UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

☑
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2024

☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM       TO

Commission File No. 001-33861

MOTORCAR PARTS OF AMERICA, INC.
(Exact name of registrant as specified in its charter)

New York
 
11-2153962
(State or other jurisdiction of 
incorporation or organization)
  
(I.R.S. Employer 
Identification No.)

2929 California Street, Torrance, California
 
90503
(Address of principal executive offices)
 
(Zip Code)

Registrant’s telephone number, including area code: (310) 212-7910

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Trading symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.01 per share
MPAA
The Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐
Accelerated filer ☑
Non-accelerated filer ☐
Smaller reporting company ☐
 
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑

There were 19,753,585 shares of Common Stock outstanding at August 1, 2024.

MOTORCAR PARTS OF AMERICA, INC.

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
 
 
 4
 
4
 
5
 
6
 
7
 
8
 
9
 
 25
 
33
 
33
     
PART II — OTHER INFORMATION
 
 
35
 
35
 
35
 
35
 
35
 
 36
 
 39

2
MOTORCAR PARTS OF AMERICA, INC.

GLOSSARY

The following terms are frequently used in the text of this report and have the meanings indicated below.

“Used Core” — An automobile part which has previously been used in the operation of a vehicle. Generally, the Used Core is an original equipment (“OE”) automobile part installed by the vehicle manufacturer and subsequently removed for replacement. Used Cores contain salvageable parts, which are an important raw material in the remanufacturing process. We obtain most Used Cores by providing credits to our customers for Used Cores returned to us under our core exchange programs. Our customers receive these Used Cores from consumers who deliver a Used Core to obtain credit from our customers upon the purchase of a newly remanufactured automobile part. When sufficient Used Cores are not available from our customers, we purchase Used Cores from core brokers, who are in the business of buying and selling Used Cores. The Used Cores purchased from core brokers or returned to us by our customers under the core exchange programs, and which have been physically received by us, are part of our raw material and work-in-process inventory. Used Cores returned by consumers to our customers but not yet returned to us are classified as contract assets until we physically receive these Used Cores.

“Remanufactured Core” — The Used Core underlying an automobile part that has gone through the remanufacturing process and through that process has become part of a newly remanufactured automobile part. The remanufacturing process takes a Used Core, breaks it down into its component parts, replaces those components that cannot be reused and reassembles the salvageable components of the Used Core and additional new components into a remanufactured automobile part. Remanufactured Cores held for sale at our customer locations are included in long-term contract assets. The Remanufactured Core portion of stock adjustment returns are classified as contract assets until we physically receive them.

3

PART I — FINANCIAL INFORMATION

Item 1.
Financial Statements

MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets

 
June 30, 2024
    
March 31, 2024
  
ASSETS
  
(Unaudited)
        
Current assets:
            
Cash and cash equivalents
  
$
7,531,000
    
$
13,974,000
  
Short-term investments
    
1,887,000
      
1,837,000
  
Accounts receivable — net
    
78,624,000
      
96,296,000
  
Inventory — net
    
402,931,000
      
397,328,000
  
Contract assets
    
27,317,000
      
27,139,000
  
Prepaid expenses and other current assets
    
21,753,000
      
23,885,000
  
Total current assets
    
540,043,000
      
560,459,000
  
Plant and equipment — net
    
35,010,000
      
38,338,000
  
Operating lease assets
    
77,057,000
      
83,973,000
  
Long-term deferred income taxes
    
3,960,000
      
2,976,000
  
Long-term contract assets
    
315,463,000
      
320,282,000
  
Goodwill and intangible assets — net
    
4,102,000
      
4,274,000
  
Other assets
    
2,320,000
      
1,700,000
  
TOTAL ASSETS
  
$
977,955,000
    
$
1,012,002,000
  
LIABILITIES AND SHAREHOLDERS’  EQUITY
                
Current liabilities:
                
Accounts payable and accrued liabilities
  
$
159,627,000
    
$
185,182,000
  
Customer finished goods returns accrual
    
28,893,000
      
38,312,000
  
Contract liabilities
    
41,504,000
      
37,591,000
  
Revolving loan
    
143,834,000
      
128,000,000
  
Other current liabilities
    
8,363,000
      
7,021,000
  
Operating lease liabilities
    
9,083,000
      
8,319,000
  
Total current liabilities
    
391,304,000
      
404,425,000
  
Convertible notes, related party
     31,676,000
       30,776,000  
Long-term contract liabilities
    
210,378,000
      
212,068,000
  
Long-term deferred income taxes
    
39,000
      
511,000
  
Long-term operating lease liabilities
    
71,044,000
      
72,240,000
  
Other liabilities
    
6,345,000
      
6,872,000
  
Total liabilities
    
710,786,000
      
726,892,000
  
Commitments and contingencies
      
       
 
Shareholders’ equity:
                
Preferred stock; par value $0.01 per share, 5,000,000 shares authorized; none issued
    
-
      
-
  
Series A junior participating preferred stock; par value $0.01 per share, 20,000 shares authorized; none issued
    
-
      
-
  
Common stock; par value $0.01 per share, 50,000,000 shares authorized; 19,753,585 and 19,662,380 shares issued and outstanding at June 30, 2024 and March 31, 2024, respectively
    
198,000
      
197,000
  
Additional paid-in capital
    
237,073,000
      
236,255,000
  
Retained earnings
    
21,418,000
      
39,503,000
  
Accumulated other comprehensive income
    
8,480,000
      
9,155,000
  
Total shareholders’ equity
    
267,169,000
      
285,110,000
  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
  
$
977,955,000
    
$
1,012,002,000
  

The accompanying notes to condensed consolidated financial statements are an integral part hereof.

4
MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)

   
Three Months Ended
  
 
June 30,
  
   
2024
    
2023
  
             
Net sales
  
$
169,887,000
    
$
159,705,000
  
Cost of goods sold
    
140,713,000
      
133,138,000
  
Gross profit
    
29,174,000
      
26,567,000
  
Operating expenses:
                
General and administrative
    
16,670,000
      
12,602,000
  
Sales and marketing
    
5,449,000
      
5,419,000
  
Research and development
    
2,433,000
      
2,375,000
  
Foreign exchange impact of lease liabilities and forward contracts
    
11,078,000
      
(4,270,000
)
Total operating expenses
    
35,630,000
      
16,126,000
  
Operating (loss) income
    
(6,456,000
)
    
10,441,000
  
Other expenses:
                
Interest expense, net
    
14,387,000
      
11,720,000
  
Change in fair value of compound net derivative liability
     (2,580,000 )     140,000  
Total other expenses
     11,807,000       11,860,000  
Loss before income tax benefit
    
(18,263,000
)
    
(1,419,000
)
Income tax benefit
    
(178,000
)
    
(9,000
)
Net loss  
$
(18,085,000
)
  
$
(1,410,000
)
Basic net loss per share
  
$
(0.92
)
  
$
(0.07
)
Diluted net loss per share
  
$
(0.92
)
  
$
(0.07
)
Weighted average number of shares outstanding:
                
Basic
    
19,674,539
      
19,508,626
  
Diluted
    
19,674,539
      
19,508,626
  

The accompanying notes to condensed consolidated financial statements are an integral part hereof.

5
MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive (Loss) Income
(Unaudited)

   
Three Months Ended
  
 
June 30,
  
   
2024
    
2023
  
             
Net loss
  
$
(18,085,000
)
  
$
(1,410,000
)
Other comprehensive (loss) income, net of tax:
                
Foreign currency translation (loss) gain
    
(675,000
)
    
3,343,000
  
Total other comprehensive (loss) income, net of tax
    
(675,000
)
    
3,343,000
  
Comprehensive (loss) income
  
$
(18,760,000
)
  
$
1,933,000
  

The accompanying notes to condensed consolidated financial statements are an integral part hereof.

6
MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Shareholders’ Equity
(Unaudited)

 
Common Stock
                          
   
Shares
    
Amount
    
Additional
Paid-in
Capital
    
Retained
Earnings
    
Accumulated
Other
Comprehensive
Income (Loss)
    
Total
  
                                     
Balance at March 31, 2024
    
19,662,380
    
$
197,000
    
$
236,255,000
    
$
39,503,000
    
$
9,155,000
    
$
285,110,000
  
Compensation recognized under employee stock plans
    
-
      
-
      
1,000,000
      
-
      
-
      
1,000,000
  
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes
    
91,205
      
1,000
      
(182,000
)
    
-
      
-
      
(181,000
)
Foreign currency translation
    
-
      
-
      
-
      
-
      
(675,000
)
    
(675,000
)
Net loss
    
-
      
-
      
-
      
(18,085,000
)
    
-
      
(18,085,000
)
Balance at June 30, 2024
    
19,753,585
    
$
198,000
    
$
237,073,000
    
$
21,418,000
    
$
8,480,000
    
$
267,169,000
  

 
Common Stock
                          
   
Shares
    
Amount
    
Additional
Paid-in
Capital
    
Retained
Earnings
    
Accumulated
Other
Comprehensive
Income (Loss)
   
Total
  
                                     
Balance at March 31,2023
    
19,494,615
    
$
195,000
    
$
231,836,000
    
$
88,747,000
    
$
(303,000
)
  
$
320,475,000
  
Compensation recognized under employee stock plans
    
-
      
-
      
1,310,000
      
-
      
-
      
1,310,000
  
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes
    
104,530
      
1,000
      
(280,000
)
    
-
      
-
      
(279,000
)
Foreign currency translation
    
-
      
-
      
-
      
-
      
3,343,000
      
3,343,000
  
Net loss
    
-
      
-
      
-
      
(1,410,000
)
    
-
      
(1,410,000
)
Balance at June 30, 2023
    
19,599,145
    
$
196,000
    
$
232,866,000
    
$
87,337,000
    
$
3,040,000
    
$
323,439,000
  

The accompanying notes to condensed consolidated financial statements are an integral part hereof.

7
MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)

    Three Months Ended  

 
June 30,
  
   
2024
    
2023
  
Cash flows from operating activities:
            
Net loss
  
$
(18,085,000
)
  
$
(1,410,000
)
Adjustments to reconcile net loss to net cash used in operating activities:
                
Depreciation and amortization
    
2,729,000
      
3,033,000
  
Amortization of debt issuance costs
     537,000       464,000  
Amortization of interest on contract liabilities
     203,000       249,000  
Accrued interest on convertible notes, related party
     880,000       800,000  
Amortization of core premiums paid to customers
    
2,471,000
      
2,490,000
  
Amortization of finished goods premiums paid to customers
    
257,000
      
167,000
  
Noncash lease expense
    
2,608,000
      
2,504,000
  
Foreign exchange impact of lease liabilities and forward contracts
    
11,078,000
      
(4,270,000
)
Change in fair value of compound net derivative liability
     (2,580,000 )     140,000  
Gain on short-term investments
    
(28,000
)
    
(121,000
)
Net provision for inventory reserves
    
3,184,000
      
3,366,000
  
Net provision for customer payment discrepancies and credit losses
    
34,000
      
1,159,000
  
Deferred income taxes
    
(1,862,000
)
    
1,595,000
  
Share-based compensation expense
    
1,000,000
      
1,310,000
  
Loss on disposal of plant and equipment
    
-
      
1,000
  
Changes in operating assets and liabilities:
                
Accounts receivable
    
17,207,000
      
(27,518,000
)
Inventory
    
(9,061,000
)
    
(10,782,000
)
Prepaid expenses and other current assets
    
(1,232,000
)
    
2,391,000
  
Other assets
    
(785,000
)
    
16,000
  
Accounts payable and accrued liabilities
    
(20,367,000
)
    
927,000
  
Customer finished goods returns accrual
    
(9,275,000
)
    
(4,679,000
)
Contract assets
    
1,482,000
      
(792,000
)
Contract liabilities
    
2,089,000
      
9,320,000
  
Operating lease liabilities
    
(2,162,000
)
    
(1,863,000
)
Other liabilities
    
(1,163,000
)
    
1,033,000
  
Net cash used in operating activities
    
(20,841,000
)
    
(20,470,000
)
Cash flows from investing activities:
                
Purchase of plant and equipment
    
(490,000
)
    
(40,000
)
Purchase of short-term investments
    
(22,000
)
    
(27,000
)
Net cash used in investing activities
    
(512,000
)
    
(67,000
)
Cash flows from financing activities:
                
Borrowings under revolving loan
    
42,366,000
      
26,000,000
  
Repayments of revolving loan
    
(26,532,000
)
    
(4,200,000
)
Repayments of term loan
    
-
      
(938,000
)
Payments for debt issuance costs
    
(15,000
)
    
(418,000
)
Payments on finance lease obligations
    
(472,000
)
    
(492,000
)
Cash used to net share settle equity awards
    
(181,000
)
    
(279,000
)
Net cash provided by financing activities
    
15,166,000
      
19,673,000
  
Effect of exchange rate changes on cash and cash equivalents
    
(256,000
)
    
155,000
  
Net decrease in cash and cash equivalents
    
(6,443,000
)
    
(709,000
)
Cash and cash equivalents — Beginning of period
    
13,974,000
      
11,596,000
  
Cash and cash equivalents  — End of period
  
$
7,531,000
    
$
10,887,000
  
Supplemental disclosures of cash flow information:
                
Cash paid for interest, net
  
$
12,689,000
    
$
10,120,000
  
Cash paid for income taxes, net of refunds
    
2,196,000
      
645,000
  
Cash paid for operating leases
    
3,355,000
      
3,081,000
  
Cash paid for finance leases
    
523,000
      
554,000
  
Plant and equipment acquired under finance leases
    
-
      
31,000
  
Assets acquired under operating leases
    
1,815,000
      
-
  
Non-cash capital expenditures
    
19,000
      
-
  
Debt issuance costs included in accounts payable and accrued liabilities
     -       187,000  
Interest paid in-kind
    3,209,000       -  

The accompanying notes to condensed consolidated financial statements are an integral part hereof.

8
MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30, 2024
(Unaudited)
1. Company Background and Organization

Motorcar Parts of America, Inc. and its subsidiaries (the “Company”, or “MPA”) is a leading supplier of automotive aftermarket non-discretionary replacement parts, and test solutions and diagnostic equipment. These replacement parts are primarily sold to automotive retail chain stores and warehouse distributors throughout North America and to major automobile manufacturers for both their aftermarket programs and warranty replacement programs (“OES”). The Company’s test solutions and diagnostic equipment primarily serves the global automotive component and powertrain testing market. The Company’s products include (i) light duty and heavy duty rotating electrical products such as alternators and starters, (ii) wheel hub assemblies and bearings, (iii) brake-related products, which include brake calipers, brake boosters, brake rotors, brake pads, brake shoes, and brake master cylinders, and (iv) other products, which include (a) turbochargers and (b) test solutions and diagnostic equipment including: (i) applications for combustion engine vehicles, including bench top testers for alternators and starters, (ii) equipment for the pre- and post-production of electric vehicles, and (iii) software emulation of power system applications for the electrification of all forms of transportation (including automobiles, trucks, the emerging electrification of systems within the aerospace industry, and electric vehicle charging stations).

2. Basis of Presentation and New Accounting Pronouncements

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2025. This report should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the fiscal year ended March 31, 2024, which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on June 11, 2024, and the 10-K/A for the fiscal year ended March 31, 2024 as filed with the SEC on June 28, 2024.

The accompanying condensed consolidated financial statements have been prepared on a consistent basis with, and there have been no material changes to, except as noted below, the accounting policies described in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements that are presented in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2024.

Accounting Pronouncements Not Yet Adopted

Disclosure Improvements

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. This standard was issued in response to the SEC’s disclosure update and simplification initiative, which affects a variety of topics within the Accounting Standards Codification. The amendments apply to all reporting entities within the scope of the affected topics unless otherwise indicated. The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The Company is currently evaluating the impact this guidance will have on its financial statement disclosures.
9
Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This standard requires the Company to disclose significant segment expenses that are regularly provided to the CODM and are included within each reported measure of segment operating results. The standard also requires the Company to disclose the total amount of any other items included in segment operating results, which were not deemed to be significant expenses for separate disclosure, along with a qualitative description of the composition of these other items. In addition, the standard also requires disclosure of the CODM’s title and position, as well as detail on how the CODM uses the reported measure of segment operating results to evaluate segment performance and allocate resources. The standard also aligns interim segment reporting disclosure requirements with annual segment reporting disclosure requirements. This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact this guidance will have on its financial statement disclosures.

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740). This standard requires the Company to provide further disaggregated income tax disclosures for specific categories on the effective tax rate reconciliation, as well as additional information about federal, state/local and foreign income taxes. The standard also requires the Company to annually disclose its income taxes paid (net of refunds received), disaggregated by jurisdiction.  This guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The standard is to be applied prospective basis, although optional retrospective application is permitted. The Company is currently evaluating the impact this guidance will have on its financial statement disclosures.

