Motorcar Parts of America, Inc.

Good morning. My name is David and I'll be your conference operator today. At this time, I would like to welcome everyone to Motorcar Parts of America Fiscal 2022 3Q Conference Call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press the star key followed by the number 1 on your telephone keypad. If you'd like to withdraw your question, press star one once again. Thank you, Gary Mayer. With Investor Relations, you may begin your conference.

Thank you, Dave, and thanks, everyone, for joining us today for our call. Before I turn the call over to Selwyn Jaffe, Chairman, President, and Chief Executive Officer, and David Lee, the company's Chief Financial Officer, I'd like to remind everyone of the safe harbor statement included in today's press release. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for certain forward-looking statements, including statements made during today's conference call. Such forward-looking statements are based on the company's current expectations and beliefs concerning future developments and their potential effects on the company. There can be no assurance that future developments affecting the company will be those anticipated by Motor Car Parts of America. Actual results may differ from those projected in the forward-looking statements. These forward-looking statements involve significant risks and uncertainties, some of which are beyond control of the company and are subject to change based upon various factors. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. For more detailed discussion of some of the ongoing risks and uncertainties of the company's business, I refer you to the various filings with the Securities and Exchange Commission. With that, I'd like to begin our call and turn it over to Selwyn Jaffe to begin.

Okay. Thank you, Gary. I appreciate everyone joining us today. I hope you're all safe and healthy. Let me begin by highlighting our very strong fiscal third quarter results and the drivers behind this exceptional growth despite the well-known industry supply chain challenges that were a modest drag on reaching our full potential. We delivered record net sales of 161.8 million, a 32% year-over-year increase. It is also notable that net sales growth was 30.5% on a nine-month basis, also reaching another record for the company, despite quarter-to-quarter variabilities in customer order patterns. More exciting than this exceptional growth are the reasons behind it and the sustainable long-term momentum that we are building. I will share detail on several. First, we have new and existing customer expansion across all of our product lines. Second, we have growing opportunities in brake-related categories. Third, there are emerging opportunities in the electric vehicle space. And finally, favorable underlying fundamentals in the aftermarket parts industry. Let's start with demand for our product lines, which continues to grow across the board. Our strategic focus on multi-growth platforms in our hard parts business contributed to our strong third quarter performance. It is also further establishing MPA as a valued partner to our customers from a quality and supplier standpoint. We expect this momentum to continue. As a complement to our strong and growing position within the automotive aftermarket, our diagnostic business for alternators and starters continues to roll out at retail custom store locations. These benchtop testers enable retailers to offer accurate advice with the latest protocols to diagnose problems for consumers and reduce unnecessary returns. This provides a value added benefit for the retailer while strengthening their consumer relationships. The global automotive testing market is also very large at approximately $5.4 billion, and we believe our efforts in this market will generate solid results. A strong growth in the quarter was unfortunately constrained by manufacturing challenges in Malaysia related to the shutdown of the country by the government due to COVID. This impacted our operations in the country and significantly reduced our capacity. However, our team in Malaysia did an exceptional job outsourcing production to help meet customer demand. And fortunately, operations are now back up and running in Malaysia. David will have more to share on the impact of this important development momentarily. Turning to our brake-related products, As I mentioned earlier, this is an area where we are seeing very strong success. To put our brake-related growth in perspective, products in this category as a percentage of overall sales increased to 15% for the nine-month period, from 9% in the same period a year ago. At the same time, rotating electrical sales and all other product lines also increased. Our state-of-the-art brake caliper remanufacturing operation continues to gain momentum, notwithstanding supply chain challenges that constrained our robust growth. Manufacturing efficiencies will improve as this operation matures, volumes increase, and we continue to mitigate supply chain issues. Moving to our emerging opportunities in the electric vehicle space, our presence in electric vehicle testing applications in the areas of development and production continues to gain traction as demand for test equipment related to performance, endurance, and production of electric vehicle products continues to gain momentum. We remain enthusiastic about the outlook and are encouraged by new strategic partnerships, engineering strength, industry leading technology, and the significant opportunities in front of us as electric mobility evolves. While we are not providing details on this segment just yet, Let me just make a few comments about this exciting business that complements our hard parts business and relationships with our customers. Last quarter, we announced that our electric motor emulator was selected to support the development of the rotor motor controllers for Johns Hopkins Applied Physics Laboratory under a contract with NASA for its Dragonfly mission to Saturn's moon Titan. In addition, our vision is to offer EV manufacturers contract testing services via our newly established Detroit Technical Center. This also offers significant growth opportunities. Our initial customer will commence this quarter, and we plan to host a formal opening ceremony in the spring. This is clearly a testament to our EV technology, its exciting applications, and the potential from our acquisition of DMV Electronics. Now, moving to the favorable industry environment in which we operate, industry reports continue to show that people are keeping their vehicles longer and used car sales continue to climb to record levels. The result is an increase in miles driven by our kind of vehicles, or OKVs, with approximately 287 million vehicles now on the road in the United States alone, and the average age of vehicles is now at 12.1 years and aging. The market for our current hard parts categories represent more than $6 billion at the retail level. I would also note that car lease residuals relative to the value of the vehicle at lease end are now sharply lower than the value of the vehicle. As a result, consumers are buying out their leases rather than leasing new vehicles, further contributing to an increased aging of the vehicle population. All of this bodes well for the aftermarket parts replacement industry, and these favorable dynamics fuel our optimism. We are very well positioned with our significant channel relationships for aftermarket parts and our superior parts and solutions for our customers and consumers. We are building on this through our strategic focus on moving into new product areas, as we are doing with brake calipers, and taking market share in the product categories where we have advantaged opportunities. Certainly, there continue to be challenges facing the aftermarket industry in the near term. Supply chain, freight, raw materials, and other pandemic-related headwinds. We are working hard every day to mitigate these challenges with our global team in collaboration with our suppliers and logistic providers, including through price increases and freight surcharges, for example. We are making very good progress, as David will share shortly. Let me summarize my comments. Our multi-year strategic expansion initiatives are coming to fruition, putting us in a strong position to further benefit from our growth investments. Our footprint for the future is now the footprint of today, and we are encouraged by the favorable underlying demand fundamentals of the automotive replacement parts market. In short, our company is well positioned for sustainable long-term top line and bottom line growth for the non-discretionary parts and solutions that move our world. I'll now turn the call over to David to review our results in greater detail.