MPAA reported a solid Q2 2026 performance with continued top-line growth and meaningful cash flow generation, albeit with some non-operational items affecting reported profitability. Net sales rose 6.4% year over year to $221.5 million, supported by strength in brake-related products and ongoing demand for nondiscretionary replacement parts. Gross profit totaled $42.7 million, up 3.5% YoY, while gross margin compressed modestly to 19.3% from 19.8% a year earlier, reflecting higher absorption of costs amid volume growth and the impact of noncash and onetime items that are detailed by management. Operating income increased 30.8% YoY to $16.4 million, underscoring operating leverage as volume expands and efficiency initiatives take hold. However, net income remained negative at $(2.15) million and EPS came in at $(0.11), largely reflecting noncash charges (~$4.8 million) and onetime cash expenses (~$0.52 million) disclosed in the quarter.
In the six months ended September 30, 2025, MPAA achieved record net sales of $409.8 million (+8.4% YoY) and record gross profit of $76.6 million (gross margin 18.7%), highlighting improving absorption of fixed costs with higher volumes. Cash flow dynamics remained strong: operating cash flow of $21.9 million in Q2 and $31.9 million for the first half, with net bank debt reduced to $56.7 million after substantial debt paydown and ongoing share repurchases totaling 287,910 shares for $3.4 million in the first six months. Management reaffirmed full-year guidance for fiscal 2026, noting that the quarter included a $14.8 million core revenue realignment from inventory center realignments (a nonrecurring event) and a temporary delay in purchases from a large customer, both of which management expects to offset or normalize in the back half of the year.
Strategically, MPAA remains focused on expanding nondiscretionary aftermarket parts and fortifying the diagnostic business, while leveraging its North American footprint to gain share in brakes (notably brake calipers) and heavy-duty rotating electrics. The Mexico growth trajectory and expanding Latin American footprint support the longer-term opportunity set, complemented by ongoing cost-reduction and supply chain initiatives to improve margins as volumes scale. With liquidity robust (approx. $161 million in total liquidity) and leverage low by historical standards, the company appears well positioned to fund growth investments, continue opportunistic buybacks, and further deleverage over time. Investors should monitor input costs, FX exposure (notably peso-related), customer concentration dynamics, and the pace of deferrals in a non-discretionary-heavy replacement cycle, which MPAA characterizes as largely temporary but still a near-term driver of quarterly variability.