3. Accounts Receivable — Net

The Company has trade accounts receivable that result from the sale of goods and services. Accounts receivable — net includes offset accounts related to allowances for credit losses, customer payment discrepancies, and returned goods authorizations (“RGAs”) issued for in-transit unit returns. The Company uses accounts receivable discount programs with certain customers and their respective banks (see Note 10).

Accounts receivable — net is comprised of the following:

 
  
June 30, 2024
    
March 31, 2024
  
Accounts receivable — trade
  
$
104,734,000
    
$
118,500,000
  
Allowance for credit losses
    
(73,000
)
    
(189,000
)
Customer payment discrepancies
    
(1,288,000
)
    
(1,206,000
)
Customer returns RGA issued
    
(24,749,000
)
    
(20,809,000
)
Total accounts receivable — net
  
$
78,624,000
    
$
96,296,000
  

10
4. Inventory — Net

Inventory — net is comprised of the following:

 
  
June 30, 2024
    
March 31, 2024
  
Inventory — net
            
Raw materials
  
$
160,187,000
    
$
158,819,000
  
Work-in-process
    
10,467,000
      
7,943,000
  
Finished goods
    
230,269,000
      
227,650,000
  
 
    
400,923,000
      
394,412,000
  
Less allowance for excess and obsolete inventory
    
(17,615,000
)
    
(17,372,000
)
Inventory
    
383,308,000
      
377,040,000
  
Inventory unreturned
    
19,623,000
      
20,288,000
  
Total inventory — net
  
$
402,931,000
    
$
397,328,000
  

5. Contract Assets

During the three months ended June 30, 2024 and 2023, the Company reduced the carrying value of Remanufactured Cores held at customers’ locations by $394,000 and $778,000, respectively.

Contract assets are comprised of the following:

 
  
June 30, 2024
    
March 31, 2024
  
Short-term contract assets
            
Cores expected to be returned by customers
  
$
15,715,000
    
$
15,409,000
  
Core premiums paid to customers     9,502,000       9,567,000  
Upfront payments to customers
    
1,352,000
      
1,407,000
  
Finished goods premiums paid to customers
    
748,000
      
756,000
  
Total short-term contract assets
  
$
27,317,000
    
$
27,139,000
  

               
Remanufactured cores held at customers’ locations
  
$
277,247,000
    
$
279,427,000
  
Core premiums paid to customers     27,914,000       30,227,000  
Long-term core inventory deposits     5,569,000       5,569,000  
Upfront payments to customers     2,405,000       2,718,000  
Finished goods premiums paid to customers
    
2,328,000
      
2,341,000
  
 Total long-term contract assets
  
$
315,463,000
    
$
320,282,000
  
6. Significant Customer and Other Information

Significant Customer Concentrations

The largest customers accounted for the following percentage of consolidated net sales:

   
Three Months Ended
  
 
  
June 30,
  
 
  
2024
    
2023
  
Net sales
            
Customer A
    
40
%
    
34
%
Customer C
   
28
%
    
28
%
Customer B
   
17
%
    
20
%
Customer D
    4 %     5 %

Revenues for Customers A through C were derived from the Hard Parts segment and Test Solutions and Diagnostic Equipment segment. Revenues for Customer D were derived from the Hard Parts segment. See Note 18 for a discussion of the Company’s segments.

The largest customers accounted for the following percentage of accounts receivable – trade:

 
  
June 30, 2024
    
March 31, 2024
  
Accounts receivable - trade
            
Customer A
    
38
%
    
35
%
Customer B
   
18
%
    
25
%
Customer C
   
12
%
    
13
%
Customer D     10 %     6 %

Geographic and Product Information

The Company’s products are sold predominantly in North America and accounted for the following percentages of consolidated net sales:

   
Three Months Ended
  
 
  
June 30,
  
 
  
2024
    
2023
  
Product line
            
Rotating electrical products
    
65
%
    
64
%
Brake-related products
    
24
%
    
22
%
Wheel hub products
    
7
%
    
11
%
Other products
    
4
%
    
3
%
 
   
100
%
    
100
%

Significant Supplier Concentrations

The Company had no suppliers that accounted for more than 10% of inventory purchases for the three months ended June 30, 2024 and 2023.

7. Debt


The Company is party to a $268,620,000 senior secured financing, (as amended from time to time, the “Credit Facility”) consisting of a $238,620,000 revolving loan facility (the “Revolving Facility”), subject to certain restrictions, and a $30,000,000 term loan facility (the “Term Loans”). The Term Loans were repaid during the year ended March 31, 2024. The Credit Facility matures on December 12, 2028. The lenders have a security interest in substantially all of the assets of the Company. During the three months ended June 30, 2024, the Company enrolled in a feature with its lenders, under which the Company sweeps its cash collections to pay down its revolving facility and borrows on-demand to fund payments. This feature is expected to reduce interest expense on borrowings under the Credit Facility.

The Company had $143,834,000 and $128,000,000 outstanding under the Revolving Facility at June 30, 2024 and March 31, 2024, respectively. In addition, $6,370,000 was outstanding for letters of credit at June 30, 2024. At June 30, 2024, after certain contractual adjustments, $82,174,000 was available under the Revolving Facility. The interest rate on the Company’s Revolving Facility was 8.58% and 8.43%, at June 30, 2024 and March 31, 2024, respectively.

The Credit Facility requires the Company to maintain a minimum fixed charge coverage ratio if undrawn availability is less than 22.5% of the aggregate revolving commitments and a specified minimum undrawn availability. During the period ended June 30, 2024, undrawn availability was greater than the 22.5% threshold, therefore, the fixed charge coverage ratio financial covenant was not required to be tested.


Convertible Notes


On March 31, 2023, the Company entered into a note purchase agreement, as amended, (the “Note Purchase Agreement”) with Bison Capital Partners VI, L.P. and Bison Capital Partners VI-A, L.P. (collectively, the “Purchasers”) and Bison Capital Partners VI, L.P., as the purchaser representative (the “Purchaser Representative”) for the issuance and sale of $32,000,000 in aggregate principal amount of convertible notes due in 2029 (the “Convertible Notes”), which was used for general corporate purposes. The Convertible Notes bear interest at a rate of 10.0% per annum, compounded annually, and payable (i) in-kind or (ii) in cash, annually in arrears on April 1 of each year, commencing on April 1, 2024. During the three months ended June 30, 2024, non-cash accrued interest on the Convertible Notes of $3,209,000 was paid in-kind and is included in the principal amount of Convertible Notes at June 30, 2024. The Convertible Notes have an initial conversion price of $15.00 per share of common stock (“Conversion Option”). Unless and until the Company delivers a redemption notice, the Purchasers of the Convertible Notes may convert their Convertible Notes at any time at their option. Upon conversion, the Convertible Notes will be settled in shares of the Company’s common stock. Except in the case of the occurrence of a fundamental transaction, as defined in the form of convertible promissory note, the Company may not redeem the Convertible Notes prior to March 31, 2026. After March 31, 2026, the Company may redeem all or part of the Convertible Notes for a cash purchase (the “Company Redemption”) price. The effective interest rate was 18.3% as of June 30, 2024 and March 31, 2024, respectively.



The Company’s Convertible Notes are comprised of the following:



   
June 30, 2024
    
March 31, 2024
 
             
Principal amount of Convertible Notes
  
$
35,209,000
    
$
32,000,000
  
Less: unamortized debt discount attributed to Compound Net Derivative Liability
    
(7,338,000
)
    
(7,576,000
)
Less: unamortized debt discount attributed to debt issuance costs
    
(1,025,000
)
    
(1,058,000
)
Carrying amount of the Convertible Notes
    
26,846,000
      
23,366,000
  
Plus: Compound Net Derivative Liability
    
4,830,000
      
7,410,000
  
Net carrying amount of Convertible Notes, related party
  
$
31,676,000
    
$
30,776,000
  



In connection with the Note Purchase Agreement, the Company entered into common stock warrants (the “Warrants”) with the Purchasers, which mature on March 30, 2029. The fair value of the Warrants, using Level 3 inputs and the Monte Carlo simulation model, was zero at June 30, 2024 and March 31, 2024.



The Company Redemption option has been combined with the Conversion Option as a compound net derivative liability (the “Compound Net Derivative Liability”). The Compound Net Derivative Liability has been recorded within convertible note, related party in the condensed consolidated balance sheets at June 30, 2024 and March 31, 2024. The fair value of the Conversion Option and the Company Redemption option using Level 3 inputs and the Monte Carlo simulation model was a liability of $5,800,000 and $9,800,000, and an asset of $970,000 and $2,390,000 at June 30, 2024 and March 31, 2024, respectively. During the three months ended June 30, 2024 and 2023, the Company recorded a gain of $2,580,000 and a loss of $140,000, respectively, as the change in fair value of the Compound Net Derivative Liability in the condensed consolidated statement of operations and condensed consolidated statement of cash flows.


13

The Convertible Notes also contain additional features, such as, default interest and options related to a fundamental transaction, which were not separately accounted for as the value of such features were not material at June 30, 2024 and March 31, 2024.



Interest expense related to the Convertible Notes is as follows:


 
Three Months Ended
  
 
June 30,
  
 
2024
     2023
 
Contractual interest expense
  
$
880,000
     $  800,000
  
Accretion of debt discount
    
238,000
        201,000
  
Amortization of debt issuance costs
    
33,000
        27,000
  
Total interest expense
  
$
1,151,000
     $
 1,028,000
  



There are no future payments required under the Convertible Notes prior to their maturity, therefore, the principal amount of the Convertible Notes plus interest payable in-kind, assuming no early redemption or conversion has occurred, of $56,704,000 would be paid on March 30, 2029.

8. Contract Liabilities

Contract liabilities are comprised of the following:

 
  
June 30, 2024
    
March 31, 2024
  
Short-term contract liabilities
  
   

Customer allowances earned
  
$
23,267,000
    
$
19,789,000
  
Customer core returns accruals
    
11,040,000
      
10,448,000
  
Accrued core payment
    
3,383,000
      
3,476,000
  
Core bank liability
    
1,753,000
      
1,739,000
  
Customer deposits
    
1,703,000
      
1,735,000
  
Finished goods liabilities
   
358,000
      
404,000
  
Total short-term contract liabilities
  
$
41,504,000
    
$
37,591,000
  
Long-term contract liabilities
                
Customer core returns accruals
  
$
192,813,000
    
$
193,545,000
  
Core bank liability
    
11,399,000
      
11,843,000
  
Accrued core payment
    
6,070,000
      
6,535,000
  
Finished goods liabilities
    
96,000
      
145,000
  
Total long-term contract liabilities
  
$
210,378,000
    
$
212,068,000
  

9. Leases

The Company leases various facilities in North America and Asia under operating leases expiring through August 2033. The Company has material nonfunctional currency leases that could have a material impact on the Company’s condensed consolidated statements of operations. As required for other monetary liabilities, lessees remeasure foreign currency-denominated lease liabilities using the exchange rate at each reporting date, but the lease assets are nonmonetary assets measured at historical rates and are not affected by subsequent changes in the exchange rates. In connection with the remeasurement of these leases, the Company recorded a loss of $5,709,000 and a gain of $3,770,000 during the three months ended June 30, 2024 and 2023, respectively. These amounts are included in foreign exchange impact of lease liabilities and forward contracts in the condensed consolidated statements of operations.
Balance sheet information for leases is as follows:

Leases
  
Classification
  
June 30, 2024
    
March 31, 2024
  
Assets:
  
 
            
Operating
  
Operating lease assets
  
$
77,057,000
    
$
83,973,000
  
Finance
  
Plant and equipment
    
4,239,000
      
4,611,000
  
Total leased assets
  
 
  
$
81,296,000
    
$
88,584,000
  
 
  
 
                
Liabilities:
  
 
                
Current
  
 
                
Operating
  
Operating lease liabilities
  
$
9,083,000
    
$
8,319,000
  
Finance
  
Other current liabilities
    
1,427,000
      
1,585,000
  
Long-term
  
 
                
Operating
  
Long-term operating lease liabilities
    
71,044,000
      
72,240,000
  
Finance
  
Other liabilities
    
1,577,000
      
1,893,000
  
Total lease liabilities
  
 
  
$
83,131,000
    
$
84,037,000
  

Lease cost recognized in the condensed consolidated statements of operations is as follows:

   
Three Months Ended
  
 
  
June 30,
  
 
  
2024
    
2023
  
Lease cost
            
Operating lease cost
  
$
3,759,000
    
$
3,742,000
  
Short-term lease cost
    
312,000
      
293,000
  
Variable lease cost
    
164,000
      
186,000
  
Finance lease cost:
                
Amortization of finance lease assets
    
358,000
      
403,000
  
Interest on finance lease liabilities
    
51,000
      
62,000
  
Total lease cost
  
$
4,644,000
    
$
4,686,000
  

Maturities of lease commitments at June 30, 2024 by fiscal year were as follows:

Maturity of lease liabilities
  
Operating Leases
    
Finance Leases
    
Total
  
2025 - remaining nine months
  
$
10,093,000
    
$
1,231,000
    
$
11,324,000
  
2026
    
13,272,000
      
1,014,000
      
14,286,000
  
2027
    
11,421,000
      
523,000
      
11,944,000
  
2028
    
10,929,000
      
363,000
      
11,292,000
  
2029
    
11,126,000
      
169,000
      
11,295,000
  
Thereafter
    
43,462,000
      
-
      
43,462,000
  
Total lease payments
    
100,303,000
      
3,300,000
      
103,603,000
  
Less amount representing interest
    
(20,176,000
)
    
(296,000
)
    
(20,472,000
)
Present value of lease liabilities
  
$
80,127,000
    
$
3,004,000
    
$
83,131,000
  
Other information about leases is as follows:

 
  
June 30, 2024
    
March 31, 2024
  
Lease term and discount rate
            
Weighted-average remaining lease term (years):
            
Finance leases
    
2.7
      
2.8
  
Operating leases
    
8.0
      
8.3
  
Weighted-average discount rate:
                
Finance leases
    
6.5
%
    
6.4
%
Operating leases
    
5.8
%
    
5.8
%

10. Accounts Receivable Discount Programs

The Company uses accounts receivable discount programs offered by certain customers and their respective banks. Under these programs, the Company may sell those customers’ receivables to those banks at a discount to be agreed upon at the time the receivables are sold. These discount arrangements allow the Company to accelerate receipt of payment on customers’ receivables.

The following is a summary of accounts receivable discount programs:

   
Three Months Ended
  
 
  
June 30,
  
 
  
2024
    
2023
  
Receivables discounted
  
$
144,541,000
    
$
104,332,000
  
Weighted average number of days collection was accelerated
    
342
      
337
  
Annualized weighted average discount rate
    
6.9
%
    
6.4
%
Amount of discount recognized as interest expense
  
$
9,507,000
    
$
6,252,000
  

11. Supplier Finance Programs

The Company utilizes a supplier finance program, which allows certain of the Company’s suppliers to sell their receivables due from the Company to participating financial institutions at the sole discretion of both the supplier and the financial institutions. The program is administered by a third party. As of June 30, 2024, $15,000,000 of commitments from participating financial institutions are available to suppliers under this program. The Company has no economic interest in the sale of these receivables and no direct relationship with the financial institution. Payments to the third-party administrator are based on services rendered and are not related to the volume or number of financing agreements between suppliers, financial institution, and the third-party administrator. The Company is not a party to agreements negotiated between participating suppliers and the financial institution. The Company’s obligations to its suppliers, including amounts due and payment terms, are not affected by a supplier’s decision to participate in this program. The Company does not provide guarantees and there are no assets pledged to the financial institution or the third-party administrator for the committed payment in connection with this program. At June 30, 2024, the Company had $12,773,000 of outstanding supplier obligations confirmed under this program, included in accounts payable in the condensed consolidated balance sheet.

12. Net Loss per Share

Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share includes the effect, if any, from the potential exercise or conversion of securities, such as stock options, Warrants, and Convertible Notes (as defined in Note 7), which would result in the issuance of incremental shares of common stock to the extent such impact is not anti-dilutive.

