Motorcar Parts of America, Inc. (Nasdaq: MPAA

Positive Drivers and Initiatives Include:

Three-Month Results

for the fiscal 2026 third quarter were $167.7 million compared with $186.2 million in the prior year – reflecting an approximately $17 million sales decrease to one of the company’s large customers as explained previously, with sales to this customer now increasing in the current fiscal fourth quarter.Net sales

for the same period was 19.6 percent compared with 24.1 percent a year earlier, impacted by this large sales decrease. Gross margin on a sequential basis increased to 19.6 percent for the quarter compared with 18.0 percent for the fiscal first quarter and 19.3 percent for the fiscal second quarter. Gross margin is expected to continue to improve in the current fiscal fourth quarter, benefiting from increased ordering activity from this large customer on a sequential basis and related increased sales.Gross profitGross margin

for the fiscal 2026 third quarter was $8.3 million compared with $17.6 million in the prior year, impacted by lower sales.Operating income

Interest expense for the fiscal 2026 third quarter decreased by $3.5 million to $10.9 million from $14.4 million a year ago, reflecting lower average outstanding balances under the company’s credit facility, lower utilization of accounts receivable discount programs, and lower interest rates.

Net income for the fiscal 2026 third quarter was $1.8 million, or $0.09 per diluted share, compared with net income of $2.3 million, or $0.11 per diluted share, for the prior year. Net income was impacted by non-cash and one-time expenses of $611,000, or $0.03 per diluted share, as detailed in Exhibit 1, as well as the factors previously noted.

“Notwithstanding our short-term revised guidance, our outlook remains positive and ordering activity by a large customer is beginning to return to more normalized levels. Equally important, we anticipate favorable benefits due to the changing competitive landscape, as evidenced by our new business commitments and opportunities,” said Selwyn Joffe, chairman, president and chief executive officer.

He noted the company’s accelerated brake-related sales momentum, which will benefit overall gross profits.

Joffe also highlighted the company’s commitment to enhancing shareholder value through opportunities to divest non-strategic assets, expanding its business in Latin America, and leveraging the company’s solid financial position, cash flow generation and continued year-to-date net bank debt reduction.

Joffe added that for the nine-month period the company generated cash of approximately $23.7 million and net bank debt decreased by $10.9 million, after share repurchases of $8.4 million, to $70.5 million from $81.4 million. The company currently has $25.1 million remaining available to repurchase shares under its authorized share repurchase program.

The company used cash of approximately $8.2 million from operating activities for the fiscal 2026 third quarter, primarily attributable to the build-up of inventory for new business. The company’s net bank debt was $70.5 million as of December 31, 2025. Cash and revolver availability was approximately $146 million as of December 31, 2025 which supports new business opportunities, share repurchases and related initiatives to enhance shareholder value.

Nine-Month Results

for the fiscal 2026 nine-month period increased $13.3 million, or 2.4 percent, to $577.5 million from $564.2 million, despite a decrease of approximately $40 million from the previously noted customer.Net sales

for the nine months was 19.0 percent compared with 20.4 percent a year earlier, impacted by the sales decrease from the large customer previously referenced.Gross profitgross margin

for the fiscal nine-month period was $44.8 million compared with $23.6 million in the prior year, reflecting the foreign exchange impact of lease liabilities and forward contracts.Operating income

Interest expense decreased by $6.6 million for the nine months to $36.4 million from $43.0 million a year ago, reflecting lower average outstanding balances under the company’s credit facility and lower interest rates.

Net income for the fiscal 2026 nine-month period was $2.7 million, or $0.13 per diluted share, impacted by non-cash expenses of $3.8 million, or $0.19 per diluted share, and one-time cash expenses of $1.9 million, or $0.09 per diluted share, compared with a net loss of $18.7 million, or $0.95 per share, a year ago, impacted by various items detailed in Exhibit 2. Net income for the nine-month period reflects the items impacting the fiscal 2026 third quarter explained above.

