Motorcar Parts 2025 Q4 Earnings Misses Targets as Net Income Deteriorates by 154%

Motorcar Parts (MPAA) reported its fiscal 2025 Q4 earnings on June 09, 2025. Despite a modest revenue increase, results missed expectations due to a significant net loss and negative earnings per share. The company did not raise guidance, projecting net sales between $780 and $800 million for fiscal year 2026, indicating growth of 3% to 5.6% year-over-year. Operating income is expected to rise by 4.3% to 10.4%, but uncertainties persist regarding tariffs. The overall outlook remains cautious amid external challenges.

Revenue

The total revenue of Motorcar Parts increased by 1.9% to $193.10 million in 2025 Q4, up from $189.48 million in 2024 Q4.

Earnings/Net Income

Motorcar Parts swung to a loss of $0.04 per share in 2025 Q4 from a profit of $0.07 per share in 2024 Q4 (154.6% negative change). Meanwhile, the company reported a net loss of $-722,000 in 2025 Q4, reflecting a 154.0% deterioration from the net income of $1.34 million achieved in 2024 Q4. The EPS indicates a concerning financial performance.

Post-Earnings Price Action Review

The strategy of buying MPAA when its revenue beats expectations and holding for 30 days resulted in poor performance. The backtest demonstrated a significant loss of -52.01%, with an excess return of -89.33% and a Sharpe ratio of -0.43, indicating high risk and negative returns. This reflects the challenges faced by investors using this strategy, as it has not yielded favorable outcomes. The negative results underscore the volatility and risk associated with MPAA's stock, and the strategy appears to be ineffective given the current market conditions. Investors are advised to reassess their approach, considering alternative strategies and potential risks.

CEO Commentary

Selwyn Joffe, Chairman, President, and Chief Executive Officer, highlighted the company's strong fiscal 2025 performance with net sales increasing 5.5% to a record $757 million and gross profit rising 16.1% to a record $154 million. He emphasized the successful mitigation of tariffs through price increases and supply chain initiatives, positioning Motorcar Parts for competitive advantages and market share growth. Joffe noted the ongoing strength of their nondiscretionary product portfolio, particularly in hard parts and brake-related applications, while expressing confidence in continued organic growth despite external challenges. His tone remained optimistic regarding the company’s long-term prospects and financial targets.

Guidance

David Lee, Chief Financial Officer, provided forward-looking guidance, projecting net sales for the fiscal year ending March 31, 2026, to be between $780 million and $800 million, representing growth of 3% to 5.6% year-over-year. Operating income is anticipated to range from $86 million to $91 million, indicating 4.3% to 10.4% growth year-over-year. These estimates do not include certain noncash items and onetime expenses, reflecting the ongoing uncertainty regarding tariffs.

Additional News

Motorcar Parts of America recently reported record fiscal third-quarter results, with net sales increasing by 8.3% to $186.2 million and gross profit surging by 49.4% to $44.9 million. The company generated $34.4 million in cash from operating activities and reduced net bank debt by $30.3 million. In addition, Motorcar Parts repurchased 268,130 shares for $2.1 million, enhancing shareholder value. Furthermore, the company announced new strategic initiatives to further improve profitability, including optimizing global operations and expanding its product portfolio. These efforts aim to position Motorcar Parts for continued growth and competitive advantages in the automotive aftermarket industry.