16
The following presents a reconciliation of basic and diluted net loss per share:

   
Three Months Ended
  
 
  
June 30,
  
 
  
2024
    
2023
  
Net loss
  
$
(18,085,000
)
  
$
(1,410,000
)
Basic shares
    
19,674,539
      
19,508,626
  
Effect of potentially dilutive securities
    
-
      
-
  
Diluted shares
    
19,674,539
      
19,508,626
  
Net loss per share:
                
Basic net loss per share
  
$
(0.92
)
  
$
(0.07
)
Diluted net loss per share
  
$
(0.92
)
  
$
(0.07
)


Potential common shares that would have the effect of increasing diluted net income per share or decreasing diluted net loss per share are considered to be anti-dilutive and as such, these shares are not included in calculating diluted net loss per share. For the three months ended June 30, 2024 and 2023, there were 2,285,834 and 2,067,168, respectively, of potential common shares not included in the calculation of diluted net loss per share because their effect was anti-dilutive. In addition, for the three months ended June 30, 2024 and 2023, there were 2,405,941 and 2,186,667, respectively, of potential common shares not included in the calculation of diluted net loss per share under the “if-converted” method for the Convertible Notes because their effect was anti-dilutive. The potential common shares related to the Warrants issued in connection with the Convertible Notes (see Note 7) are anti-dilutive until they become exercisable and as of June 30, 2024, the Warrants were not exercisable.

13. Income Taxes

The Company recorded an income tax benefit of $178,000, or an effective tax rate of 1.0%, and $9,000, or an effective tax rate of 0.6%, for the three months ended June 30, 2024 and 2023, respectively. The effective tax rate for the three months ended June 30, 2024, was primarily impacted by (i) the change in valuation allowance, (ii) foreign income taxed at rates that are different from the federal statutory rate, and (iii) specific jurisdictions that the Company does not expect to recognize the benefit of losses.

Management assesses the need for the valuation allowance on a quarterly basis by jurisdiction. In assessing the need for a valuation allowance, the Company considers all positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, past financial performance, and tax planning strategies. Based on this analysis, the Company determined that it is more likely than not that certain deferred tax assets will not be realized. As a result, the Company maintained its valuation allowance. The Company will continue to monitor the need for a valuation allowance in future periods, considering any changes in circumstances that may affect the realizability of deferred tax assets.
 
The Company and its subsidiaries file income tax returns for the U.S. federal, various state, and foreign jurisdictions with varying statutes of limitations. At June 30, 2024, the Company is under examination by the State of California for fiscal years ended March 31, 2020, 2021, and 2022 and remains subject to examination from the fiscal years ended March 31, 2020 and forward. The Company believes no significant changes in the unrecognized tax benefits will occur within the next 12 months.

17
14. Financial Risk Management and Derivatives

Purchases and expenses denominated in currencies other than the U.S. dollar, which are primarily related to the Company’s overseas facilities, expose the Company to market risk from material movements in foreign exchange rates between the U.S. dollar and the foreign currencies. The Company’s primary risk exposure is from fluctuations in the value of the Mexican peso and to a lesser extent the Chinese yuan. To mitigate these risks, the Company enters into forward foreign currency exchange contracts to exchange U.S. dollars for these foreign currencies. The extent to which forward foreign currency exchange contracts are used, is modified periodically in response to the Company’s estimate of market conditions and the terms and length of anticipated requirements.

The Company enters into forward foreign currency exchange contracts in order to reduce the impact of foreign currency fluctuations and not to engage in currency speculation. The use of derivative financial instruments allows the Company to reduce its exposure to the risk that the eventual cash outflow resulting from funding the expenses of the foreign operations will be materially affected by changes in exchange rates between the U.S. dollar and the foreign currencies. The Company does not hold or issue financial instruments for trading purposes. The Company designates forward foreign currency exchange contracts for forecasted expenditure requirements to fund foreign operations.

The Company had forward foreign currency exchange contracts with a U.S. dollar equivalent notional value of $54,640,000 and $54,092,000 at June 30, 2024 and March 31, 2024, respectively. These contracts generally have a term of one year or less, at rates agreed at the inception of the contracts. The counterparty to these derivative transactions is a major financial institution with investment grade credit rating; however, the Company is exposed to credit risk with this institution. The credit risk is limited to the potential unrealized gains (which offset currency fluctuations adverse to the Company) in any such contract should this counterparty fail to perform as contracted. Any changes in the fair values of forward foreign currency exchange contracts are included in foreign exchange impact of lease liabilities and forward contracts in the condensed consolidated statements of operations.

The following shows the effect of derivative instruments on the condensed consolidated statements of operations:

 
Foreign Exchange Impact of Lease Liabilities and Forward Contracts
  
   
Three Months Ended
  
  Derivatives Not Designated as
  
June 30,
  
Hedging Instruments
  
2024
    
2023
  
(Loss) gain from forward foreign currency exchange contracts
  
$
(5,369,000
)
  
$
500,000

The fair value of the forward foreign currency exchange contracts of $2,853,000 is included in other current liabilities in the condensed consolidated balance sheets at June 30, 2024. The fair value of the forward foreign currency exchange contracts of $2,516,000 is included in prepaid expenses and other current assets in the condensed consolidated balance sheets at March 31, 2024. The changes in the fair values of forward foreign currency exchange contracts are included in foreign exchange impact of lease liabilities and forward contracts in the condensed consolidated statements of cash flows for the three months ended June 30, 2024 and 2023.

18
15. Fair Value Measurements

The following summarizes financial assets and liabilities measured at fair value, by level within the fair value hierarchy:

   
June 30, 2024
    
March 31, 2024
  
         
Fair Value Measurements
          
Fair Value Measurements
  
         
Using Inputs Considered as
          
Using Inputs Considered as
  
   
Fair Value
    
Level 1
    
Level 2
    
Level 3
    
Fair Value
    
Level 1
    
Level 2
    
Level 3
  
Assets
                                                
Short-term investments                                                
 Mutual funds
  
$
1,887,000
    
$
1,887,000
    
$
-
    
$
-
    
$
1,837,000
    
$
1,837,000
    
$
-
    
$
-
  
Prepaid expenses and other current assets                                                                
Forward foreign currency exchange contracts
    
-
      
-
      
-
      
-
      
2,516,000
      
-
      
2,516,000
      
-
  
                                                                 
Liabilities
                                                                
Other current liabilities
                                                                
Deferred compensation
    
1,887,000
      
1,887,000
      
-
      
-
      
1,837,000
      
1,837,000
      
-
      
-
  
Forward foreign currency exchange contracts
     2,853,000       -       2,853,000       -       -       -       -       -  
Convertible notes, related party
                                                                
Compound Net Derivative Liability
     4,830,000       -       -       4,830,000       7,410,000       -       -       7,410,000  

Short-term Investments and Deferred Compensation

The Company’s short-term investments, which fund its deferred compensation liabilities, consist of investments in mutual funds. These investments are classified as Level 1 as the shares of these mutual funds trade with sufficient frequency and volume to enable the Company to obtain pricing information on an ongoing basis.

Forward Foreign Currency Exchange Contracts

The forward foreign currency exchange contracts are primarily measured based on the foreign currency spot and forward rates quoted by the banks or foreign currency dealers (See Note 14).

Compound Net Derivative Liability

The Company estimates the fair value of the Compound Net Derivative Liability (see Note 7) using Level 3 inputs and the Monte Carlo simulation model at the balance sheet date. The Monte Carlo simulation model requires the input of subjective assumptions including the expected volatility of the underlying stock. These subjective assumptions are based on both historical and other information. Changes in the values assumed and used in the model can materially affect the estimate of fair value. This amount is recorded within convertible notes, related party in the condensed consolidated balance sheets at June 30, 2024 and March 31, 2024. Any changes in the fair value of the Compound Net Derivative Liability are recorded in change in fair value of compound net derivative liability in the condensed consolidated statements of operations and condensed consolidated statement of cash flows.

The following assumptions were used to determine the fair value of the Compound Net Derivative Liability:

   
June 30, 2024
    
March 31, 2024
  
Risk free interest rate
    
4.41
%
    
4.36
%
Cost of equity
    
22.90
%
    
23.20
%
Weighted average cost of capital     13.90 %     14.90 %
Expected volatility of MPA common stock     50.00 %     50.00 %
EBITDA volatility     40.00 %     40.00 %

The following summarizes the activity for Level 3 fair value measurements:

   
Three Months Ended
  
   
June 30,
  
 
   2024     2023
  
Beginning balance
  
$
7,410,000
     $ 8,430,000  
Changes in fair value of Compound Net Derivative Liability included in earnings
    
(2,580,000
)
    
140,000
  
Ending balance
  
$
4,830,000
     $ 8,570,000  

During the three months ended June 30, 2024, the Company had no significant measurements of assets or liabilities at fair value on a nonrecurring basis subsequent to their initial recognition.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair value due to the short-term nature of these instruments. The carrying amounts of the revolving loan and other long-term liabilities approximate their fair value based on the variable nature of interest rates and current rates for instruments with similar characteristics. At June 30, 2024 and March 31, 2024, the net carrying amount of the Convertible Notes was $31,676,000 and $30,776,000, respectively (see Note 7). The estimated fair value of the Company’s Convertible Notes was $34,267,000  and $38,276,000 using Level 3 inputs at June 30, 2024 and March 31, 2024, respectively.

19
16. Share-based Payments

Stock Options

During the three months ended June 30, 2024 and 2023, no options to purchase shares of the Company’s common stock were granted.

The following is a summary of stock option transactions:

   
Number of
    
Weighted Average
  
 
  
Shares
    
Exercise Price
  
Outstanding at March 31, 2024
    
1,108,017
    
$
20.29
  
Granted
    
-
    
$
-
  
Exercised
    
-
 
$
-
  
Forfeited/Cancelled
    
(1,383
)
  
$
17.29
  
Expired     (36,733 )   $ 22.93  
Outstanding at June 30, 2024
    
1,069,901
    
$
20.21
  

At June 30, 2024, options to purchase 132,133 shares of common stock were unvested at a weighted average exercise price of $9.32.

At June 30, 2024, there was $368,000 of total unrecognized compensation expense related to unvested stock option awards, which will be recognized over the weighted average remaining vesting period of approximately 2.2 years.

Restricted Stock Units (“RSUs”)

During the three months ended June 30, 2024, the Company granted 207,050 of time-based vesting RSUs, based on the closing market price on the grant date. During the three months ended June 30, 2023, no RSUs were granted by the Company.

The following is a summary of non-vested RSUs:

 
  
Number of
Shares
    
Weighted Average
Grant Date Fair
Value
  
Outstanding at March 31, 2024
    
240,923
    
$
12.23
  
Granted
    
207,050
    
$
6.69
  
Vested
    
(86,559
)
  
$
16.63
  
Forfeited/Cancelled
    
(762
)
  
$
11.04
  
Outstanding at June 30, 2024
    
360,652
    
$
8.00
  

At June 30, 2024, there was $2,270,000 of unrecognized compensation expense related to RSUs, which will be recognized over the weighted average remaining vesting period of approximately 2.1 years.

Performance Stock Units (“PSUs”)

During the three months ended June 30, 2024, the Company granted 155,391 PSUs (at target performance levels), which cliff vest after a three-year performance period, subject to continued employment. The number of shares earned at the end of the three-year performance period will vary, based only on actual performance, from 0% to 150% of the target number of PSUs granted depending on the Company’s total shareholder return (“TSR”) percentile rank relative to that of a peer group over the performance period. TSR is measured based on a comparison of the closing price on the first trading day of the performance period and the average closing price over the last 30 trading days of the performance period. TSR is considered a market condition because it measures the Company’s return against the performance of the Russell 3000, excluding companies classified as financials and real estate and companies with a market capitalization of more than $600 million, over a given period of time.

20
During the three months ended June 30, 2023, the Company granted 533,856 PSUs, which vest within a three-year period, subject to continued employment, as follows: (i) if the stock price is greater than or equal to $10.00 per share, then 1/3 of the grant will vest, (ii) if the stock price is greater than or equal to $15.00 per share then the next 1/3 of the grant will vest, and (iii) if the stock price is greater than or equal to $20.00 per share then the final 1/3 of the grant will vest. Recipients are eligible to vest in between 50% and 150% of the third tranche by achieving a stock price between $17.50 and $25.00 per share (each stock price target must be met for 30 consecutive trading days).

The Company calculated the fair value of these PSUs individually for each tranche using the Monte Carlo Simulation Model at the grant date. Compensation cost is recognized over the estimated derived service period. Compensation cost related to these awards will not be adjusted even if the market condition is not met. The following table summarizes the assumptions used in determining the fair value of these awards subject to market conditions:

    Three Months Ended  
   
June 30,
  
   
2024
    
2023
  
Risk free interest rate
    
4.45
%
     4.32 %
Expected life in years
     3.0
       0.8-1.8  
Expected volatility of MPA common stock
    
59.80
%
    
54.20
%
Average correlation coefficient of peer companies
    
16.50
%
     -
 %
Expected dividend yield
    
-
       -  
Grant date fair value
  
$
8.65
    
$
3.57-5.06
  

The following is a summary of non-vested PSUs:

 
  
Number of
Shares
    
Weighted Average
Grant Date Fair
Value
  
Outstanding at March 31, 2024
    
773,923
    
$
7.73
  
Granted
    
155,391
    
$
8.65
  
Added by performance factor
    10,952
     $
22.27
  
Vested
    
(32,848
)
  
$
22.27
  
Forfeited/Cancelled
    
(52,137
)
  
$
23.27
  
Outstanding at June 30, 2024
    
855,281
    
$
6.58
  

At June 30, 2024, there was $2,280,000 of unrecognized compensation expense related to these awards, which will be recognized over the weighted average remaining vesting period of approximately 2.1 years.

17. Commitments and Contingencies

Warranty Returns

The Company allows its customers to return goods that their consumers have returned to them, whether or not the returned item is defective (“warranty returns”). The Company accrues an estimate of its exposure to warranty returns based on a historical analysis of the level of this type of return as a percentage of  unit sales. Amounts charged to expense for these warranty returns are considered in arriving at the Company’s net sales.

21
The following summarizes the changes in the warranty returns:

   
Three Months Ended
  
 
  
June 30,
  
 
  
2024
    
2023
  
Balance at beginning of period
  
$
19,326,000
    
$
19,830,000
  
Charged to expense
    
33,352,000
      
31,112,000
  
Amounts processed
    
(37,632,000
)
    
(34,265,000
)
Balance at end of period
  
$
15,046,000
    
$
16,677,000
  

At June 30, 2024 and March 31, 2024, the Company’s total warranty return accrual was $15,046,000 and $19,326,000, respectively, of which $5,251,000 and $5,667,000, respectively, was included in the customer returns RGA issued within accounts receivable—net and $9,795,000 and $13,659,000, respectively, was included in the customer finished goods returns accrual in the condensed consolidated balance sheets.

Contingencies

The Company is subject to various lawsuits and claims. In addition, government agencies and self-regulatory organizations have the ability to conduct periodic examinations of and administrative proceedings regarding the Company’s business, and its compliance with law, code, and regulations related to matters including but not limited to environmental, information security, taxes, levies, tariffs and such. The Company has an immaterial amount accrued related to these exposures to various lawsuits and claims.


18. Segment Information



The Company’s three operating segments are as follows:



•
Hard Parts, which includes (i) light duty rotating electric products such as alternators and starters, (ii) wheel hub products, (iii) brake-related products, including brake calipers, brake boosters, brake rotors, brake pads and brake master cylinders, and (iv) turbochargers,

•
Test Solutions and Diagnostic Equipment, which includes (i) applications for combustion engine vehicles, including bench top testers for alternators and starters, (ii) equipment for the pre- and post-production of electric vehicles, and (iii) software emulation of power system applications for the electrification of all forms of transportation (including automobiles, trucks, the emerging electrification of systems within the aerospace industry, and electric vehicle charging stations), and

•
Heavy Duty, which includes non-discretionary automotive aftermarket replacement hard parts for heavy-duty truck, industrial, marine, and agricultural applications.



The Company’s Hard Parts operating segment meets the criteria of a reportable segment. The Test Solutions and Diagnostic Equipment and Heavy Duty segments are not material, are not required to be separately reported, and are included within the “all other” category.

