Motorcar Parts of America, Inc.

Ladies and gentlemen, thank you for standing by. My name is Brent and I will be your conference operator today. At this time, I would like to welcome everyone to the Motorcar Parks of America's fiscal 2022 fourth quarter and year end conference call. 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 would like to ask a question at that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. It is now my pleasure to turn today's call over to Mr. Gary Meyer, Investor Relations. Sir, please go ahead.

Thank you, Brent. Thanks, everyone, for joining us. Before I begin the call and I turn it over to Selwyn Jaffe, Chairman, President, 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. Private Securities Litigation Reform Act of 1995 provides a safe harbor for certain forward-looking statements, including statements made during today's call. Such forward-looking statements are based on the company's current expectations and beliefs concerning future developments, and there are potential effects on the company. There can be no assurance that future developments affecting the company will be those anticipated by us. Actual results may differ from these projected forward-looking statements. These forward-looking statements involve significant risks and uncertainties, some of which are beyond the 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 statement. whether as a result of new information, future events, or otherwise. For a 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 said, I'd like to begin the call. I'll turn it over to Selwyn for our prepared remarks.

Thank you, Gary. I appreciate everyone joining us today. I hope you're all safe and healthy. As announced this morning, we delivered record net sales of $650.3 million for fiscal 2022, representing a year-over-year increase of 20.3%. We achieved this exceptional growth despite continued global supply chain challenges and the continued COVID environment. I should also highlight several additional successes during the year. We developed a comprehensive line of brake pads utilizing an industry-leading formulation, and brake rotors serving the professional install market under the company's quality-built brand. We secured multi-year new business commitments and opportunities of more than $100 million, primarily across multiple brake-related products. We have successfully expanded sales through additional product line offerings in Mexico. We completed a multi-year expansion programs of our facilities in Mexico, including completion of a new brake caliper remanufacturing facility. We have added capacity to support anticipated future growth with limited additional CapEx investment. We extended the maturity date of our credit facility from June 2023 to May 2026 to enhance our liquidity and capital resources. We secured inventory, which enabled us to support our customers, meet demand, and obtain new business despite worldwide supply chain and logistics challenges. We secured purchase orders from all major automotive retailers for rotating electrical benchtop testing equipment. We opened an electric vehicle contract testing center in Detroit, Michigan, with customer business signed up. We continued a series of prestigious Tier 1 wins for our EV technology with orders from major global automotive, aerospace, and research institutions. And equally important, we continued our social responsibility initiatives with plans to launch an agri-farm organic food and community program in Mexico, and continued our focus on opportunities to enhance our environmental, social, and governance practices on a global basis. All of these accomplishments enable us to resume annual guidance, which at the top range is estimated to reach 700 million in net sales this fiscal year, representing a year-over-year increase of $49.7 million based on our current visibility, notwithstanding potential order-to-order fluctuations due to timing of orders. Excluding $13.3 million of core revenue realized in our previous fiscal year, which the company does not expect in fiscal 2023, net sales are expected to increase between 6.8% and 9.9% in fiscal year 2023. Operating income is expected to be between $57 and $61 million before the non-economic, non-cash foreign exchange impact of lease liabilities and forward contracts. The non-economic, non-cash impact of revaluation of calls on customer shelves and supply chain disruptions and costs related to COVID-19. We estimate other non-cash items will be approximately $21 million. including core and finished goods premium amortization and share-based compensation. And cash expenses will be approximately $2 million for special electric vehicle-related research and development expenses impacting operating income. Depreciation and amortization are estimated to be approximately $13 million. In summary, operating income, before the impact of the non-cash and cash items, and before depreciation and amortization, as previously mentioned, is expected to be between $93 million and $97 million. Let me provide some additional commentary about the company's progress. We are particularly focused on meaningful opportunities to enhance gross profit on an annual basis, which would leverage our fixed costs. We also expect to benefit from the company's now-completed multi-year investment program to support our expansion, particularly our state-of-the-art global production and distribution capacity. In short, we have successfully built upon our history and industry reputation and expanded our product line offerings from a single category, rotating electrical, to offering multiple non-discretionary products with a particularly important focus on brake-related applications. These products have different gross margin profiles that will impact overall gross margins, but we expect to enhance gross profit as we leverage our overhead levels. I should note that we have been in a ramp-up mode for break-related products. I should note that we've been in a ramp-up mode for break-related products, as should be expected in newly launched products. We expect gross profit and margins will be enhanced as this business matures. Equally important, we expect to grow our product lines without substantially increasing our overhead. In summary, new and existing custom expansion across all of our product lines is continuing. Brake-related product categories are gaining momentum and being further enhanced by the recent launch of brake pads and rotors. The underlying fundamentals of the aftermarket parts industry are vibrant, supported by an average vehicle age now exceeding 12 years resulting in increased demand for replacement parts. Demand is strong, and we are a value partner to our customers from a product quality and supplier standpoint. Our electric vehicle diagnostic testing subsidiaries continues to gain traction. I should mention, we are well positioned to address both the internal combustion engine market and the emerging electric vehicle market with product functionality and applications across both markets. That said, industry observers expect continued growth demand for combustion engine application for decades, and we offer a broad line of non-discretionary aftermarket parts necessary to serve the internal combustion engine car population, which is approximately 280-plus million vehicles. At the same time, applications and services also offer significant opportunities to address the emerging electric vehicle market. As this EV market continues to gain momentum, We will not only benefit from our non-discretionary product offerings, but also from increasing demand for battery powered emulation, testing, and development of inverters, electric motors, and high speed battery charging station applications offered by EV subsidiary. As I mentioned on previous calls and highlighted earlier, our benchtop testers for alternators and starters continue to roll out at more than 15,000 retail customer 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 tested market is also very large at approximately 5.4 billion and we remain enthusiastic about our growth opportunities in this market. And understanding the 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. Our global team is working in collaboration with our suppliers and logistic providers, and we are passing through price increases and freight surcharges to our customers, which we believe are necessary and not unreasonable. David will elaborate in more detail shortly. I will now turn the call over to David to review our results in greater detail.