Share Repurchase

For the fiscal 2026 nine-month period, the company repurchased 669,472 shares for $8.4 million at an average share price of $12.47. During the fiscal 2026 third quarter, the company repurchased 381,562 shares for $5.0 million at an average share price of $13.10 under its current authorization program.

The company anticipates further opportunities to build shareholder value through enhanced profitability and strong cash generation, supported by an anticipated return to more normal ordering activity and sales growth.

Revised Fiscal 2026 Guidance

The company is revising its fiscal 2026 sales guidance to between $750 million and $760 million, impacted by the previously noted reduced ordering by a large customer, due to its closure of stores and consolidation of distribution centers. Operating income is expected to be between $72 million and $79 million, with depreciation and amortization of approximately $10 million. These estimates reflect the expected impact of tariffs enacted as of February 9, 2026, and do not include certain non-cash items and one-time expenses.

Use of Non-GAAP Measure

This press release includes the following non-GAAP measure – EBITDA, which is not a measure of financial performance under GAAP and should not be considered as an alternative to net income as a measure of financial performance. The company believes this non-GAAP measure, when considered together with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to the company’s results of operations. However, this non-GAAP measure has significant limitations in that it does not reflect all the costs and other items associated with the operation of the company’s business as determined in accordance with GAAP. In addition, the company’s non-GAAP measures may be calculated differently and are therefore not comparable to similar measures by other companies. Therefore, investors should consider non-GAAP measures in addition to, and not as a substitute for, or superior to, measures of financial performance in accordance with GAAP. For a definition and reconciliation of EBITDA to net income, its corresponding GAAP measure, see the financial tables included in this press release. Also, refer to our Form 8-K to which this release is attached, and other filings we make with the SEC, for further information regarding this measure.

Earnings Conference Call and Webcast

Selwyn Joffe, chairman, president and chief executive officer, and David Lee, chief financial officer, will host an investor conference call today at 10:00 a.m. Pacific time to discuss the company’s financial results and operations. The call will be open to all interested investors either through a live audio webcast atwww.motorcarparts.com www.motorcarparts.com

About Motorcar Parts of America, Inc.

Motorcar Parts of America, Inc. is a remanufacturer, manufacturer, and distributor of automotive aftermarket parts -- including alternators, starters, wheel bearings and hub assemblies, brake calipers, brake pads, brake rotors, brake master cylinders, brake power boosters, turbochargers, and diagnostic testing equipment utilized in imported and domestic passenger vehicles, light trucks, and heavy-duty applications. Its products are sold to automotive retail outlets and the professional repair market throughout the United States, Canada, and Mexico, with facilities located in California, New York, Mexico, Malaysia, China and India, and administrative offices located in California, Tennessee, Mexico, Singapore, Malaysia, and Canada. In addition, the company’s electrical vehicle subsidiary designs and manufactures testing solutions for performance, endurance, and production of multiple components in the electric power train – providing simulation, emulation, and production applications for the electrification of both automotive and aerospace industries, including electric vehicle charging systems. Additional information is available atwww.motorcarparts.com

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for certain forward-looking statements. The statements contained in this press release that are not historical facts are forward-looking statements based on the company’s current expectations and beliefs concerning future developments and their potential effects on the company. 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. Reference is also made to the Risk Factors set forth in the company’s Form 10-K Annual Report filed with the Securities and Exchange Commission (SEC) in June 2025 and in its Forms 10-Q filed with the SEC for additional risks and uncertainties facing the company. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise.

(Financial tables follow)

Additional Information and Non-GAAP Financial Measures

To supplement the consolidated financial statements presented in accordance with U.S. generally accepted accounting principles ("GAAP"), the company has included the following additional information and non-GAAP financial measures for the three and nine months ended December 31, 2025 and 2024. Among other things, the company uses such additional information and non-GAAP adjusted financial measures in addition to and together with corresponding GAAP measures to help analyze the performance of its business.