Financial information relating to the Company’s segments is as follows:


   
Three Months Ended June 30, 2024
  
   
Hard Parts
    
All Other
    
Total
  
Net sales to external customers
  
$
158,187,000
    
$
11,700,000
    
$
169,887,000
  
Intersegment sales
    
32,000
      
12,000
      
44,000
  
Operating loss
    
(6,459,000
)(1)
    
(6,000
)
    
(6,465,000
)
Depreciation and amortization
    
2,525,000
      
204,000
      
2,729,000
  
Segment assets
    
989,363,000
      
55,297,000
      
1,044,660,000
  
Capital expenditures
    
253,000
      
237,000
      
490,000
  


   
Three Months Ended June 30, 2023
  
   
Hard Parts
    
All Other
    
Total
  
Net sales to external customers
  
$
149,747,000
    
$
9,958,000
    
$
159,705,000
  
Intersegment sales
    
132,000
      
95,000
      
227,000
  
Operating income (loss)
    
11,506,000
 (1)
   
(1,079,000
)
    
10,427,000
  
Depreciation and amortization
    
2,679,000
      
354,000
      
3,033,000
  
Segment assets
    
1,063,301,000
      
52,368,000
      
1,115,669,000
  
Capital expenditures
    
40,000
      
-
      
40,000
  

   
Three Months Ended
  
 
  
June 30,
  
Net sales
  
2024
    
2023
  
Total net sales for reportable segment
  
$
158,219,000
    
$
149,879,000
  
Other net sales
     11,712,000       10,053,000  
Elimination of intersegment net sales
    
(44,000
)
    
(227,000
)
Total consolidated net sales
  
$
169,887,000
    
$
159,705,000
  

   
Three Months Ended
  
 
  
June 30,
  
Profit or loss
  
2024
    
2023
  
Total operating (loss) income for reportable segment
  
$
(6,459,000
)
  
$
11,506,000
  
Other operating loss
     (6,000 )     (1,079,000 )
Elimination of intersegment operating income
    
9,000
      
14,000
  
Interest expense, net
     (14,387,000 )     (11,720,000 )
Change in fair value of compound net derivative liability
    
2,580,000
      
(140,000
)
Total consolidated loss before income tax benefit
  
$
(18,263,000
)
  
$
(1,419,000
)

Assets
  
June 30, 2024
    
March 31, 2024
  
Total assets for reportable segment
  
$
989,363,000
    
$
1,019,811,000
  
Other assets
    
55,297,000
      
54,946,000
  
Elimination of intersegment assets
    
(66,705,000
)
    
(62,755,000
)
Total consolidated assets
  
$
977,955,000
    
$
1,012,002,000
 


(1)
The operating (loss) income for the Company's Hard Parts segment for the three months ended June 30, 2024 and 2023 includes the foreign exchange impact of lease liabilities and forward contracts, which were a loss of $11,078,000 and a gain of $4,270,000, respectively.


19. Share Repurchases



In August 2018, the Company’s board of directors approved an increase in its share repurchase program from $20,000,000 to $37,000,000 of its common stock. During the three months ended June 30, 2024, the Company did not repurchase any shares of its common stock. As of June 30, 2024, $18,745,000 has been utilized and $18,255,000 remains available to repurchase shares under the authorized share repurchase program, subject to the limit in the Company’s Credit Facility. The Company retired the 837,007 shares repurchased under this program through June 30, 2024. The Company’s share repurchase program does not obligate it to acquire any specific number of shares and shares may be repurchased in privately negotiated and/or open market transactions.
20. Related Party Transactions

Lease

In December 2022, the Company entered into an operating lease for its 35,000 square foot manufacturing, warehouse, and office facility in Ontario, Canada, with a company co-owned by a member of management. The lease, which commenced January 1, 2023, has an initial term of one year with a base rent of approximately $27,000 per month and includes options to renew for up to four years. In November 2023, the Company exercised one of these options to renew for an additional one-year period. The rent expense recorded for the related party lease was $81,000 for the three months ended June 30, 2024 and 2023.

Convertible Note and Election of Director

In connection with the issuance and sale of the Company’s Convertible Notes on March 31, 2023 (see Note 7), the Board appointed Douglas Trussler, a co-founder of Bison Capital, to the Board. Mr. Trussler’s compensation will be consistent with the Company’s previously disclosed standard compensation practices for non-employee directors, which are described in the Company’s Definitive Proxy Statement, filed with the SEC on July 26, 2024.
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis presents factors that Motorcar Parts of America, Inc. and its subsidiaries (“our,” “we” or “us”) believe are relevant to an assessment and understanding of our consolidated financial position and results of operations. This financial and business analysis should be read in conjunction with our March 31, 2024 audited consolidated financial statements included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on June 11, 2024, and the 10-K/A for the fiscal year ended March 31, 2024 as filed with the SEC on June 28, 2024.

Disclosure Regarding Private Securities Litigation Reform Act of 1995

This report may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to our future performance that involve risks and uncertainties. All statements other than statements of historical fact are forward-looking statements, including, but not limited to, statements about our strategic initiatives, operational plans and objectives, expectations for economic conditions and recovery and future business and financial performance, as well as statements regarding underlying assumptions related thereto. They include, among others, factors related to the timing and implementation of strategic initiatives, the highly competitive nature of our industry, demand for our products and services, complexities in our inventory and supply chain, challenges with transforming and growing our business. Except as required by law, we undertake no obligation to revise or update publicly any forward-looking statements for any reason. Therefore, you should not place undue reliance on those statements. Please refer to “Item 1A. Risk Factors” of our most recent Annual Report on Form 10-K filed with the SEC on June 11, 2024, and the 10-K/A for the fiscal year ended March 31, 2024 as filed with the SEC on June 28, 2024, as updated by our subsequent filings with the SEC, for a description of these and other risks and uncertainties that could cause actual results to differ materially from those projected or implied by the forward-looking statements.

Management Overview

With a scalable infrastructure and abundant growth opportunities, we are focused on growing our aftermarket business in the North American marketplace and growing our leadership position in the test solutions and diagnostic equipment market by providing innovative and intuitive solutions to our customers. Our investments in global infrastructure and human resources during the past few years reflects the significant expansion of manufacturing capacity to support multiple product lines. These investments included (i) a 410,000 square foot distribution center, (ii) two buildings totaling 372,000 square feet for remanufacturing and core sorting of brake calipers, and (iii) the realignment of production at our original 312,000 square foot facility in Mexico. In addition, during the three months ended June 30, 2024, we reduced our headcount at our Torrance, California facility in connection with our on-going strategy to utilize our global footprint to enhance operating efficiencies and expect to realize future benefit from these cost-saving measures.

Segment Reporting

Our three operating segments are as follows:


 •
Hard Parts, which includes (i) light duty rotating electric products such as alternators and starters, (ii) wheel hub products, (iii) brake-related products, including brake calipers, brake boosters, brake rotors, brake pads and brake master cylinders, and (iv) turbochargers,

•
Test Solutions and Diagnostic Equipment, which includes (i) applications for combustion engine vehicles, including bench-top testers for alternators and starters, (ii) equipment for the pre- and post-production of electric vehicles, and (iii) software emulation of power system applications for the electrification of all forms of transportation (including automobiles, trucks, the emerging electrification of systems within the aerospace industry, and electric vehicle charging stations), and

•
Heavy Duty, which includes non-discretionary automotive aftermarket replacement hard parts for heavy-duty truck, industrial, marine, and agricultural applications.

25
Our Hard Parts operating segment meets the criteria of a reportable segment. The Test Solutions and Diagnostic Equipment and Heavy Duty segments are not material, are not required to be separately reported, and are included within the “all other” category.  See Note 18 of the notes to condensed consolidated financial statements for more information.

Results of Operations for the Three Months Ended June 30, 2024 and 2023

The following discussion and analysis should be read together with the financial statements and notes thereto appearing elsewhere herein.

The following summarizes certain key consolidated operating data:

   
Three Months Ended
  
   
June 30,
  
   
2024
    
2023
  
Cash flow used in operations
  
$
(20,841,000
)
  
$
(20,470,000
)
Finished goods turnover (annualized) (1)
    
3.3
      
3.5
  


(1)
Annualized finished goods turnover for the fiscal quarter is calculated by multiplying cost of goods sold for the quarter by 4 and dividing the result by the average between beginning and ending non-core finished goods inventory values for the fiscal quarter. We believe this provides a useful measure of our ability to turn our inventory into revenues.

Net Sales and Gross Profit

The following summarizes net sales and gross profit:

   
Three Months Ended
  
   
June 30,
  
   
2024
    
2023
  
Net sales
  
$
169,887,000
    
$
159,705,000
  
Cost of goods sold
    
140,713,000
      
133,138,000
  
Gross profit
    
29,174,000
      
26,567,000
  
Gross profit percentage
    
17.2
%
    
16.6
%

Net Sales. Our consolidated net sales for the three months ended June 30, 2024 were $169,887,000, which represents an increase of $10,182,000, or 6.4%, from the three months ended June 30, 2023 of $159,705,000. Our sales for the three months ended June 30, 2024 compared with the three months ended June 30, 2023 reflect continued strong demand for rotating electrical and brake-related products.

Gross Profit. Our consolidated gross profit was $29,174,000, or 17.2% of consolidated net sales, for the three months ended June 30, 2024 compared with $26,567,000, or 16.6% of consolidated net sales, for the three months ended June 30, 2023. The increase in our gross margin for the three months ended June 30, 2024 reflects (i) changes in product mix, (ii) increased utilization of our facilities, and (iii) the benefit of price increases that went into effect during the current and prior periods.

In addition, our gross margin for the three months ended June 30, 2024 compared with the three months ended June 30, 2023 was impacted by (i) amortization of core and finished goods premiums paid to customers related to new business of $2,728,000 and $2,657,000, respectively and (ii) the non-cash quarterly revaluation of cores that are part of the finished goods on the customers’ shelves (which are included in contract assets) to the lower of cost or net realizable value, which resulted in a write-down of $394,000 and $778,000, respectively.

26
Operating Expenses

The following summarizes our consolidated operating expenses:

   
Three Months Ended
  
   
June 30,
  
   
2024
    
2023
  
General and administrative
  
$
16,670,000
    
$
12,602,000
  
Sales and marketing
    
5,449,000
      
5,419,000
  
Research and development
    
2,433,000
      
2,375,000
  
Foreign exchange impact of lease liabilities and forward contracts
    
11,078,000
      
(4,270,000
)
Percent of net sales
                
General and administrative
    
9.8
%
    
7.9
%
Sales and marketing
    
3.2
%
    
3.4
%
Research and development
    
1.4
%
    
1.5
%
Foreign exchange impact of lease liabilities and forward contracts
    
6.5
%
    
(2.7
)%

General and Administrative. Our general and administrative expenses for the three months ended June 30, 2024 were $16,670,000, which represents an increase of $4,068,000, or 32.3%, from the three months ended June 30, 2023 of $12,602,000. This increase was primarily due to (i) $2,868,000 of increased severance during the three months ended June 30, 2024 due to headcount reductions in connection with our strategy to utilize our global footprint to enhance operating efficiencies and (ii) a loss of $950,000 during the three months ended June 30, 2024 compared with a gain $982,000 during the three months ended June 30, 2023 resulting from foreign currency exchange rates. These increases were partially offset by $815,000 of decreased general and administrative expenses at our offshore locations.

Sales and Marketing. Our sales and marketing expenses were consistent at $5,449,000 for the three months ended June 30, 2024 compared with $5,419,000 for the three months ended June 30, 2023.

Research and Development. Our research and development expenses were consistent at $2,433,000 for the three months ended June 30, 2024 compared with $2,375,000 for the three months ended June 30, 2023.

Foreign Exchange Impact of Lease Liabilities and Forward Contracts. Our foreign exchange impact of lease liabilities and forward contracts were a non-cash loss of $11,078,000 compared with a non-cash gain of $4,270,000 for the three months ended June 30, 2024 and 2023, respectively. This change during the three months ended June 30, 2024 compared with the three months ended June 30, 2023 was primarily due to (i) the remeasurement of our foreign currency-denominated lease liabilities, which resulted in a non-cash loss of $5,709,000 compared with a non-cash gain of $3,770,000, respectively, due to foreign currency exchange rate fluctuations and (ii) the forward foreign currency exchange contracts, which resulted in a non-cash loss of $5,369,000 compared with a non-cash gain of $500,000, respectively, due to the changes in their fair values.

Operating (Loss) Income

Consolidated Operating (Loss) Income. Our consolidated operating loss for the three months ended June 30, 2024 was $6,456,000 compared with consolidated operating income of $10,441,000 for the three months ended June 30, 2023. This decrease was primarily due our foreign exchange impact of lease liabilities and forward contracts and other items as discussed above.

Interest Expense

Interest Expense, net. Our interest expense for the three months ended June 30, 2024 was $14,387,000, which represents an increase of $2,667,000, or 22.8%, from interest expense for the three months ended June 30, 2023 of $11,720,000. This increase was primarily due to increased collection of receivables utilizing accounts receivable discount programs on higher sales partially offset by lower average outstanding balances under our credit facility.

27
Change in Fair Value of Compound Net Derivative Liability

Change in Fair Value of Compound Net Derivative Liability. Our change in fair value of compound net derivative liability associated with the convertible notes issued on March 31, 2023 was a non-cash gain of $2,580,000 compared with a non-cash loss of $140,000 for the three months ended June 30, 2024 and 2023, respectively.

Provision for Income Taxes

Income Tax. We recorded an income tax benefit of $178,000, or an effective tax rate of 1.0%, and $9,000, or an effective tax rate of 0.6%, for the three months ended June 30, 2024 and 2023, respectively. The effective tax rate for the three months ended June 30, 2024, was primarily impacted by (i) the change in valuation allowance, (ii) foreign income taxed at rates that are different from the federal statutory rate, and (iii) specific jurisdictions that we do not expect to recognize the benefit of losses.

Liquidity and Capital Resources

Overview

We had working capital (current assets minus current liabilities) of $148,739,000 and $156,034,000, a ratio of current assets to current liabilities of 1.4:1.0, at June 30, 2024 and March 31, 2024, respectively.

During the three months ended June 30, 2024, we enrolled in a feature with our lenders, under which we sweep our cash collections to pay down our revolving facility and borrow on-demand to fund payments. This feature is expected to reduce interest expense on borrowings under the credit facility.

Our primary source of liquidity was from the use of our receivable discount programs and credit facility during the three months ended June 30, 2024. In addition, we have access to our existing cash, as well as our available credit facility to meet short-term liquidity needs. We believe our cash and cash equivalents, use of receivable discount programs, amounts available under our credit facility, and other sources are sufficient to satisfy our expected future working capital needs and lease and capital expenditure obligations over the next 12 months.

Share Repurchase Program

In August 2018, our board of directors approved an increase in our share repurchase program from $20,000,000 to $37,000,000 of our common stock. As of June 30, 2024, $18,745,000 had been utilized and $18,255,000 remains available to repurchase shares under the authorized share repurchase program, subject to the limit in our credit facility. We retired the 837,007 shares repurchased under this program through June 30, 2024. Our share repurchase program does not obligate us to acquire any specific number of shares and shares may be repurchased in privately negotiated and/or open market transactions.

28
Cash Flows

The following summarizes cash flows as reflected in the condensed consolidated statements of cash flows:

   
Three Months Ended
  
   
June 30,
  
   
2024
    
2023
  
Cash flows (used in) provided by:
            
Operating activities
  
$
(20,841,000
)
  
$
(20,470,000
)
Investing activities
    
(512,000
)
    
(67,000
)
Financing activities
    
15,166,000
      
19,673,000
  
Effect of exchange rates on cash and cash equivalents
    
(256,000
)
    
155,000
  
Net decrease in cash and cash equivalents
  
$
(6,443,000
)
  
$
(709,000
)
Additional selected cash flow data:
                
Depreciation and amortization
  
$
2,729,000
    
$
3,033,000
  
Capital expenditures
    
490,000
      
40,000
  

Net cash used in operating activities was $20,841,000 and $20,470,000 during the three months ended June 30, 2024 and 2023, respectively. The significant changes in our operating activities reflect (i) increased collections of our accounts receivable balances resulting from higher sales during the current year compared with higher accounts receivable balances in the prior year as we managed the use of our customers’ accounts receivable discount programs and (ii) a reduction of accounts payable balances in the current year due the timing of supplier payments compared with the prior year. We continue to manage our working capital to maximize our operating cash flow.

Net cash used in investing activities was $512,000 and $67,000 during the three months ended June 30, 2024 and 2023, respectively. The change in our investing activities primarily resulted from increased capital expenditures.

Net cash provided by financing activities was $15,166,000 and $19,673,000 during the three months ended June 30, 2024 and 2023, respectively. The change in our financing activities primarily resulted from lower net borrowing of amounts under our credit facility.

Capital Resources

Credit Facility

We are party to a $268,620,000 senior secured financing (as amended from time to time, the “Credit Facility”) consisting of a $238,620,000 revolving loan facility (the “Revolving Facility”), subject to certain restrictions, and a $30,000,000 term loan facility (the “Term Loans”). The Term Loans were repaid during the year ended March 31, 2024. The Credit Facility matures on December 12, 2028. The lenders have a security interest in substantially all of our assets. During the three months ended June 30, 2024, we enrolled in a feature with our lenders, under which we sweep our cash collections to pay down our revolving facility and borrow on-demand to fund payments. This feature is expected to reduce interest expense on borrowings under the Credit Facility.

We had $143,834,000 and $128,000,000 outstanding under the Revolving Facility at June 30, 2024 and March 31, 2024, respectively. In addition, $6,370,000 was outstanding for letters of credit at June 30, 2024. At June 30, 2024, after certain contractual adjustments, $82,174,000 was available under the Revolving Facility. The interest rate on our Revolving Facility was 8.58% and 8.43%, at June 30, 2024 and March 31, 2024, respectively.

