Executive Summary
Motorcar Parts of America (MPAA) delivered a resilient FY2024 despite industry softness in late Q3 and Q4, with solid cash generation and margin recovery supported by pricing actions and a ramp in brake-related product lines. For the full year, net sales rose 5.1% to $717.7 million, gross margin expanded to 18.5%, and EBITDA reached $58.6 million, while cash flow from operations totaled approximately $39.2 million and net debt was reduced to $114 million. The year was highlighted by a strategic shift toward higher-margin brake programs, ongoing working-capital initiatives, and the early-stage but meaningful contribution from non-discretionary testing and diagnostic solutions. Management signaled confidence in FY2025 through targeted sales growth of 3.9%–6.7% and EBITDA/profitability expansion driven by volume, price realisations and cost efficiencies, while also noting ongoing investments in manufacturing footprint, notably the Malaysia wheel-hub site, and a vendor-finance program to extend supplier terms.
In Q4 2024 alone, revenue declined modestly year-over-year to $189.5 million, with gross margin near 18.4% and quarterly EBITDA of $17.7 million. The quarterly net income was modest at $1.3 million due to a mix of higher interest expense from a broader accounts-receivable discount program and non-cash/tax-related items, yet the company still generated meaningful free cash flow headwinds and remains on track to realize margin accretion as price increases take hold and brake programs scale. MPAA also disclosed a clear path to improving cash flow through working-capital neutralization (targeting roughly $20 million in annualized working-capital relief) and a continued emphasis on higher-value parts introductions (800+ new part numbers annually).
Overall, the investment thesis rests on (1) visible margin uplift from price increases and brake-program efficiencies, (2) strengthening non-discretionary aftermarket demand across product lines (including Mexico and hard parts), and (3) a capital-allocation framework that prioritizes debt reduction and potential buybacks in the context of improving free cash flow and a strengthened balance sheet. Risks include elevated interest expense from supplier-discount programs, ongoing industry softness in select categories, and execution risk around new brake and testing platforms.
Key Performance Indicators
QoQ: 32.69% | YoY:-46.75%
QoQ: 102.83% | YoY:-8.29%
QoQ: 102.83% | YoY:-2.44%
Key Insights
Revenue (Q4 2024): $189.48 million; YoY change: -2.70%, QoQ change: +10.25%
Gross Profit (Q4 2024): $35.53 million; YoY: -1.73%, QoQ: +18.25%
Operating Income (Q4 2024): $12.64 million; YoY: -46.75%, QoQ: +32.69%
EBITDA (Q4 2024): $7.10 million; EBITDA Margin (Q4 2024): 3.75%
Net Income (Q4 2024): $1.34 million; YoY: -8.29%, QoQ: +102.83%
EPS (Q4 2024): $0.068; Diluted EPS: $0.0606; Weighted Avg Shares (out): 19.66 million (basic), 22.09 million (diluted)
Full-Year FY2024: Net sales $717.7 milli...