The company believes this information helps provide a more complete understanding of the company's results of operations and the factors and trends affecting the company's business. However, this information should be considered as a supplement to, and not as a substitute for, or superior to, information contained in the company’s financial statements prepared in accordance with GAAP. In addition, the company’s non-GAAP measures may be calculated differently and are therefore not comparable to similar measures by other companies.

The company defines EBITDA as earnings before interest, taxes, depreciation, and amortization. A reconciliation of EBITDA to net income is provided below along with information regarding such items.

View source version on businesswire.com:https://www.businesswire.com/news/home/20260209613969/en/

MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited)

	Three Months Ended						Nine Months Ended
	December 31,						December 31,
		2025			2024			2025			2024

Net sales	$	167,697,000		$	186,176,000		$	577,531,000		$	564,249,000
Cost of goods sold		134,819,000			141,294,000			468,009,000			448,916,000
Gross profit		32,878,000			44,882,000			109,522,000			115,333,000
Operating expenses:
General and administrative		15,328,000			16,212,000			45,094,000			47,934,000
Sales and marketing		6,350,000			5,621,000			19,371,000			16,904,000
Research and development		3,460,000			3,008,000			10,694,000			7,884,000
Foreign exchange impact of lease liabilities and forward contracts		(594,000	)		2,460,000			(10,411,000	)		18,966,000
Total operating expenses		24,544,000			27,301,000			64,748,000			91,688,000
Operating income		8,334,000			17,581,000			44,774,000			23,645,000
Other expenses:
Interest expense, net		10,901,000			14,435,000			36,412,000			43,004,000
Change in fair value of compound net derivative liability		(3,910,000	)		(260,000	)		140,000			(2,460,000	)
Total other expenses		6,991,000			14,175,000			36,552,000			40,544,000
Income (loss) before income tax (benefit) expense		1,343,000			3,406,000			8,222,000			(16,899,000	)
Income tax (benefit) expense		(434,000	)		1,115,000			5,552,000			1,849,000
Net income (loss)	$	1,777,000		$	2,291,000		$	2,670,000		$	(18,748,000	)
Basic net income (loss) per share	$	0.09		$	0.12		$	0.14		$	(0.95	)
Diluted net income (loss) per share	$	0.09		$	0.11		$	0.13		$	(0.95	)
Weighted average number of shares outstanding:
Basic		19,393,228			19,783,170			19,377,401			19,739,481
Diluted		20,139,201			20,416,958			20,146,118			19,739,481

MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES Consolidated Balance Sheets

	December 31, 2025		March 31, 2025
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	17,511,000	$	9,429,000
Short-term investments		2,060,000		1,881,000
Accounts receivable — net		80,730,000		91,064,000
Inventory — net		398,980,000		359,669,000
Contract assets		33,327,000		29,606,000
Prepaid expenses and other current assets		25,153,000		19,822,000
Total current assets		557,761,000		511,471,000
Plant and equipment — net		30,681,000		31,990,000
Operating lease assets		65,852,000		66,603,000
Long-term deferred income taxes		5,850,000		4,569,000
Long-term contract assets		325,044,000		336,268,000
Goodwill and intangible assets — net		3,527,000		3,757,000
Other assets		2,595,000		2,978,000
TOTAL ASSETS	$	991,310,000	$	957,636,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	187,829,000	$	172,117,000
Customer finished goods returns accrual		37,856,000		34,411,000
Contract liabilities		60,323,000		38,158,000
Revolving loan		88,010,000		90,787,000
Other current liabilities		7,411,000		5,570,000
Operating lease liabilities		9,357,000		9,982,000
Total current liabilities		390,786,000		351,025,000
Convertible notes, related party		39,890,000		35,207,000
Long-term contract liabilities		234,789,000		241,404,000
Long-term deferred income taxes		563,000		362,000
Long-term operating lease liabilities		58,973,000		65,308,000
Other liabilities		7,762,000		6,631,000
Total liabilities		732,763,000		699,937,000
Commitments and contingencies
Shareholders' equity:
Preferred stock; par value $.01 per share, 5,000,000 shares authorized; none issued		-		-
Series A junior participating preferred stock; par value $.01 per share, 20,000 shares authorized; none issued		-		-
Common stock; par value $.01 per share, 50,000,000 shares authorized; 19,208,710 and 19,435,706 shares issued and outstanding at December 31, 2025 and March 31, 2025, respectively		192,000		194,000
Additional paid-in capital		228,388,000		234,413,000
Retained earnings		22,703,000		20,033,000
Accumulated other comprehensive income		7,264,000		3,059,000
Total shareholders' equity		258,547,000		257,699,000
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	991,310,000	$	957,636,000

