Motorcar Parts of America, Inc.

Ladies and gentlemen, thank you for standing by. My name is Bhavesh and I'll be your conference operator today. At this time, I would like to welcome everyone to the Motorcar Parts of America Fiscal 2024 Second Quarter Conference Call and Webcast. At this time, 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 followed by the number one on your telephone keypad. If you'd like to withdraw your question, please press the star followed by the one once again. Thank you. I will now have a call over to Gary Meyer, VP of Communications and Investor Relations with Motor Car Parts of America. He may begin your conference.

Thank you. Thanks, everyone, for joining us today. Before I turn the call over to Selin Jaffe, Chairman, President, Chief Executive Officer, and David Lee, the company's Chief Financial Officer, let me remind everyone of the safe harbor statement included in today's press release. The Private Securities and 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 these 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. In particular, expectations about anticipated future growth and opportunities with customers may not be achieved. The company undertakes no obligation to publicly update or revise any forward-looking statements whether it was 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 company's various filings with the Securities and Exchange Commission. I would now like to begin the call and turn it over to Selin.

Thank you, Gary. I appreciate everyone joining us today. We were encouraged by record sales and record gross profit for the quarter and six months, and solid cash flow from operating activities. The company generated approximately 15 million of cash from operating activities during the quarter. For the six-month period, the company used approximately 5 million in operating activities. However, I should mention, had we not intentionally decided to lower collection of receivables by $35 million as of September 30th, we would have generated approximately $30 million of positive cash from operating activities for the six-month period. predominantly coming in the second quarter. Using the customer supply chain vendor finance programs, we have the option to draw down on customer payments at any time, which David will explain in more detail. Industry trends remain favorable, and we are seeing improving operational efficiencies with increasing sales volume. We are continuing our focus on leveraging our strengths, including our solid customer relationships, highly regarded product quality, industry-leading skew coverage, and quality, not to mention our value-added merchandising and marketing support. In summary, our operating efficiency improvements, along with increased overhead absorption from higher sales and production, and price increases, all bode well for margin expansion. Our quarterly results reflect the benefit of some price increases, and we anticipate additional benefits from further price increases for the balance of the year. We are excited with our positive cash flow generation for the quarter and remain focused on neutralizing working capital as much as possible for the balance of the year. Our initiatives include increasing gross profit and operating income, managing our inventories and percentage of sales, and implementing programs to extend days outstanding on accounts payable. As a reminder, we expect sales for fiscal 2024 to be between 720 and $740 million, representing between 5.4% and 8.3% year-over-year growth, respectively. With respect to cash flow, our expectation is to continue to generate cash. David will expand upon this in a few minutes. Regarding year-end guidance, we expect operating income before the impact of the non-cash and cash items and before depreciation and amortization to be between $90 and $95 million. To provide more details before the non-cash foreign exchange impact of lease liabilities and forward contracts, the non-cash impact of revaluation of calls and customer shills and supply chain disruptions, operating income for fiscal 2024 is expected to be between $60 and $65 million. We estimate other non-cash items will be approximately $16 million, including core and finished goods premium amortization and share-based compensation. And cash expenses will be approximately $2 million for special EV-related R&D expenses that impact operating income. Depreciation and amortization are estimated to be approximately $12 million. In short, for the fiscal 2024 second half, we expect to continue to enhance our gross margins across the board and enhance our cash flow. Our multi-year strategic initiatives and favorable industry dynamics bode well for the company, and we are extremely well positioned for sustainable top and bottom line growth in our hard parts business, as well as testing solutions. Now let me expand a bit further and provide some updates to other drivers of our business to support our ability to achieve our longer term financial targets. We continue to experience meaningful traction with customers and consumers with the launch of our brake-related product lines, with operating efficiency improvements continuing as volume increases and with fixed cost absorption. We are continuing to expand hard-bought sales in Mexico with multiple product lines as our customers experience increased demand for aftermarket products. We are receiving increasing orders and new customer interest for our test solutions and diagnostic equipment. In particular, our benchtop testers are alternators and starters from major automotive retailers and distributors to the professional installer. Major global automotive aerospace and research institutions for electric vehicle mobility, product development, and design continue to purchase our equipment and utilize our Detroit Tech Center testing services. Lastly, the APEC show last week was very positive, and the outlook for new business remains very strong. We continue to be well positioned to address both the internal combustion engine market and the emerging electric vehicle market with product functionality and applications across both markets. Industry data continues to support our view that strong demand for internal combustion engine applications and our broad line of non-discretionary aftermarket parts will be here for decades, notwithstanding electric vehicle growth, which still represents a small percentage of the overall car part. I'll now turn the call over to David to review our results in greater detail.