Financial Highlights
Revenue (Q4 2024): $189.48 million; YoY change: -2.70%, QoQ change: +10.25%
Gross Profit (Q4 2024): $35.53 million; YoY: -1.73%, QoQ: +18.25%
Operating Income (Q4 2024): $12.64 million; YoY: -46.75%, QoQ: +32.69%
EBITDA (Q4 2024): $7.10 million; EBITDA Margin (Q4 2024): 3.75%
Net Income (Q4 2024): $1.34 million; YoY: -8.29%, QoQ: +102.83%
EPS (Q4 2024): $0.068; Diluted EPS: $0.0606; Weighted Avg Shares (out): 19.66 million (basic), 22.09 million (diluted)
Full-Year FY2024: Net sales $717.7 million (+5.1% YoY); Gross Profit $132.6 million (+16.3% YoY); Gross Margin 18.5% (+1.8pp YoY); Operating Income $46.1 million (+26.5% YoY); EBITDA $58.6 million; Cash from operations $39.2 million; Net loss for the year: $(49.2) million largely due to a non-cash U.S. tax valuation allowance; Net debt end-FY: $114 million; Cash and availability: $114.9 million; Free Cash Flow (FY2024): $(11.2) million; Capex: $(0.54) million; Debt reduction: $32.5 million in FY2024
Key balance-sheet ratios (Q4 2024): Current ratio 1.39; Quick ratio 0.40; Cash ratio 0.03; Debt to capitalization 0.43; Debt to equity 0.74; Interest coverage 0.86; Gross margin 18.7% in Q4; Operating margin 6.67% in Q4; Net margin 0.71% in Q4; ROE 0.47%; ROA 0.13%.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
189.48M |
-2.70% |
10.25% |
| Gross Profit |
35.53M |
-1.73% |
18.25% |
| Operating Income |
12.64M |
-46.75% |
32.69% |
| Net Income |
1.34M |
-8.29% |
102.83% |
| EPS |
0.07 |
-2.44% |
102.83% |
Key Financial Ratios
operatingProfitMargin
6.67%
operatingCashFlowPerShare
$-0.54
freeCashFlowPerShare
$-0.57
Management Commentary
- Brake program and pricing: Management stressed that accelerated brake-related sales should improve margins and absorb overhead, with ongoing efficiency gains from purchasing and production. The company has a greenfield brake caliper operation since 2019 and is now among the top three brake-caliper suppliers. (Quote highlights: Selwyn Joffe; implications for margin accretion and market leadership)
- Working capital and cash generation: MPAA is actively extending payable days (target of +30 days) and improving inventory management to reduce working capital, aiming for roughly $20 million annualized working-capital relief. The vendor-finance program is also expanding supplier terms to improve liquidity. (Strategic initiative emphasis by Selwyn Joffe)
- Price realization and margin upside: The company indicated ~$10 million of additional price increases are in effect and expected to contribute meaningfully to annual sales, gross profit, and EBITDA as price realization takes hold in FY2025. (Management commentary by Selwyn Joffe and David Lee)
- Market backdrop and product mix: Despite overall industry softness in late FY2024, management noted a broad-based improvement across product lines, with wheel hubs regaining momentum after a Malaysia-direct shipping shift. Weather and tax refunds were cited as catalysts in the April–May period. (Selwyn Joffe; Carolina Jolly question)
- Strategic growth and governance: Dan Lelchuk (Centric brakes co-founder) joined MPAA to bolster brake-line leadership and cost-structure optimization. The board refresh with Jack Liebau was announced, signaling governance strengthening and an emphasis on aftermarket expertise. (Selwyn Joffe and referenced governance commentary)
We started our brake caliper business as a greenfield operation in August of 2019. And today, we are in the top three suppliers in this category.
— Selwyn Joffe
Price increases in effect will contribute an additional $10 million in annualized sales, gross profit and EBITDA.
— David Lee
Forward Guidance
FY2025 guidance highlights:
- Sales expected in the range of $746 million to $766 million, representing 3.9% to 6.7% year-over-year growth.
- Operating income anticipated between $62 million and $67 million, before non-cash impacts from lease liabilities/forward contracts and core-value adjustments; non-cash items about $17 million and depreciation & amortization about $11 million.
- Implied operating income before these non-cash items and D&A in the $90 million to $95 million range, signaling margin accretion from higher volumes, price increases, and cost-cutting initiatives.
- Additional $10 million of price increases already in effect are expected to lift annualized sales, gross profit, and EBITDA.
- Margin upside supported by brake program ramp, efficiencies from purchasing/production, and ongoing working-capital optimization (inventory and payables). Management also expects continued growth from new product introductions (target ≧800/year) and the expansion of testing solutions/diagnostic equipment.
- Key risks to monitor include the persistence of industry softness in select categories, execution risk around the brake-caliper ramp and new SKU introductions, and the ability to sustain favorable supplier terms amid higher interest rate environments. Investors should monitor the impact of vendor-finance arrangements on interest expense and working-capital dynamics.