Items Impacting Net Income for the Three Months Ended December 31, 2025 and 2024								Exhibit 1

	Three Months Ended December 31,
	2025						2024
	$			Per Diluted Share			$			Per Diluted Share
GAAP net income	$	1,777,000		$	0.09		$	2,291,000		$	0.11

Non-cash items impacting net income
Core and finished goods premium amortization	$	2,980,000		$	0.15		$	2,664,000		$	0.13
Revaluation - cores on customers' shelves		554,000			0.03			758,000			0.04
Share-based compensation expenses		1,388,000			0.07			993,000			0.05
Foreign exchange impact of lease liabilities and forward contracts		(594,000	)		(0.03	)		2,460,000			0.12
Change in fair value of compound net derivative liability		(3,910,000	)		(0.19	)		(260,000	)		(0.01	)
Tax effect (a)		(105,000	)		(0.01	)		(1,654,000	)		(0.08	)
Total non-cash items impacting net income	$	313,000		$	0.02		$	4,961,000		$	0.24

Cash items impacting net income
New product line start-up costs and transition expenses, and severance and other		397,000			0.02			-			-
Tax effect (a)		(99,000	)		(0.00	)		-			-
Total cash items impacting net income	$	298,000		$	0.01		$	-		$	-

(a) Tax effect is calculated by applying an income tax rate of 25.0% to items listed above; this rate may differ from the period's actual income tax rate.

Items Impacting Net Income for the Nine Months Ended December 31, 2025 and 2024								Exhibit 2

	Nine Months Ended December 31,
	2025						2024
	$			Per Diluted Share			$			Per Diluted Share
GAAP net income (loss)	$	2,670,000		$	0.13		$	(18,748,000	)	$	(0.95	)

Non-cash items impacting net income
Core and finished goods premium amortization	$	8,815,000		$	0.44		$	8,013,000		$	0.41
Revaluation - cores on customers' shelves		2,805,000			0.14			2,316,000			0.12
Share-based compensation expenses		4,318,000			0.21			3,009,000			0.15
Foreign exchange impact of lease liabilities and forward contracts		(10,411,000	)		(0.52	)		18,966,000			0.96
Gain due to realignment of inventory at customer distribution centers		(643,000	)		(0.03	)		-			-
Change in fair value of compound net derivative liability		140,000			0.01			(2,460,000	)		(0.12	)
Tax effect (a)		(1,256,000	)		(0.06	)		(7,461,000	)		(0.38	)
Total non-cash items impacting net income	$	3,768,000		$	0.19		$	22,383,000		$	1.13

Cash items impacting net income
New product line start-up costs and transition expenses, and severance and other (b)		397,000			0.02			4,438,000			0.22
Net tariff costs paid for products sold before price increases were effective		2,124,000			0.11			-			-
Tax effect (a)		(630,000	)		(0.03	)		(1,110,000	)		(0.06	)
Total cash items impacting net income	$	1,891,000		$	0.09		$	3,328,000		$	0.17

(a) Tax effect is calculated by applying an income tax rate of 25.0% to items listed above; this rate may differ from the period's actual income tax rate.
(b) For the nine months ended December 31, 2024, consists of $1,298,000 impacting gross profit and $3,140,000 included in operating expenses.