The Credit Facility requires us to maintain a minimum fixed charge coverage ratio if undrawn availability is less than 22.5% of the aggregate revolving commitments and a specified minimum undrawn availability. During the period ended June 30, 2024, undrawn availability was greater than the 22.5% threshold, therefore, the fixed charge coverage ratio financial covenant was not required to be tested.

29
Convertible Notes

On March 31, 2023, we entered into a note purchase agreement, as amended, (the “Note Purchase Agreement”) with Bison Capital Partners VI, L.P. and Bison Capital Partners VI-A, L.P. (collectively, the “Purchasers”) and Bison Capital Partners VI, L.P., as the purchaser representative (the “Purchaser Representative”) for the issuance and sale of $32,000,000 in aggregate principal amount of convertible notes due in 2029 (the “Convertible Notes”), which was used for general corporate purposes. The Convertible Notes bear interest at a rate of 10.0% per annum, compounded annually, and payable (i) in-kind or (ii) in cash, annually in arrears on April 1 of each year, commencing on April 1, 2024. During the three months ended June 30, 2024, non-cash accrued interest on the Convertible Notes of $3,209,000 was paid in-kind and is included in the principal amount of Convertible Notes at June 30, 2024. The Convertible Notes have an initial conversion price of approximately $15.00 per share of common stock. (“Conversion Option”). Unless and until we deliver a redemption notice, the Purchasers of the Convertible Notes may convert their Convertible Notes at any time at their option. Upon conversion, the Convertible Notes will be settled in shares of our common stock. Except in the case of the occurrence of a fundamental transaction, as defined in the form of convertible promissory note, we may not redeem the Convertible Notes prior to March 31, 2026. After March 31, 2026, we may redeem all or part of the Convertible Notes for a cash purchase (the “Company Redemption”) price. The effective interest rate was 18.3% as of June 30, 2024 and March 31, 2024, respectively.

In connection with the Note Purchase Agreement, we entered into common stock warrants (the “Warrants”) with the Purchasers, which mature on March 30, 2029. The fair value of the Warrants, using Level 3 inputs and the Monte Carlo simulation model, was zero at June 30, 2024 and March 31, 2024.

The Company Redemption option has been combined with the Conversion Option as a compound net derivative liability (the “Compound Net Derivative Liability”). The Compound Net Derivative Liability has been recorded within convertible note, related party in the condensed consolidated balance sheets at June 30, 2024 and March 31, 2024. The fair value of the Conversion Option and the Company Redemption option using Level 3 inputs and the Monte Carlo simulation model was a liability of $5,800,000 and $9,800,000, and an asset of $970,000 and $2,390,000 at June 30, 2024 and March 31, 2024, respectively. During the three months ended June 30, 2024 and 2023, we recorded a gain of $2,580,000 and a loss of $140,000, respectively, as the change in fair value of the Compound Net Derivative Liability in the condensed consolidated statement of operations and condensed consolidated statement of cash flows.

The Convertible Notes also contain additional features, such as, default interest and options related to a fundamental transaction, which were not separately accounted for as the value of such features were not material at June 30, 2024 and March 31, 2024.

Accounts Receivable Discount Programs

We use accounts receivable discount programs offered by certain customers and their respective banks. Under these programs, we have options to sell those customers’ receivables to those banks at a discount to be agreed upon at the time the receivables are sold. These discount arrangements allow us to accelerate receipt of payment on customers’ receivables. While these arrangements have reduced our working capital needs, there can be no assurance that these programs will continue in the future. Interest expense resulting from these programs would increase if interest rates rise, if utilization of these discounting arrangements expands, if customers extend their payment to us, or if the discount period is extended to reflect more favorable payment terms to customers.

30
The following is a summary of the accounts receivable discount programs:

   
Three Months Ended
  
   
June 30,
  
   
2024
    
2023
  
Receivables discounted
  
$
144,541,000
    
$
104,332,000
  
Weighted average number of days collection was accelerated
    
342
      
337
  
Annualized weighted average discount rate
    
6.9
%
    
6.4
%
Amount of discount recognized as interest expense
  
$
9,507,000
    
$
6,252,000
  

Supplier Finance Programs

We utilize a supplier finance program, which allows certain of our suppliers to sell their receivables due from us to participating financial institutions at the sole discretion of both the supplier and the financial institutions. The program is administered by a third party. As of June 30, 2024, $15,000,000 of commitments from participating financial institutions are available to suppliers under this program. We have no economic interest in the sale of these receivables and no direct relationship with the financial institution. Payments to the third-party administrator are based on services rendered and are not related to the volume or number of financing agreements between suppliers, financial institution, and the third-party administrator. We are not a party to agreements negotiated between participating suppliers and the financial institution. Our obligations to our suppliers, including amounts due and payment terms, are not affected by a supplier's decision to participate in this program. We do not provide guarantees and there are no assets pledged to the financial institution or the third-party administrator for the committed payment in connection with this program. At June 30, 2024, we had $12,773,000 of outstanding supplier obligations confirmed under this program, included in accounts payable in the condensed consolidated balance sheet.

Capital Expenditures and Commitments

Capital Expenditures

Our total capital expenditures were $493,000 and $64,000 for three months ended June 30, 2024 and 2023, respectively. These capital expenditures include (i) cash paid for the purchase of plant and equipment plant, (ii) equipment acquired under finance leases, and (iii) non-cash capital expenditures. Capital expenditures for fiscal 2025 primarily include the purchase of equipment for our current operations. We expect to incur approximately $7,000,000 of capital expenditures primarily to support our global growth initiatives and current operations during fiscal 2025. We have used and expect to continue using our working capital and additional capital lease obligations to finance these capital expenditures.

Related Party Transactions

Lease

In December 2022, we entered into an operating lease for our 35,000 square foot manufacturing, warehouse, and office facility in Ontario, Canada, with a company co-owned by a member of management. The lease, which commenced January 1, 2023, had an initial term of one year with a base rent of approximately $27,000 per month and included options to renew for up to four years. In November 2023, we exercised one of these options to renew for an additional one-year period.  The rent expense recorded for the related party lease was $81,000 for the three months ended June 30, 2024 and 2023.

Convertible Note and Election of Director

In connection with the issuance and sale of our Convertible Notes on March 31, 2023, the Board appointed Douglas Trussler, a co-founder of Bison Capital, to the Board. Mr. Trussler’s compensation will be consistent with our previously disclosed standard compensation practices for non-employee directors, which are described in our Definitive Proxy Statement, filed with the SEC on July 26, 2024.

31
Litigation

We are subject to various lawsuits and claims. In addition, government agencies and self-regulatory organizations have the ability to conduct periodic examinations of and administrative proceedings regarding our business, and our compliance with law, code, and regulations related to all matters including but not limited to environmental, information security, taxes, levies, tariffs and such. We have an immaterial amount accrued related to these exposures to various lawsuits and claims.

Critical Accounting Policies

There have been no material changes to, except as noted below, our critical accounting policies and estimates that are presented in our Annual Report on Form 10-K for the year ended March 31, 2024, which was filed on June 11, 2024, and the 10-K/A for the fiscal year ended March 31, 2024 as filed with the SEC on June 28, 2024.

Accounting Pronouncements Not Yet Adopted

Disclosure Improvements

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. This standard was issued in response to the SEC’s disclosure update and simplification initiative, which affects a variety of topics within the Accounting Standards Codification. The amendments apply to all reporting entities within the scope of the affected Topics unless otherwise indicated. The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. We are currently evaluating the impact this guidance will have on our financial statement disclosures.

Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This standard requires us to disclose significant segment expenses that are regularly provided to the CODM and are included within each reported measure of segment operating results. The standard also requires us to disclose the total amount of any other items included in segment operating results, which were not deemed to be significant expenses for separate disclosure, along with a qualitative description of the composition of these other items. In addition, the standard also requires disclosure of the CODM’s title and position, as well as detail on how the CODM uses the reported measure of segment operating results to evaluate segment performance and allocate resources. The standard also aligns interim segment reporting disclosure requirements with annual segment reporting disclosure requirements. This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the impact this guidance will have on our financial statement disclosures.

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740). This standard requires us to provide further disaggregated income tax disclosures for specific categories on the effective tax rate reconciliation, as well as additional information about federal, state/local and foreign income taxes. The standard also requires us to annually disclose our income taxes paid (net of refunds received), disaggregated by jurisdiction.  This guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The standard is to be applied prospective basis, although optional retrospective application is permitted. We are currently evaluating the impact this guidance will have on our financial statement disclosures.

32
Item 3.
Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in market risk from the information provided in Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K as of March 31, 2024, which was filed with the SEC on June 11, 2024, and the 10-K/A for the fiscal year ended March 31, 2024 as filed with the SEC on June 28, 2024.

Item 4.
Controls and Procedures

Evaluation of Disclosure Controls and Procedures
 
We have established disclosure controls and procedures designed to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to management, including our chief executive officer, chief financial officer, and chief accounting officer, as appropriate to allow timely decisions regarding required disclosures.
 
Under the supervision and with the participation of management, including our chief executive officer, chief financial officer, and chief accounting officer, we have conducted an evaluation of the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e). Based on this evaluation, our chief executive officer, chief financial officer, and chief accounting officer concluded that MPA’s disclosure controls and procedures were effective as of June 30, 2024.

Inherent Limitations on Effectiveness of Controls
 
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Exchange Act Rules 13a-15(f) and 15d-15(f).
 
Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America, applying certain estimates and judgments as required.
 
Internal control over financial reporting includes those policies and procedures that:
 
1. Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
 
2. Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
 
3. Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
 
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
33
Changes in Internal Control Over Financial Reporting
 
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) that occurred during the three months ended June 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

34
PART II — OTHER INFORMATION

Item 1.
Legal Proceedings

We are subject to various lawsuits and claims. In addition, government agencies and self-regulatory organizations have the ability to conduct periodic examinations of and administrative proceedings regarding our business, and our compliance with law, code, and regulations related to all matters including but not limited to environmental, information security, taxes, levies, tariffs and such. We have an immaterial amount accrued related to these exposures to various lawsuits and claims.

Item 1A.
Risk Factors

There have been no material changes in the risk factors set forth in Item 1A to Part I of our Annual Report on Form 10-K for the fiscal year ended March 31, 2024, filed on June 11, 2024, and the 10-K/A for the fiscal year ended March 31, 2024 as filed with the SEC on June 28, 2024.

Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds

Limitation on Payment of Dividends and Share Repurchases

The Credit Facility currently permits the payment of up to $30,000,000 of dividends and share repurchases for fiscal year 2025, subject to pro forma compliance with amended financial covenants.

Purchases of Equity Securities by the Issuer

Shares repurchased during the three months ended June 30, 2024 were as follows:

Periods
  
Total Number of
Shares Purchased
    
Average Price
Paid Per Share
    
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
    
Approximate
Dollar Value of
Shares That May
Yet Be Purchased
Under the Plans
or Programs (1)
  
                         
April 1 - April 30, 2024:
                        
Open market and privately negotiated purchases
    
-
    
$
-
      
-
    
$
18,255,000
  
May 1 - May 31, 2024:
                                
Open market and privately negotiated purchases
    
-
    
$
-
      
-
      
18,255,000
  
June 1 - June 30, 2024:
                                
Open market and privately negotiated purchases
    
-
    
$
-
      
-
      
18,255,000
  
                                 
Total
    
0
              
0
    
$
18,255,000
  


(1)
As of June 31, 2024, $18,745,000 had been utilized and $18,255,000 remains available to repurchase shares under the authorized share repurchase program, subject to the limit in our Credit Facility. We retired the 837,007 shares repurchased under this program through June 30, 2024. Our share repurchase program does not obligate us to acquire any specific number of shares and shares may be repurchased in privately negotiated and/or open market transactions.

Item 3.
Defaults Upon Senior Securities

None.

Item 5.
Other Information

(a)
None.
   
(b)
None.
   
(c)
During the quarter ended June 30, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” as each such term is defined in Item 408 of Regulation S-K.

35
Item 6.
Exhibits

(a)
Exhibits:

Number          
  
Description of Exhibit          
  
Method of Filing          
3.1
  
Certificate of Incorporation of the Company
  
Incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form SB-2 declared effective on March 22, 1994 (the “1994 Registration Statement”).
         
3.2
  
Amendment to Certificate of Incorporation of the Company
  
Incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1 (No. 33-97498) declared effective on November 14, 1995.
         
3.3
  
Amendment to Certificate of Incorporation of the Company
  
         
3.4
  
Amendment to Certificate of Incorporation of the Company
  
         
3.5
  
Amendment to Certificate of Incorporation of the Company
  
         
3.6
  
Amended and Restated By-Laws of Motorcar Parts of America, Inc.
  
         
3.7
  
Certificate of Amendment of the Certificate of Incorporation of the Company
  
         
3.8
  
Amendment to the Amended and Restated By-Laws of Motorcar Parts of America, Inc., as adopted on June 9, 2016
  
         
3.9
  
Amendment to the Amended and Restated By-Laws of the Company
  
         
3.10
  
Third Amendment to the Amended and Restated By-Laws of Motorcar Parts of America, Inc., as adopted on January 26, 2022
  
         
4.1
  
Description of the  Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934
  
         
4.2
  
2004 Non-Employee Director Stock Option Plan
  
         
4.3
  
2010 Incentive Award Plan
  
         
4.4
  
Amended and Restated 2010 Incentive Award Plan
  

36
Number          
  
Description of Exhibit          
  
Method of Filing          
4.5
  
Second Amended and Restated 2010 Incentive Award Plan
  
         
4.6
  
2014 Non-Employee Director Incentive Award Plan
  
         
4.7
  
Third Amended and Restated 2010 Incentive Award Plan
  
         
4.8
  
Fourth Amended and Restated 2010 Incentive Award Plan
  
         
4.9
  
2022 Incentive Award Plan
  
         
4.10
  
Form of Convertible Promissory Note
  
         
4.11
  
Form of Common Stock Warrant
  
         
4.12
  
First Amended and Restated Convertible Promissory Note
  
         
4.13
  
First Amended and Restated Common Stock Warrant
  
         
 
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002
  
Filed herewith.
         
 
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002
  
Filed herewith.
         
 
Certification of Chief Accounting Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002
  
Filed herewith.
         
 
Certifications of Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002
  
Filed herewith.
         
97.1
  
Policy for Recovery of Erroneously Awarded Compensation
  

37
Number          
  
Description of Exhibit          
  
Method of Filing          
101.INS
  
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document).
    
         
101.SCH
  
Inline XBRL Taxonomy Extension Schema Document
    
         
101.CAL
  
Inline XBRL Taxonomy Extension Calculation Linkbase Document
    
         
101.DEF
  
Inline XBRL Taxonomy Extension Definition Linkbase Document
    
         
101.LAB
  
Inline XBRL Taxonomy Extension Label Linkbase Document
    
         
101.PRE
  
Inline XBRL Taxonomy Extension Presentation Linkbase Document
    
         
104
  
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
    

38
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
MOTORCAR PARTS OF AMERICA, INC.
     
