑per‑share (EPS) of $0.07, a miss of $0.31 against the consensus estimate of $0.38. On a non‑GAAP basis, adjusted EPS was $0.17, falling short of the $0.39 estimate. Cash flow from operations surged to $21.9 million, and net bank debt fell by $17.7 million to $56.7 million after repurchasing 90,114 shares for $1.4 million.
The revenue beat was driven by robust demand in MPAA’s core automotive‑aftermarket segments, particularly in the non‑discretionary parts market that benefits from an aging U.S. vehicle fleet. Pricing power in these segments helped offset a slight contraction in gross margin from 19.8% to 19.3% year‑over‑year, a decline largely attributable to a $3.6 million non‑cash expense and a $698,000 one‑time cash charge that increased cost of goods sold. The mix shift toward higher‑margin diagnostic and heavy‑duty products also contributed to the top‑line growth.
The EPS miss reflects the impact of the margin contraction and the one‑time charges that eroded profitability. While operating income rose, the lower gross margin and the additional expenses reduced earnings per share. The company’s net loss of $2.1 million, compared with a $3.0 million loss a year earlier, indicates a narrowing loss but still falls short of analyst expectations. The EPS miss was the primary driver of the negative market reaction, with analysts noting that the company’s earnings fell well below consensus despite the revenue beat.
Cash flow and balance‑sheet strength improved markedly. Operating cash flow of $21.9 million and a $17.7 million reduction in net bank debt demonstrate a solid liquidity position. The share‑repurchase program, totaling 90,114 shares for $1.4 million, signals management’s confidence in the company’s cash generation and a commitment to returning value to shareholders. The debt reduction also lowers interest expense, which fell to $12.7 million from $14.2 million, further supporting the company’s financial health.
Management emphasized the company’s strategic focus on the non‑discretionary aftermarket and its North American footprint. CEO Selwyn Joffe said, “Results for the fiscal second quarter reflect continued success at leveraging the company’s prominent position within the non‑discretionary automotive aftermarket and North American footprint.” He added that the solid financial position, cash flow generation, and net debt reduction will enhance competitive positioning and support future opportunities. The company did not provide new guidance for the remainder of the fiscal year, leaving investors to interpret the results in the context of the current market environment.
The market reaction was sharply negative, with analysts citing the EPS miss as the main catalyst. Despite the revenue beat and improved cash flow, the earnings shortfall underscored the company’s ongoing margin pressure and highlighted the importance investors place on profitability metrics over top‑line growth alone.
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