Exchange: NASDAQ | Sector: Consumer Cyclical | Industry: Auto Parts
Q1 2026
Published: Aug 11, 2025
Earnings Highlights
Revenue of $188.36M down 0.6% year-over-year
EPS of $0.15 increased by 135.3% from previous year
Gross margin of 18.0%
Net income of 3.04M
"We're off to a solid start for fiscal 2026. We are encouraged by our first quarter performance, reflecting record net sales and gross profits for our fiscal first quarter." - Selwyn H. Joffe
Motorcar Parts of America Inc (MPAA) QQ1 2026 Results â Record Quarterly Net Sales and Margin Expansion Amid Tariff Dynamics and Strategic Growth Initiatives
Executive Summary
Motorcar Parts of America Inc (MPAA) delivered a solid start to fiscal 2026 with a first-quarter performance that produced record net sales and gross profits. Net sales rose 10.9% year over year to $188.4 million, while gross profit increased 16.3% to $33.9 million, and operating income swung to a positive $20.1 million from a prior-year loss. The company also generated $10 million in cash flow from operations, reduced net bank debt by $7 million to $74.4 million, and completed share repurchases of roughly 198,000 shares for about $2 million. Management highlighted ongoing strengths in nondiscretionary auto parts, notably brake offerings and heavy-duty rotating electrical products, and signaled continued growth in the Mexico market and in its diagnostic business (JBT-1 bench-top tester).
Key Performance Indicators
Revenue
188.36M
QoQ: 1.18% | YoY:-0.59%
Gross Profit
33.92M
18.01% margin
QoQ: -24.43% | YoY:-4.53%
Operating Income
20.07M
QoQ: 14.15% | YoY:58.81%
Net Income
3.04M
QoQ: 32.78% | YoY:127.35%
EPS
0.16
QoQ: 33.33% | YoY:135.29%
Revenue Trend
Margin Analysis
Key Insights
Net sales: $188.4 million in QQ1 2026, up 10.9% year over year (record first-quarter sales). Gross profit: $33.9 million, up 16.3% YoY with gross margin of 18.0% (vs. 17.2% YoY). Operating income: $20.1 million, vs. an prior-year operating loss; margin â 10.7% (20.1/188.4).
EBITDA: $20.7 million; EBITDA margin â 11.0% (â20.7/188.4). Net income: $3.0 million; net income margin â 1.6%.
Cash flow and balance sheet: Operating cash flow of $10.0 million; net bank debt reduced by $7.0 million to $74.4 million; total liquidity â $147 million (cash plus availability). Shares repurchased: 197,796 shares for $2.0 million at an average price of $9.94.
Non-cash and tariff effects: Non-cash items reduced gross margin by ~2.1% (â$3.9 million) and cash expenses reduced gross margin by ~0.8% (â$1.4 million).
Financial Highlights
Revenue and profitability highlights:
- Net sales: $188.4 million in QQ1 2026, up 10.9% year over year (record first-quarter sales). Gross profit: $33.9 million, up 16.3% YoY with gross margin of 18.0% (vs. 17.2% YoY). Operating income: $20.1 million, vs. an prior-year operating loss; margin â 10.7% (20.1/188.4).
- EBITDA: $20.7 million; EBITDA margin â 11.0% (â20.7/188.4). Net income: $3.0 million; net income margin â 1.6%.
- Diluted EPS: $0.15; GAAP EPS: $0.16; weighted-average shares outstanding â 19.37 million.
- Cash flow and balance sheet: Operating cash flow of $10.0 million; net bank debt reduced by $7.0 million to $74.4 million; total liquidity â $147 million (cash plus availability). Shares repurchased: 197,796 shares for $2.0 million at an average price of $9.94.
- Non-cash and tariff effects: Non-cash items reduced gross margin by ~2.1% (â$3.9 million) and cash expenses reduced gross margin by ~0.8% (â$1.4 million).
- Guidance: FY2026 revenue guidance increased to $800â$820 million (5.6%â8.3% YoY growth); operating income guidance reaffirmed at $86â$91 million. Depreciation and amortization expected around $11 million.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
188.36M
-0.59%
1.18%
Gross Profit
33.92M
-4.53%
-24.43%
Operating Income
20.07M
58.81%
14.15%
Net Income
3.04M
127.35%
32.78%
EPS
0.16
135.29%
33.33%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key management takeaways from the QQ1 2026 earnings call:
- Growth drivers and segmentation:
- Selwyn H. Joffe emphasized nondiscretionary parts as a defensible growth anchor, noting the shift toward brake-related products and ongoing strength in the heavy-duty rotating electrical market.
We're off to a solid start for fiscal 2026. We are encouraged by our first quarter performance, reflecting record net sales and gross profits for our fiscal first quarter.
â Selwyn H. Joffe
Regardless of tariffs, we have record sales.
â Selwyn H. Joffe
Forward Guidance
Outlook and outlook validation:
- Management raised FY2026 sales guidance to $800â$820 million, implying 5.6%â8.3% year-over-year growth, supported by tariff pass-throughs and cost-reduction efforts. Operating income guidance remains $86â$91 million, suggesting continued leverage from higher volumes and improved margins amid cost controls.