Dated: August 8, 2024
By:
/s/ David Lee
   
David Lee
   
Chief Financial Officer
     
Dated: August 8, 2024
By:
/s/ Kamlesh Shah
   
Kamlesh Shah
   
Chief Accounting Officer


39
Exhibit 31.1

CERTIFICATIONS

I, Selwyn Joffe, certify that:

1. I have reviewed this report on Form 10-Q of Motorcar Parts of America, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused, such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2024
/s/ Selwyn Joffe
 
Selwyn Joffe
 
Chief Executive Officer


Exhibit 31.2

CERTIFICATIONS

I, David Lee, certify that:

1. I have reviewed this report on Form 10-Q of Motorcar Parts of America, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused, such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2024
/s/ David Lee
 
David Lee
 
Chief Financial Officer


Exhibit 31.3

CERTIFICATIONS

I, Kamlesh Shah, certify that:

1. I have reviewed this report on Form 10-Q of Motorcar Parts of America, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused, such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2024
/s/ Kamlesh Shah
 
Kamlesh Shah
 
Chief Accounting Officer


Exhibit 32.1

CERTIFICATE OF CHIEF EXECUTIVE OFFICER, CHIEF FINANCIAL OFFICER AND CHIEF
ACCOUNTING OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Motorcar Parts of America, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), I, Selwyn Joffe, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

1.
The Quarterly Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and

2.
The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 
/s/ Selwyn Joffe
 
Selwyn Joffe
 
Chief Executive Officer
 
August 8, 2024

In connection with the Quarterly Report of Motorcar Parts of America, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), I, David Lee, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

1.
The Quarterly Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and

2.
The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 
/s/ David Lee
 
David Lee
 
Chief Financial Officer
 
August 8, 2024

In connection with the Quarterly Report of Motorcar Parts of America, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), I, Kamlesh Shah, Chief Accounting Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

1.
The Quarterly Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and

2.
The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 
/s/ Kamlesh Shah
 
Kamlesh Shah
 
Chief Accounting Officer
 
August 8, 2024

The foregoing certifications are being furnished to the Securities and Exchange Commission as part of the accompanying report on Form 10-Q. A signed original of each of these statements has been provided to Motorcar Parts of America, Inc. and will be retained by Motorcar Parts of America, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

 
v3.24.2.u1
Document and Entity Information - shares
 3 Months Ended
Jun. 30, 2024
Aug. 01, 2024
Cover [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Quarterly Report true  
Document Period End Date Jun. 30, 2024  
Current Fiscal Year End Date --03-31  
Document Fiscal Year Focus 2025  
Document Fiscal Period Focus Q1  
Document Transition Report false  
Entity File Number 001-33861  
Entity Registrant Name MOTORCAR PARTS OF AMERICA INC  
Entity Central Index Key 0000918251  
Entity Incorporation, State or Country Code NY  
Entity Tax Identification Number 11-2153962  
Entity Address, Address Line One 2929 California Street  
Entity Address, City or Town Torrance  
Entity Address, State or Province CA  
Entity Address, Postal Zip Code 90503  
City Area Code 310  
Local Phone Number 212-7910  
Title of 12(b) Security Common Stock, par value $0.01 per share  
Trading Symbol MPAA  
Security Exchange Name NASDAQ  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   19,753,585
v3.24.2.u1
Condensed Consolidated Balance Sheets - USD ($)
Jun. 30, 2024
Mar. 31, 2024
Current assets:    
Cash and cash equivalents $ 7,531,000 $ 13,974,000
Short-term investments 1,887,000 1,837,000
Accounts receivable - net 78,624,000 96,296,000
Inventory - net 402,931,000 397,328,000
Contract assets 27,317,000 27,139,000
Prepaid expenses and other current assets 21,753,000 23,885,000
Total current assets 540,043,000 560,459,000
Plant and equipment - net 35,010,000 38,338,000
Operating lease assets 77,057,000 83,973,000
Long-term deferred income taxes 3,960,000 2,976,000
Long-term contract assets 315,463,000 320,282,000
Goodwill and intangible assets - net 4,102,000 4,274,000
Other assets 2,320,000 1,700,000
TOTAL ASSETS 977,955,000 1,012,002,000
Current liabilities:    
Accounts payable and accrued liabilities 159,627,000 185,182,000
Customer finished goods returns accrual 28,893,000 38,312,000
Contract liabilities 41,504,000 37,591,000
Revolving loan 143,834,000 128,000,000
Other current liabilities 8,363,000 7,021,000
Operating lease liabilities 9,083,000 8,319,000
Total current liabilities 391,304,000 404,425,000
Convertible notes, related party $ 31,676,000 $ 30,776,000
Notes Payable, Noncurrent, Related Party, Type [Extensible Enumeration] us-gaap:RelatedPartyMember us-gaap:RelatedPartyMember
Long-term contract liabilities $ 210,378,000 $ 212,068,000
Long-term deferred income taxes 39,000 511,000
Long-term operating lease liabilities 71,044,000 72,240,000
Other liabilities 6,345,000 6,872,000
Total liabilities 710,786,000 726,892,000
Commitments and contingencies
Shareholders' equity:    
Preferred stock 0 0
Common stock; par value $.01 per share, 50,000,000 shares authorized; 19,753,585 and 19,662,380 shares issued and outstanding at June 30, 2024 and March 31, 2024, respectively 198,000 197,000
Additional paid-in capital 237,073,000 236,255,000
Retained earnings 21,418,000 39,503,000
Accumulated other comprehensive income 8,480,000 9,155,000
Total shareholders' equity 267,169,000 285,110,000
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 977,955,000 1,012,002,000
Series A Junior Participating Preferred Stock [Member]    
Shareholders' equity:    
Preferred stock $ 0 $ 0
v3.24.2.u1
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares
Jun. 30, 2024
Mar. 31, 2024
Shareholders' equity:    
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, authorized (in shares) 5,000,000 5,000,000
Preferred stock, issued (in shares) 0 0
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, authorized (in shares) 50,000,000 50,000,000
Common stock, issued (in shares) 19,753,585 19,662,380
Common stock, outstanding (in shares) 19,753,585 19,662,380
Series A Junior Participating Preferred Stock [Member]    
Shareholders' equity:    
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, authorized (in shares) 20,000 20,000
Preferred stock, issued (in shares) 0 0
v3.24.2.u1
Condensed Consolidated Statements of Operations - USD ($)
 3 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Condensed Consolidated Statements of Operations [Abstract]    
Net sales $ 169,887,000 $ 159,705,000
Cost of goods sold 140,713,000 133,138,000
Gross profit 29,174,000 26,567,000
Operating expenses:    
General and administrative 16,670,000 12,602,000
Sales and marketing 5,449,000 5,419,000
Research and development 2,433,000 2,375,000
Foreign exchange impact of lease liabilities and forward contracts 11,078,000 (4,270,000)
Total operating expenses 35,630,000 16,126,000
Operating (loss) income (6,456,000) 10,441,000
Other expenses:    
Interest expense, net 14,387,000 11,720,000
Change in fair value of compound net derivative liability (2,580,000) 140,000
Total other expenses 11,807,000 11,860,000
Loss before income tax benefit (18,263,000) (1,419,000)
Income tax benefit (178,000) (9,000)
Net loss $ (18,085,000) $ (1,410,000)
Basic net loss per share (in dollars per share) $ (0.92) $ (0.07)
Diluted net loss per share (in dollars per share) $ (0.92) $ (0.07)
Weighted average number of shares outstanding:    
Basic (in shares) 19,674,539 19,508,626
Diluted (in shares) 19,674,539 19,508,626
v3.24.2.u1
Condensed Consolidated Statements of Comprehensive (Loss) Income - USD ($)
 3 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Condensed Consolidated Statements of Comprehensive (Loss) Income [Abstract]    
Net loss $ (18,085,000) $ (1,410,000)
Other comprehensive (loss) income, net of tax:    
Foreign currency translation (loss) gain (675,000) 3,343,000
Total other comprehensive (loss) income, net of tax (675,000) 3,343,000
Comprehensive (loss) income $ (18,760,000) $ 1,933,000
v3.24.2.u1
Condensed Consolidated Statements of Shareholders' Equity - USD ($)
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Total
Beginning balance at Mar. 31, 2023 $ 195,000 $ 231,836,000 $ 88,747,000 $ (303,000) $ 320,475,000
Beginning balance (in shares) at Mar. 31, 2023 19,494,615        
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Compensation recognized under employee stock plans $ 0 1,310,000 0 0 1,310,000
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes $ 1,000 (280,000) 0 0 (279,000)
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes (in shares) 104,530        
Foreign currency translation $ 0 0 0 3,343,000 3,343,000
Net loss 0 0 (1,410,000) 0 (1,410,000)
Ending balance at Jun. 30, 2023 $ 196,000 232,866,000 87,337,000 3,040,000 323,439,000
Ending balance (in shares) at Jun. 30, 2023 19,599,145        
Beginning balance at Mar. 31, 2024 $ 197,000 236,255,000 39,503,000 9,155,000 $ 285,110,000
Beginning balance (in shares) at Mar. 31, 2024 19,662,380       19,662,380
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Compensation recognized under employee stock plans $ 0 1,000,000 0 0 $ 1,000,000
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes $ 1,000 (182,000) 0 0 (181,000)
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes (in shares) 91,205        
Foreign currency translation $ 0 0 0 (675,000) (675,000)
Net loss 0 0 (18,085,000) 0 (18,085,000)
Ending balance at Jun. 30, 2024 $ 198,000 $ 237,073,000 $ 21,418,000 $ 8,480,000 $ 267,169,000
Ending balance (in shares) at Jun. 30, 2024 19,753,585       19,753,585
v3.24.2.u1
Condensed Consolidated Statements of Cash Flows - USD ($)
 3 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Cash flows from operating activities:    
Net loss $ (18,085,000) $ (1,410,000)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 2,729,000 3,033,000
Amortization of debt issuance costs 537,000 464,000
Amortization of interest on contract liabilities 203,000 249,000
Accrued interest on convertible notes, related party 880,000 800,000
Amortization of core premiums paid to customers 2,471,000 2,490,000
Amortization of finished goods premiums paid to customers 257,000 167,000
Noncash lease expense 2,608,000 2,504,000
Foreign exchange impact of lease liabilities and forward contracts 11,078,000 (4,270,000)
Change in fair value of compound net derivative liability (2,580,000) 140,000
Gain on short-term investments (28,000) (121,000)
Net provision for inventory reserves 3,184,000 3,366,000
Net provision for customer payment discrepancies and credit losses 34,000 1,159,000
Deferred income taxes (1,862,000) 1,595,000
Share-based compensation expense 1,000,000 1,310,000
Loss on disposal of plant and equipment 0 1,000
Changes in operating assets and liabilities:    
Accounts receivable 17,207,000 (27,518,000)
Inventory (9,061,000) (10,782,000)
Prepaid expenses and other current assets (1,232,000) 2,391,000
Other assets (785,000) 16,000
Accounts payable and accrued liabilities (20,367,000) 927,000
Customer finished goods returns accrual (9,275,000) (4,679,000)
Contract assets 1,482,000 (792,000)
Contract liabilities 2,089,000 9,320,000
Operating lease liabilities (2,162,000) (1,863,000)
Other liabilities (1,163,000) 1,033,000
Net cash used in operating activities (20,841,000) (20,470,000)
Cash flows from investing activities:    
Purchase of plant and equipment (490,000) (40,000)
Purchase of short-term investments (22,000) (27,000)
Net cash used in investing activities (512,000) (67,000)
Cash flows from financing activities:    
Borrowings under revolving loan 42,366,000 26,000,000
Repayments of revolving loan (26,532,000) (4,200,000)
Repayments of term loan 0 (938,000)
Payments for debt issuance costs (15,000) (418,000)
Payments on finance lease obligations (472,000) (492,000)
Cash used to net share settle equity awards (181,000) (279,000)
Net cash provided by financing activities 15,166,000 19,673,000
Effect of exchange rate changes on cash and cash equivalents (256,000) 155,000
Net decrease in cash and cash equivalents (6,443,000) (709,000)
Cash and cash equivalents - Beginning of period 13,974,000 11,596,000
Cash and cash equivalents - End of period 7,531,000 10,887,000
Supplemental disclosures of cash flow information:    
Cash paid for interest, net 12,689,000 10,120,000
Cash paid for income taxes, net of refunds 2,196,000 645,000
Cash paid for operating leases 3,355,000 3,081,000
Cash paid for finance leases 523,000 554,000
Plant and equipment acquired under finance leases 0 31,000
Assets acquired under operating leases 1,815,000 0
Non-cash capital expenditures 19,000 0
Debt issuance costs included in accounts payable and accrued liabilities 0 187,000
Interest paid in-kind $ 3,209,000 $ 0
v3.24.2.u1
Company Background and Organization
 3 Months Ended
Jun. 30, 2024
Company Background and Organization [Abstract]  
Company Background and Organization
1. Company Background and Organization
Motorcar Parts of America, Inc. and its subsidiaries (the “Company”, or “MPA”) is a leading supplier of automotive aftermarket non-discretionary replacement parts, and test solutions and diagnostic equipment. These replacement parts are primarily sold to automotive retail chain stores and warehouse distributors throughout North America and to major automobile manufacturers for both their aftermarket programs and warranty replacement programs (“OES”). The Company’s test solutions and diagnostic equipment primarily serves the global automotive component and powertrain testing market. The Company’s products include (i) light duty and heavy duty rotating electrical products such as alternators and starters, (ii) wheel hub assemblies and bearings, (iii) brake-related products, which include brake calipers, brake boosters, brake rotors, brake pads, brake shoes, and brake master cylinders, and (iv) other products, which include (a) turbochargers and (b) test solutions and diagnostic equipment including: (i) applications for combustion engine vehicles, including bench top testers for alternators and starters, (ii) equipment for the pre- and post-production of electric vehicles, and (iii) software emulation of power system applications for the electrification of all forms of transportation (including automobiles, trucks, the emerging electrification of systems within the aerospace industry, and electric vehicle charging stations).
v3.24.2.u1
Basis of Presentation and New Accounting Pronouncements
 3 Months Ended
Jun. 30, 2024
Basis of Presentation and New Accounting Pronouncements [Abstract]  
Basis of Presentation and New Accounting Pronouncements
2. Basis of Presentation and New Accounting Pronouncements

Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2025. This report should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the fiscal year ended March 31, 2024, which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on June 11, 2024, and the 10-K/A for the fiscal year ended March 31, 2024 as filed with the SEC on June 28, 2024.

The accompanying condensed consolidated financial statements have been prepared on a consistent basis with, and there have been no material changes to, except as noted below, the accounting policies described in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements that are presented in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2024.

Accounting Pronouncements Not Yet Adopted

Disclosure Improvements

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. This standard was issued in response to the SEC’s disclosure update and simplification initiative, which affects a variety of topics within the Accounting Standards Codification. The amendments apply to all reporting entities within the scope of the affected topics unless otherwise indicated. The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The Company is currently evaluating the impact this guidance will have on its financial statement disclosures.

Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This standard requires the Company to disclose significant segment expenses that are regularly provided to the CODM and are included within each reported measure of segment operating results. The standard also requires the Company to disclose the total amount of any other items included in segment operating results, which were not deemed to be significant expenses for separate disclosure, along with a qualitative description of the composition of these other items. In addition, the standard also requires disclosure of the CODM’s title and position, as well as detail on how the CODM uses the reported measure of segment operating results to evaluate segment performance and allocate resources. The standard also aligns interim segment reporting disclosure requirements with annual segment reporting disclosure requirements. This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact this guidance will have on its financial statement disclosures.

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740). This standard requires the Company to provide further disaggregated income tax disclosures for specific categories on the effective tax rate reconciliation, as well as additional information about federal, state/local and foreign income taxes. The standard also requires the Company to annually disclose its income taxes paid (net of refunds received), disaggregated by jurisdiction.  This guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The standard is to be applied prospective basis, although optional retrospective application is permitted. The Company is currently evaluating the impact this guidance will have on its financial statement disclosures.
v3.24.2.u1
Accounts Receivable - Net
 3 Months Ended
Jun. 30, 2024
Accounts Receivable - Net [Abstract]  
Accounts Receivable - Net
3. Accounts Receivable — Net
The Company has trade accounts receivable that result from the sale of goods and services. Accounts receivable — net includes offset accounts related to allowances for credit losses, customer payment discrepancies, and returned goods authorizations (“RGAs”) issued for in-transit unit returns. The Company uses accounts receivable discount programs with certain customers and their respective banks (see Note 10).

Accounts receivable — net is comprised of the following:
 
  
June 30, 2024
    
March 31, 2024
  
Accounts receivable — trade
  
$
104,734,000
    
$
118,500,000
  
Allowance for credit losses
    
(73,000
)
    
(189,000
)
Customer payment discrepancies
    
(1,288,000
)
    
(1,206,000
)
Customer returns RGA issued
    
(24,749,000
)
    
(20,809,000
)
Total accounts receivable — net
  
$
78,624,000
    
$
96,296,000
  
v3.24.2.u1
Inventory - Net
 3 Months Ended
Jun. 30, 2024
Inventory - Net [Abstract]  
Inventory - Net
4. Inventory — Net
Inventory — net is comprised of the following:
 
  
June 30, 2024
    
March 31, 2024
  
Inventory — net
            
Raw materials
  
$
160,187,000
    
$
158,819,000
  
Work-in-process
    
10,467,000
      
7,943,000
  
Finished goods
    
230,269,000
      
227,650,000
  
 
    
400,923,000
      
394,412,000
  
Less allowance for excess and obsolete inventory
    
(17,615,000
)
    
(17,372,000
)
Inventory
    
383,308,000
      
377,040,000
  
Inventory unreturned
    
19,623,000
      
20,288,000
  
Total inventory — net
  
$
402,931,000
    
$
397,328,000
  
v3.24.2.u1
Contract Assets
 3 Months Ended
Jun. 30, 2024
Contract Assets [Abstract]  
Contract Assets
5. Contract Assets
During the three months ended June 30, 2024 and 2023, the Company reduced the carrying value of Remanufactured Cores held at customers’ locations by $394,000 and $778,000, respectively.