Items Impacting Gross Profit for the Three Months Ended December 31, 2025 and 2024						Exhibit 3

	Three Months Ended December 31,
	2025				2024
	$		Gross Margin		$		Gross Margin
GAAP gross profit	$	32,878,000	19.6	%	$	44,882,000	24.1	%

Non-cash items impacting gross profit
Core and finished goods premium amortization	$	2,980,000	1.8	%	$	2,664,000	1.4	%
Revaluation - cores on customers' shelves		554,000	0.3	%		758,000	0.4	%
Total non-cash items impacting gross profit	$	3,534,000	2.1	%	$	3,422,000	1.8	%

Items Impacting Gross Profit for the Nine Months Ended December 31, 2025 and 2024							Exhibit 4

	Nine Months Ended December 31,
	2025					2024
	$			Gross Margin		$		Gross Margin
GAAP gross profit	$	109,522,000		19.0	%	$	115,333,000	20.4	%

Non-cash items impacting gross profit
Core and finished goods premium amortization	$	8,815,000		1.5	%	$	8,013,000	1.4	%
Revaluation - cores on customers' shelves		2,805,000		0.5	%		2,316,000	0.4	%
Gain due to realignment of inventory at customer distribution centers (a)		(643,000	)	0.4	%		-	-
Total non-cash items impacting gross profit	$	10,977,000		2.4	%	$	10,329,000	1.8	%

Cash items impacting gross profit
New product line start-up costs and transition expenses		-		-			1,298,000	0.2	%
Net tariff costs paid for products sold before price increases were effective		2,124,000		0.4	%		-	-
Total cash items impacting gross profit	$	2,124,000		0.4	%	$	1,298,000	0.2	%

(a) gross margin reflecting impact to net sales and cost of goods sold

Items Impacting EBITDA for the Three and Nine Months Ended December 31, 2025 and 2024								Exhibit 5

	Three Months Ended December 31,						Nine Months Ended December 31,
		2025			2024			2025			2024
GAAP net income (loss)	$	1,777,000		$	2,291,000		$	2,670,000		$	(18,748,000	)
Interest expense, net		10,901,000			14,435,000			36,412,000			43,004,000
Income tax expense		(434,000	)		1,115,000			5,552,000			1,849,000
Depreciation and amortization		2,359,000			2,532,000			7,181,000			7,862,000
EBITDA	$	14,603,000		$	20,373,000		$	51,815,000		$	33,967,000

Non-cash items impacting EBITDA
Core and finished goods premium amortization	$	2,980,000		$	2,664,000		$	8,815,000		$	8,013,000
Revaluation - cores on customers' shelves		554,000			758,000			2,805,000			2,316,000
Share-based compensation expenses		1,388,000			993,000			4,318,000			3,009,000
Foreign exchange impact of lease liabilities and forward contracts		(594,000	)		2,460,000			(10,411,000	)		18,966,000
Gain due to realignment of inventory at customer distribution centers		-			-			(643,000	)		-
Change in fair value of compound net derivative liability		(3,910,000	)		(260,000	)		140,000			(2,460,000	)
Total non-cash items impacting EBITDA	$	418,000		$	6,615,000		$	5,024,000		$	29,844,000

Cash items impacting EBITDA
New product line start-up costs and transition expenses, and severance and other		397,000			-			397,000			4,438,000
Net tariff costs paid for products sold before price increases were effective		-			-			2,124,000			-
Total cash items impacting EBITDA	$	397,000		$	-		$	2,521,000		$	4,438,000

Significant new business commitments from changing competitive landscape and industry dynamics -- including bankruptcy of a competitor, growth in demand for replacement parts with aging vehicles and increasing miles driven
Margin accretion due to strong momentum in the utilization of brake-related capacity
Overall margin accretion from continued improvements in operating efficiencies
Pursuing strategic alternatives for EV technology