- Key assumptions and monitoring points:
- Tariff environment: Management indicated tariff pass-throughs are included in the revenue guidance but did not disclose the exact amount; the company expects the net tariff impact to continue evolving, with a sequentially smaller effect in the September quarter and some impact still anticipated.
- Margin trajectory: Gross margin benefited from higher absorption due to higher sales and noncash items; ongoing cost-reduction initiatives and supply-chain optimization are expected to sustain margin expansion.
- Growth catalysts: Brakes (calipers) with capacity to scale, expanding brand presence (Quality-Built) in the professional installer market, expansion in Mexico and Latin America, and growth of the diagnostic business (JBT-1) with more testers deployed and after-sales services.
- Risks: Tariff volatility, currency exposure (MXN), reliance on tariff pass-through and customer price increases, potential macroeconomic weakness affecting demand in auto aftermarket channels, and competitive dynamics in brake and diagnostic segments.
- Bottom line: The company appears to be balancing topline momentum with margin discipline and a diversified nondiscretionary product portfolio. Investors should monitor tariff pass-through realization, geographic expansion progress (Mexico and LATAM), and the pace of brake-dominant category penetration in branded channels.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
MPAA Focus
18.01%
N/A
N/A
N/A
MNRO
37.20%
4.52%
0.90%
30.44%
SMP
30.20%
5.92%
1.97%
10.86%
SRI
21.20%
-1.48%
-2.84%
-4.41%
PLOW
24.50%
2.78%
0.06%
907.29%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Medium-term investment thesis: MPAA is leveraging its nondiscretionary product mix and expanding footprint to capture synergies in brake and heavy-duty rotating electrical categories, supported by tariff pass-through strategies and cost-optimization initiatives. The QQ1 2026 results demonstrate a meaningful turn to profitability (operating income of $20.1M and net income of $3.0M) with improving gross margins and strong operating cash flow. The raised FY2026 revenue guidance ($800â$820M) and reaffirmed operating income target ($86â$91M) provide a constructive earnings backdrop, assuming tariff dynamics trend toward stabilization and continued market share gains in brake and diagnostics. Key catalysts include: (1) accelerating brake caliper production and market share gains, (2) expansion in Mexico and LATAM, (3) monetization of the JBT-1 diagnostic platform through higher service revenue, and (4) ongoing capital discipline (deleveraging and share repurchases). Risks to monitor include tariff volatility, FX exposure, and macroeconomic shifts affecting non-discretionary parts demand. Overall, MPAA presents a cautiously optimistic investment case centered on non-discretionary aftermarkets, brand build in professional channels, and regional expansion, with the potential to deliver margin expansion and stronger cash conversion if tariffs stabilize and operating efficiencies continue.
Key Investment Factors
Growth Potential
Growth is anchored in nondiscretionary aftermarket parts, with upside from brake calipers expansion, heavy-duty rotating electrical markets, and broader brand penetration through Quality-Built across professional installer channels. Expect accelerating margin benefits from higher-volume absorption and ongoing cost reductions, along with expanding diagnostic services and cross-border growth in Mexico.
Profitability Risk
Tariff and currency exposure (MXN), potential deceleration in auto miles driven in a softer macro environment, dependence on tariff pass-through to maintain gross margins, competition in high-volume brake and rotating electrical categories, and execution risk in rapid international expansion.
Financial Position
Strong liquidity (â$147 million), modest leverage (net debt â$74 million), positive operating cash flow ($10 million in QQ1), and active capital allocation (share repurchases). The company guided for higher revenue with a target of sustaining and improving margins via efficiency initiatives and tariff management.
SWOT Analysis
Strengths
Nondiscretionary aftermarket focus providing non-cyclical demand and resilience
Diversified portfolio across rotating electrical, brake-related, and diagnostic products
Strong North American footprint; Mexico brake caliper production capacity
Growing diagnostic business (JBT-1 bench-top tester) with after-sales revenue potential
Solid cash flow, debt reduction, and active share repurchase program
Weaknesses
Gross margin still below many large peers (18.0% in QQ1 2026 vs. peers with higher margins in provided benchmarks)
Higher dependence on tariff pass-through to sustain margins
Concentration risk in brake-related and professional-installer segments relative to broader aftermarket, with competition pressures
Limited visibility into longer-term FX exposure and its impact on lease liabilities
Opportunities
Brakes expansion in North America and global markets, including capacity to scale the brake caliper business
Growth of Quality-Built brand in professional installer channels
Expansion in Mexico and LATAM markets aligned with increasing vehicle parc and age trends
Expansion of diagnostic offerings and after-sales services (repairs, software updates, data services)
Threats
Tariff volatility and potential pass-through effectiveness
Currency fluctuations, particularly MXN and other Latin American currencies
Macro downturn impacting discretionary expenditures within the automotive aftermarket
Competition from established aftermarket players and price compression in high-volume categories
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