Motorcar Parts of America, Inc. (NASDAQ:MPAA) Q3 2019 Earnings Conference Call Transcript

Feb 11, 2019 • 01:00 pm ET


Motorcar Parts of America, Inc. (NASDAQ:MPAA) Q3 2019 Earnings Conference Call Transcript


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Good day, ladies and gentlemen, and welcome to the Motorcar Parts of America Fiscal 2019 Third Quarter Conference Call. At this time, all participants are in a listen-only mode. Later we'll conduct a question-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference may be recorded.

I would now turn the conference to your host, Mr. Gary Maier. Sir, you may begin.

Gary Maier

Thank you, Valerie, and thank you everyone for joining us for the call today. Before we begin and I turn the call over to Selwyn Joffe, Chairman, President and Chief Executive Officer; and David Lee, the Company's Chief Financial Officer. I'd like to remind everyone of the safe harbor statement included in today's press release.

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for certain forward-looking statements, including statements made during today's call. Such forward-looking statements are based on the Company's current expectations and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that future developments affecting the Company will be those anticipated by Motorcar Parts of America.

Actual results may differ from those projected in these forward-looking statements. These forward-looking statements involve significant risks and uncertainties, some of which are beyond the control of the Company and are subject to change based upon various factors. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For a more detailed discussion of some of the ongoing risks and uncertainties of the Company's business, I refer you to the Company's various filings with the Securities and Exchange Commission.

I'd now like to begin the call and turn it over to Selwyn.

Selwyn Joffe

Thank you, Gary. I appreciate everyone joining us today. A record sales for the quarter highlight the Company's continued success and growing position within the estimated $125 billion automotive hard parts aftermarket. While the quarter end gross margin were impacted by several items, of which approximately 40% was non-cash as highlighted in today's press release, we expect adjusted gross margin improvement in the next fiscal year.

We were excited by the opportunities, our business and our product lines are growing. Our footprint is expanding to support this growth. We are at an important inflection point. As I highlighted during our call last quarter, we are ramping up production for new business wins, expanding our infrastructure to bolster our industry-leading customer support programs for our new business and products, launching our new brake program, increasing our diagnostic business for both internal combustion and electric vehicle applications, which has recently been enhanced by our recent acquisition of E&M Power and we are expanding our footprint in both our Mexican and Malaysian facilities.

In addition to our new 400,000 square feet distribution center in Mexico, we are in the process of expanding our global facilities with an additional 350,000 square feet. This expansion addresses a number of strategic initiatives. Number one,