Contract assets are comprised of the following:
 
  
June 30, 2024
    
March 31, 2024
  
Short-term contract assets
            
Cores expected to be returned by customers
  
$
15,715,000
    
$
15,409,000
  
Core premiums paid to customers     9,502,000       9,567,000  
Upfront payments to customers
    
1,352,000
      
1,407,000
  
Finished goods premiums paid to customers
    
748,000
      
756,000
  
Total short-term contract assets
  
$
27,317,000
    
$
27,139,000
  

               
Remanufactured cores held at customers’ locations
  
$
277,247,000
    
$
279,427,000
  
Core premiums paid to customers     27,914,000       30,227,000  
Long-term core inventory deposits     5,569,000       5,569,000  
Upfront payments to customers     2,405,000       2,718,000  
Finished goods premiums paid to customers
    
2,328,000
      
2,341,000
  
 Total long-term contract assets
  
$
315,463,000
    
$
320,282,000
  
v3.24.2.u1
Significant Customer and Other Information
 3 Months Ended
Jun. 30, 2024
Significant Customer and Other Information [Abstract]  
Significant Customer and Other Information
6. Significant Customer and Other Information
Significant Customer Concentrations
The largest customers accounted for the following percentage of consolidated net sales:
   
Three Months Ended
  
 
  
June 30,
  
 
  
2024
    
2023
  
Net sales
            
Customer A
    
40
%
    
34
%
Customer C
   
28
%
    
28
%
Customer B
   
17
%
    
20
%
Customer D
    4 %     5 %

Revenues for Customers A through C were derived from the Hard Parts segment and Test Solutions and Diagnostic Equipment segment. Revenues for Customer D were derived from the Hard Parts segment. See Note 18 for a discussion of the Company’s segments.

The largest customers accounted for the following percentage of accounts receivable – trade:
 
  
June 30, 2024
    
March 31, 2024
  
Accounts receivable - trade
            
Customer A
    
38
%
    
35
%
Customer B
   
18
%
    
25
%
Customer C
   
12
%
    
13
%
Customer D     10 %     6 %

Geographic and Product Information
The Company’s products are sold predominantly in North America and accounted for the following percentages of consolidated net sales:
   
Three Months Ended
  
 
  
June 30,
  
 
  
2024
    
2023
  
Product line
            
Rotating electrical products
    
65
%
    
64
%
Brake-related products
    
24
%
    
22
%
Wheel hub products
    
7
%
    
11
%
Other products
    
4
%
    
3
%
 
   
100
%
    
100
%

Significant Supplier Concentrations
The Company had no suppliers that accounted for more than 10% of inventory purchases for the three months ended June 30, 2024 and 2023.
v3.24.2.u1
Debt
 3 Months Ended
Jun. 30, 2024
Debt [Abstract]  
Debt
7. Debt


The Company is party to a $268,620,000 senior secured financing, (as amended from time to time, the “Credit Facility”) consisting of a $238,620,000 revolving loan facility (the “Revolving Facility”), subject to certain restrictions, and a $30,000,000 term loan facility (the “Term Loans”). The Term Loans were repaid during the year ended March 31, 2024. The Credit Facility matures on December 12, 2028. The lenders have a security interest in substantially all of the assets of the Company. During the three months ended June 30, 2024, the Company enrolled in a feature with its lenders, under which the Company sweeps its cash collections to pay down its revolving facility and borrows on-demand to fund payments. This feature is expected to reduce interest expense on borrowings under the Credit Facility.


The Company had $143,834,000 and $128,000,000 outstanding under the Revolving Facility at June 30, 2024 and March 31, 2024, respectively. In addition, $6,370,000 was outstanding for letters of credit at June 30, 2024. At June 30, 2024, after certain contractual adjustments, $82,174,000 was available under the Revolving Facility. The interest rate on the Company’s Revolving Facility was 8.58% and 8.43%, at June 30, 2024 and March 31, 2024, respectively.
The Credit Facility requires the Company to maintain a minimum fixed charge coverage ratio if undrawn availability is less than 22.5% of the aggregate revolving commitments and a specified minimum undrawn availability. During the period ended June 30, 2024, undrawn availability was greater than the 22.5% threshold, therefore, the fixed charge coverage ratio financial covenant was not required to be tested.


Convertible Notes


On March 31, 2023, the Company entered into a note purchase agreement, as amended, (the “Note Purchase Agreement”) with Bison Capital Partners VI, L.P. and Bison Capital Partners VI-A, L.P. (collectively, the “Purchasers”) and Bison Capital Partners VI, L.P., as the purchaser representative (the “Purchaser Representative”) for the issuance and sale of $32,000,000 in aggregate principal amount of convertible notes due in 2029 (the “Convertible Notes”), which was used for general corporate purposes. The Convertible Notes bear interest at a rate of 10.0% per annum, compounded annually, and payable (i) in-kind or (ii) in cash, annually in arrears on April 1 of each year, commencing on April 1, 2024. During the three months ended June 30, 2024, non-cash accrued interest on the Convertible Notes of $3,209,000 was paid in-kind and is included in the principal amount of Convertible Notes at June 30, 2024. The Convertible Notes have an initial conversion price of $15.00 per share of common stock (“Conversion Option”). Unless and until the Company delivers a redemption notice, the Purchasers of the Convertible Notes may convert their Convertible Notes at any time at their option. Upon conversion, the Convertible Notes will be settled in shares of the Company’s common stock. Except in the case of the occurrence of a fundamental transaction, as defined in the form of convertible promissory note, the Company may not redeem the Convertible Notes prior to March 31, 2026. After March 31, 2026, the Company may redeem all or part of the Convertible Notes for a cash purchase (the “Company Redemption”) price. The effective interest rate was 18.3% as of June 30, 2024 and March 31, 2024, respectively.



The Company’s Convertible Notes are comprised of the following:



   
June 30, 2024
    
March 31, 2024
 
             
Principal amount of Convertible Notes
  
$
35,209,000
    
$
32,000,000
  
Less: unamortized debt discount attributed to Compound Net Derivative Liability
    
(7,338,000
)
    
(7,576,000
)
Less: unamortized debt discount attributed to debt issuance costs
    
(1,025,000
)
    
(1,058,000
)
Carrying amount of the Convertible Notes
    
26,846,000
      
23,366,000
  
Plus: Compound Net Derivative Liability
    
4,830,000
      
7,410,000
  
Net carrying amount of Convertible Notes, related party
  
$
31,676,000
    
$
30,776,000
  



In connection with the Note Purchase Agreement, the Company entered into common stock warrants (the “Warrants”) with the Purchasers, which mature on March 30, 2029. The fair value of the Warrants, using Level 3 inputs and the Monte Carlo simulation model, was zero at June 30, 2024 and March 31, 2024.



The Company Redemption option has been combined with the Conversion Option as a compound net derivative liability (the “Compound Net Derivative Liability”). The Compound Net Derivative Liability has been recorded within convertible note, related party in the condensed consolidated balance sheets at June 30, 2024 and March 31, 2024. The fair value of the Conversion Option and the Company Redemption option using Level 3 inputs and the Monte Carlo simulation model was a liability of $5,800,000 and $9,800,000, and an asset of $970,000 and $2,390,000 at June 30, 2024 and March 31, 2024, respectively. During the three months ended June 30, 2024 and 2023, the Company recorded a gain of $2,580,000 and a loss of $140,000, respectively, as the change in fair value of the Compound Net Derivative Liability in the condensed consolidated statement of operations and condensed consolidated statement of cash flows.



The Convertible Notes also contain additional features, such as, default interest and options related to a fundamental transaction, which were not separately accounted for as the value of such features were not material at June 30, 2024 and March 31, 2024.



Interest expense related to the Convertible Notes is as follows:


 
Three Months Ended
  
 
June 30,
  
 
2024
     2023
 
Contractual interest expense
  
$
880,000
     $  800,000
  
Accretion of debt discount
    
238,000
        201,000
  
Amortization of debt issuance costs
    
33,000
        27,000
  
Total interest expense
  
$
1,151,000
     $
 1,028,000
  



There are no future payments required under the Convertible Notes prior to their maturity, therefore, the principal amount of the Convertible Notes plus interest payable in-kind, assuming no early redemption or conversion has occurred, of $56,704,000 would be paid on March 30, 2029.
v3.24.2.u1
Contract Liabilities
 3 Months Ended
Jun. 30, 2024
Contract Liabilities [Abstract]  
Contract Liabilities
8. Contract Liabilities
Contract liabilities are comprised of the following:
 
  
June 30, 2024
    
March 31, 2024
  
Short-term contract liabilities
  
   

Customer allowances earned
  
$
23,267,000
    
$
19,789,000
  
Customer core returns accruals
    
11,040,000
      
10,448,000
  
Accrued core payment
    
3,383,000
      
3,476,000
  
Core bank liability
    
1,753,000
      
1,739,000
  
Customer deposits
    
1,703,000
      
1,735,000
  
Finished goods liabilities
   
358,000
      
404,000
  
Total short-term contract liabilities
  
$
41,504,000
    
$
37,591,000
  
Long-term contract liabilities
                
Customer core returns accruals
  
$
192,813,000
    
$
193,545,000
  
Core bank liability
    
11,399,000
      
11,843,000
  
Accrued core payment
    
6,070,000
      
6,535,000
  
Finished goods liabilities
    
96,000
      
145,000
  
Total long-term contract liabilities
  
$
210,378,000
    
$
212,068,000
  
v3.24.2.u1
Leases
 3 Months Ended
Jun. 30, 2024
Leases [Abstract]  
Leases
9. Leases
The Company leases various facilities in North America and Asia under operating leases expiring through August 2033. The Company has material nonfunctional currency leases that could have a material impact on the Company’s condensed consolidated statements of operations. As required for other monetary liabilities, lessees remeasure foreign currency-denominated lease liabilities using the exchange rate at each reporting date, but the lease assets are nonmonetary assets measured at historical rates and are not affected by subsequent changes in the exchange rates. In connection with the remeasurement of these leases, the Company recorded a loss of $5,709,000 and a gain of $3,770,000 during the three months ended June 30, 2024 and 2023, respectively. These amounts are included in foreign exchange impact of lease liabilities and forward contracts in the condensed consolidated statements of operations.

Balance sheet information for leases is as follows:
Leases
  
Classification
  
June 30, 2024
    
March 31, 2024
  
Assets:
  
 
            
Operating
  
Operating lease assets
  
$
77,057,000
    
$
83,973,000
  
Finance
  
Plant and equipment
    
4,239,000
      
4,611,000
  
Total leased assets
  
 
  
$
81,296,000
    
$
88,584,000
  
 
  
 
                
Liabilities:
  
 
                
Current
  
 
                
Operating
  
Operating lease liabilities
  
$
9,083,000
    
$
8,319,000
  
Finance
  
Other current liabilities
    
1,427,000
      
1,585,000
  
Long-term
  
 
                
Operating
  
Long-term operating lease liabilities
    
71,044,000
      
72,240,000
  
Finance
  
Other liabilities
    
1,577,000
      
1,893,000
  
Total lease liabilities
  
 
  
$
83,131,000
    
$
84,037,000
  

Lease cost recognized in the condensed consolidated statements of operations is as follows:
   
Three Months Ended
  
 
  
June 30,
  
 
  
2024
    
2023
  
Lease cost
            
Operating lease cost
  
$
3,759,000
    
$
3,742,000
  
Short-term lease cost
    
312,000
      
293,000
  
Variable lease cost
    
164,000
      
186,000
  
Finance lease cost:
                
Amortization of finance lease assets
    
358,000
      
403,000
  
Interest on finance lease liabilities
    
51,000
      
62,000
  
Total lease cost
  
$
4,644,000
    
$
4,686,000
  

Maturities of lease commitments at June 30, 2024 by fiscal year were as follows:
Maturity of lease liabilities
  
Operating Leases
    
Finance Leases
    
Total
  
2025 - remaining nine months
  
$
10,093,000
    
$
1,231,000
    
$
11,324,000
  
2026
    
13,272,000
      
1,014,000
      
14,286,000
  
2027
    
11,421,000
      
523,000
      
11,944,000
  
2028
    
10,929,000
      
363,000
      
11,292,000
  
2029
    
11,126,000
      
169,000
      
11,295,000
  
Thereafter
    
43,462,000
      
-
      
43,462,000
  
Total lease payments
    
100,303,000
      
3,300,000
      
103,603,000
  
Less amount representing interest
    
(20,176,000
)
    
(296,000
)
    
(20,472,000
)
Present value of lease liabilities
  
$
80,127,000
    
$
3,004,000
    
$
83,131,000
  

Other information about leases is as follows:
 
  
June 30, 2024
    
March 31, 2024
  
Lease term and discount rate
            
Weighted-average remaining lease term (years):
            
Finance leases
    
2.7
      
2.8
  
Operating leases
    
8.0
      
8.3
  
Weighted-average discount rate:
                
Finance leases
    
6.5
%
    
6.4
%
Operating leases
    
5.8
%
    
5.8
%
v3.24.2.u1
Accounts Receivable Discount Programs
 3 Months Ended
Jun. 30, 2024
Accounts Receivable Discount Programs [Abstract]  
Accounts Receivable Discount Programs
10. Accounts Receivable Discount Programs
The Company uses accounts receivable discount programs offered by certain customers and their respective banks. Under these programs, the Company may sell those customers’ receivables to those banks at a discount to be agreed upon at the time the receivables are sold. These discount arrangements allow the Company to accelerate receipt of payment on customers’ receivables.

The following is a summary of accounts receivable discount programs:
   
Three Months Ended
  
 
  
June 30,
  
 
  
2024
    
2023
  
Receivables discounted
  
$
144,541,000
    
$
104,332,000
  
Weighted average number of days collection was accelerated
    
342
      
337
  
Annualized weighted average discount rate
    
6.9
%
    
6.4
%
Amount of discount recognized as interest expense
  
$
9,507,000
    
$
6,252,000
  
v3.24.2.u1
Supplier Finance Programs
 3 Months Ended
Jun. 30, 2024
Supplier Finance Programs [Abstract]  
Supplier Finance Programs
11. Supplier Finance Programs
The Company utilizes a supplier finance program, which allows certain of the Company’s suppliers to sell their receivables due from the Company to participating financial institutions at the sole discretion of both the supplier and the financial institutions. The program is administered by a third party. As of June 30, 2024, $15,000,000 of commitments from participating financial institutions are available to suppliers under this program. The Company has no economic interest in the sale of these receivables and no direct relationship with the financial institution. Payments to the third-party administrator are based on services rendered and are not related to the volume or number of financing agreements between suppliers, financial institution, and the third-party administrator. The Company is not a party to agreements negotiated between participating suppliers and the financial institution. The Company’s obligations to its suppliers, including amounts due and payment terms, are not affected by a supplier’s decision to participate in this program. The Company does not provide guarantees and there are no assets pledged to the financial institution or the third-party administrator for the committed payment in connection with this program. At June 30, 2024, the Company had $12,773,000 of outstanding supplier obligations confirmed under this program, included in accounts payable in the condensed consolidated balance sheet.
v3.24.2.u1
Net Loss per Share
 3 Months Ended
Jun. 30, 2024
Net Loss per Share [Abstract]  
Net Loss per Share
12. Net Loss per Share
Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share includes the effect, if any, from the potential exercise or conversion of securities, such as stock options, Warrants, and Convertible Notes (as defined in Note 7), which would result in the issuance of incremental shares of common stock to the extent such impact is not anti-dilutive.
The following presents a reconciliation of basic and diluted net loss per share:
   
Three Months Ended
  
 
  
June 30,
  
 
  
2024
    
2023
  
Net loss
  
$
(18,085,000
)
  
$
(1,410,000
)
Basic shares
    
19,674,539
      
19,508,626
  
Effect of potentially dilutive securities
    
-
      
-
  
Diluted shares
    
19,674,539
      
19,508,626
  
Net loss per share:
                
Basic net loss per share
  
$
(0.92
)
  
$
(0.07
)
Diluted net loss per share
  
$
(0.92
)
  
$
(0.07
)


Potential common shares that would have the effect of increasing diluted net income per share or decreasing diluted net loss per share are considered to be anti-dilutive and as such, these shares are not included in calculating diluted net loss per share. For the three months ended June 30, 2024 and 2023, there were 2,285,834 and 2,067,168, respectively, of potential common shares not included in the calculation of diluted net loss per share because their effect was anti-dilutive. In addition, for the three months ended June 30, 2024 and 2023, there were 2,405,941 and 2,186,667, respectively, of potential common shares not included in the calculation of diluted net loss per share under the “if-converted” method for the Convertible Notes because their effect was anti-dilutive. The potential common shares related to the Warrants issued in connection with the Convertible Notes (see Note 7) are anti-dilutive until they become exercisable and as of June 30, 2024, the Warrants were not exercisable.
v3.24.2.u1
Income Taxes
 3 Months Ended
Jun. 30, 2024
Income Taxes [Abstract]  
Income Taxes
13. Income Taxes

The Company recorded an income tax benefit of $178,000, or an effective tax rate of 1.0%, and $9,000, or an effective tax rate of 0.6%, for the three months ended June 30, 2024 and 2023, respectively. The effective tax rate for the three months ended June 30, 2024, was primarily impacted by (i) the change in valuation allowance, (ii) foreign income taxed at rates that are different from the federal statutory rate, and (iii) specific jurisdictions that the Company does not expect to recognize the benefit of losses.

Management assesses the need for the valuation allowance on a quarterly basis by jurisdiction. In assessing the need for a valuation allowance, the Company considers all positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, past financial performance, and tax planning strategies. Based on this analysis, the Company determined that it is more likely than not that certain deferred tax assets will not be realized. As a result, the Company maintained its valuation allowance. The Company will continue to monitor the need for a valuation allowance in future periods, considering any changes in circumstances that may affect the realizability of deferred tax assets.
 
The Company and its subsidiaries file income tax returns for the U.S. federal, various state, and foreign jurisdictions with varying statutes of limitations. At June 30, 2024, the Company is under examination by the State of California for fiscal years ended March 31, 2020, 2021, and 2022 and remains subject to examination from the fiscal years ended March 31, 2020 and forward. The Company believes no significant changes in the unrecognized tax benefits will occur within the next 12 months.
v3.24.2.u1
Financial Risk Management and Derivatives
 3 Months Ended
Jun. 30, 2024
Financial Risk Management and Derivatives [Abstract]  
Financial Risk Management and Derivatives
14. Financial Risk Management and Derivatives
Purchases and expenses denominated in currencies other than the U.S. dollar, which are primarily related to the Company’s overseas facilities, expose the Company to market risk from material movements in foreign exchange rates between the U.S. dollar and the foreign currencies. The Company’s primary risk exposure is from fluctuations in the value of the Mexican peso and to a lesser extent the Chinese yuan. To mitigate these risks, the Company enters into forward foreign currency exchange contracts to exchange U.S. dollars for these foreign currencies. The extent to which forward foreign currency exchange contracts are used, is modified periodically in response to the Company’s estimate of market conditions and the terms and length of anticipated requirements.
The Company enters into forward foreign currency exchange contracts in order to reduce the impact of foreign currency fluctuations and not to engage in currency speculation. The use of derivative financial instruments allows the Company to reduce its exposure to the risk that the eventual cash outflow resulting from funding the expenses of the foreign operations will be materially affected by changes in exchange rates between the U.S. dollar and the foreign currencies. The Company does not hold or issue financial instruments for trading purposes. The Company designates forward foreign currency exchange contracts for forecasted expenditure requirements to fund foreign operations.
The Company had forward foreign currency exchange contracts with a U.S. dollar equivalent notional value of $54,640,000 and $54,092,000 at June 30, 2024 and March 31, 2024, respectively. These contracts generally have a term of one year or less, at rates agreed at the inception of the contracts. The counterparty to these derivative transactions is a major financial institution with investment grade credit rating; however, the Company is exposed to credit risk with this institution. The credit risk is limited to the potential unrealized gains (which offset currency fluctuations adverse to the Company) in any such contract should this counterparty fail to perform as contracted. Any changes in the fair values of forward foreign currency exchange contracts are included in foreign exchange impact of lease liabilities and forward contracts in the condensed consolidated statements of operations.
The following shows the effect of derivative instruments on the condensed consolidated statements of operations:

 
Foreign Exchange Impact of Lease Liabilities and Forward Contracts
  
   
Three Months Ended
  
  Derivatives Not Designated as
  
June 30,
  
Hedging Instruments
  
2024
    
2023
  
(Loss) gain from forward foreign currency exchange contracts
  
$
(5,369,000
)
  
$
500,000

The fair value of the forward foreign currency exchange contracts of $2,853,000 is included in other current liabilities in the condensed consolidated balance sheets at June 30, 2024. The fair value of the forward foreign currency exchange contracts of $2,516,000 is included in prepaid expenses and other current assets in the condensed consolidated balance sheets at March 31, 2024. The changes in the fair values of forward foreign currency exchange contracts are included in foreign exchange impact of lease liabilities and forward contracts in the condensed consolidated statements of cash flows for the three months ended June 30, 2024 and 2023.
v3.24.2.u1
Fair Value Measurements
 3 Months Ended
Jun. 30, 2024
Fair Value Measurements [Abstract]  
Fair Value Measurements
15. Fair Value Measurements

The following summarizes financial assets and liabilities measured at fair value, by level within the fair value hierarchy:

   
June 30, 2024
    
March 31, 2024
  
         
Fair Value Measurements
          
Fair Value Measurements
  
         
Using Inputs Considered as
          
Using Inputs Considered as
  
   
Fair Value
    
Level 1
    
Level 2
    
Level 3
    
Fair Value
    
Level 1
    
Level 2
    
Level 3
  
Assets
                                                
Short-term investments                                                
 Mutual funds
  
$
1,887,000
    
$
1,887,000
    
$
-
    
$
-
    
$
1,837,000
    
$
1,837,000
    
$
-
    
$
-
  
Prepaid expenses and other current assets                                                                
Forward foreign currency exchange contracts
    
-
      
-
      
-
      
-
      
2,516,000
      
-
      
2,516,000
      
-
  
                                                                 
Liabilities
                                                                
Other current liabilities
                                                                
Deferred compensation
    
1,887,000
      
1,887,000
      
-
      
-
      
1,837,000
      
1,837,000
      
-
      
-
  
Forward foreign currency exchange contracts
     2,853,000       -       2,853,000       -       -       -       -       -  
Convertible notes, related party
                                                                
Compound Net Derivative Liability
     4,830,000       -       -       4,830,000       7,410,000       -       -       7,410,000  

Short-term Investments and Deferred Compensation

The Company’s short-term investments, which fund its deferred compensation liabilities, consist of investments in mutual funds. These investments are classified as Level 1 as the shares of these mutual funds trade with sufficient frequency and volume to enable the Company to obtain pricing information on an ongoing basis.

Forward Foreign Currency Exchange Contracts

The forward foreign currency exchange contracts are primarily measured based on the foreign currency spot and forward rates quoted by the banks or foreign currency dealers (See Note 14).

Compound Net Derivative Liability
The Company estimates the fair value of the Compound Net Derivative Liability (see Note 7) using Level 3 inputs and the Monte Carlo simulation model at the balance sheet date. The Monte Carlo simulation model requires the input of subjective assumptions including the expected volatility of the underlying stock. These subjective assumptions are based on both historical and other information. Changes in the values assumed and used in the model can materially affect the estimate of fair value. This amount is recorded within convertible notes, related party in the condensed consolidated balance sheets at June 30, 2024 and March 31, 2024. Any changes in the fair value of the Compound Net Derivative Liability are recorded in change in fair value of compound net derivative liability in the condensed consolidated statements of operations and condensed consolidated statement of cash flows.
The following assumptions were used to determine the fair value of the Compound Net Derivative Liability:
   
June 30, 2024
    
March 31, 2024
  
Risk free interest rate
    
4.41
%
    
4.36
%
Cost of equity
    
22.90
%
    
23.20
%
Weighted average cost of capital     13.90 %     14.90 %
Expected volatility of MPA common stock     50.00 %     50.00 %
EBITDA volatility     40.00 %     40.00 %

The following summarizes the activity for Level 3 fair value measurements:
   
Three Months Ended
  
   
June 30,
  
 
   2024     2023
  
Beginning balance
  
$
7,410,000
     $ 8,430,000  
Changes in fair value of Compound Net Derivative Liability included in earnings
    
(2,580,000
)
    
140,000
  
Ending balance
  
$
4,830,000
     $ 8,570,000  

During the three months ended June 30, 2024, the Company had no significant measurements of assets or liabilities at fair value on a nonrecurring basis subsequent to their initial recognition.
The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair value due to the short-term nature of these instruments. The carrying amounts of the revolving loan and other long-term liabilities approximate their fair value based on the variable nature of interest rates and current rates for instruments with similar characteristics. At June 30, 2024 and March 31, 2024, the net carrying amount of the Convertible Notes was $31,676,000 and $30,776,000, respectively (see Note 7). The estimated fair value of the Company’s Convertible Notes was $34,267,000  and $38,276,000 using Level 3 inputs at June 30, 2024 and March 31, 2024, respectively.
v3.24.2.u1
Share-based Payments
 3 Months Ended
Jun. 30, 2024
Share-based Payments [Abstract]  
Share-based Payments
16. Share-based Payments

Stock Options

During the three months ended June 30, 2024 and 2023, no options to purchase shares of the Company’s common stock were granted.

The following is a summary of stock option transactions:

   
Number of
    
Weighted Average
  
 
  
Shares
    
Exercise Price
  
Outstanding at March 31, 2024
    
1,108,017
    
$
20.29
  
Granted
    
-
    
$
-
  
Exercised
    
-
 
$
-
  
Forfeited/Cancelled
    
(1,383
)
  
$
17.29
  
Expired     (36,733 )   $ 22.93  
Outstanding at June 30, 2024
    
1,069,901
    
$
20.21
  

At June 30, 2024, options to purchase 132,133 shares of common stock were unvested at a weighted average exercise price of $9.32.

At June 30, 2024, there was $368,000 of total unrecognized compensation expense related to unvested stock option awards, which will be recognized over the weighted average remaining vesting period of approximately 2.2 years.

Restricted Stock Units (“RSUs”)

During the three months ended June 30, 2024, the Company granted 207,050 of time-based vesting RSUs, based on the closing market price on the grant date. During the three months ended June 30, 2023, no RSUs were granted by the Company.

The following is a summary of non-vested RSUs:

 
  
Number of
Shares
    
Weighted Average
Grant Date Fair
Value
  
Outstanding at March 31, 2024
    
240,923
    
$
12.23
  
Granted
    
207,050
    
$
6.69
  
Vested
    
(86,559
)
  
$
16.63
  
Forfeited/Cancelled
    
(762
)
  
$
11.04
  
Outstanding at June 30, 2024
    
360,652
    
$
8.00
  

At June 30, 2024, there was $2,270,000 of unrecognized compensation expense related to RSUs, which will be recognized over the weighted average remaining vesting period of approximately 2.1 years.

Performance Stock Units (“PSUs”)

During the three months ended June 30, 2024, the Company granted 155,391 PSUs (at target performance levels), which cliff vest after a three-year performance period, subject to continued employment. The number of shares earned at the end of the three-year performance period will vary, based only on actual performance, from 0% to 150% of the target number of PSUs granted depending on the Company’s total shareholder return (“TSR”) percentile rank relative to that of a peer group over the performance period. TSR is measured based on a comparison of the closing price on the first trading day of the performance period and the average closing price over the last 30 trading days of the performance period. TSR is considered a market condition because it measures the Company’s return against the performance of the Russell 3000, excluding companies classified as financials and real estate and companies with a market capitalization of more than $600 million, over a given period of time.

During the three months ended June 30, 2023, the Company granted 533,856 PSUs, which vest within a three-year period, subject to continued employment, as follows: (i) if the stock price is greater than or equal to $10.00 per share, then 1/3 of the grant will vest, (ii) if the stock price is greater than or equal to $15.00 per share then the next 1/3 of the grant will vest, and (iii) if the stock price is greater than or equal to $20.00 per share then the final 1/3 of the grant will vest. Recipients are eligible to vest in between 50% and 150% of the third tranche by achieving a stock price between $17.50 and $25.00 per share (each stock price target must be met for 30 consecutive trading days).

The Company calculated the fair value of these PSUs individually for each tranche using the Monte Carlo Simulation Model at the grant date. Compensation cost is recognized over the estimated derived service period. Compensation cost related to these awards will not be adjusted even if the market condition is not met. The following table summarizes the assumptions used in determining the fair value of these awards subject to market conditions:

    Three Months Ended  
   
June 30,
  
   
2024
    
2023
  
Risk free interest rate
    
4.45
%
     4.32 %
Expected life in years
     3.0
       0.8-1.8  
Expected volatility of MPA common stock
    
59.80
%
    
54.20
%
Average correlation coefficient of peer companies
    
16.50
%
     -
 %
Expected dividend yield
    
-
       -  
Grant date fair value
  
$
8.65
    
$
3.57-5.06
  

The following is a summary of non-vested PSUs:

 
  
Number of
Shares
    
Weighted Average
Grant Date Fair
Value
  
Outstanding at March 31, 2024
    
773,923
    
$
7.73
  
Granted
    
155,391
    
$
8.65
  
Added by performance factor
    10,952
     $
22.27
  
Vested
    
(32,848
)
  
$
22.27
  
Forfeited/Cancelled
    
(52,137
)
  
$
23.27
  
Outstanding at June 30, 2024
    
855,281
    
$
6.58
  

At June 30, 2024, there was $2,280,000 of unrecognized compensation expense related to these awards, which will be recognized over the weighted average remaining vesting period of approximately 2.1 years.
v3.24.2.u1
Commitments and Contingencies
 3 Months Ended
Jun. 30, 2024
Commitments and Contingencies [Abstract]  
Commitments and Contingencies
17. Commitments and Contingencies

Warranty Returns

The Company allows its customers to return goods that their consumers have returned to them, whether or not the returned item is defective (“warranty returns”). The Company accrues an estimate of its exposure to warranty returns based on a historical analysis of the level of this type of return as a percentage of  unit sales. Amounts charged to expense for these warranty returns are considered in arriving at the Company’s net sales.

The following summarizes the changes in the warranty returns:

   
Three Months Ended
  
 
  
June 30,
  
 
  
2024
    
2023
  
Balance at beginning of period
  
$
19,326,000
    
$
19,830,000
  
Charged to expense
    
33,352,000
      
31,112,000
  
Amounts processed
    
(37,632,000
)
    
(34,265,000
)
Balance at end of period
  
$
15,046,000
    
$
16,677,000
  

At June 30, 2024 and March 31, 2024, the Company’s total warranty return accrual was $15,046,000 and $19,326,000, respectively, of which $5,251,000 and $5,667,000, respectively, was included in the customer returns RGA issued within accounts receivable—net and $9,795,000 and $13,659,000, respectively, was included in the customer finished goods returns accrual in the condensed consolidated balance sheets.

Contingencies

The Company is subject to various lawsuits and claims. In addition, government agencies and self-regulatory organizations have the ability to conduct periodic examinations of and administrative proceedings regarding the Company’s business, and its compliance with law, code, and regulations related to matters including but not limited to environmental, information security, taxes, levies, tariffs and such. The Company has an immaterial amount accrued related to these exposures to various lawsuits and claims.
v3.24.2.u1
Segment Information
 3 Months Ended
Jun. 30, 2024
Segment Information [Abstract]  
Segment Information

18. Segment Information

The Company’s three operating segments are as follows:

•
Hard Parts, which includes (i) light duty rotating electric products such as alternators and starters, (ii) wheel hub products, (iii) brake-related products, including brake calipers, brake boosters, brake rotors, brake pads and brake master cylinders, and (iv) turbochargers,

•
Test Solutions and Diagnostic Equipment, which includes (i) applications for combustion engine vehicles, including bench top testers for alternators and starters, (ii) equipment for the pre- and post-production of electric vehicles, and (iii) software emulation of power system applications for the electrification of all forms of transportation (including automobiles, trucks, the emerging electrification of systems within the aerospace industry, and electric vehicle charging stations), and

•
Heavy Duty, which includes non-discretionary automotive aftermarket replacement hard parts for heavy-duty truck, industrial, marine, and agricultural applications.



The Company’s Hard Parts operating segment meets the criteria of a reportable segment. The Test Solutions and Diagnostic Equipment and Heavy Duty segments are not material, are not required to be separately reported, and are included within the “all other” category.


Financial information relating to the Company’s segments is as follows:
   
Three Months Ended June 30, 2024
  
   
Hard Parts
    
All Other
    
Total
  
Net sales to external customers
  
$
158,187,000
    
$
11,700,000
    
$
169,887,000
  
Intersegment sales
    
32,000
      
12,000
      
44,000
  
Operating loss
    
(6,459,000
)(1)
    
(6,000
)
    
(6,465,000
)
Depreciation and amortization
    
2,525,000
      
204,000
      
2,729,000
  
Segment assets
    
989,363,000
      
55,297,000
      
1,044,660,000
  
Capital expenditures
    
253,000
      
237,000
      
490,000
  


   
Three Months Ended June 30, 2023
  
   
Hard Parts
    
All Other
    
Total
  
Net sales to external customers
  
$
149,747,000
    
$
9,958,000
    
$
159,705,000
  
Intersegment sales
    
132,000
      
95,000
      
227,000
  
Operating income (loss)
    
11,506,000
 (1)
   
(1,079,000
)
    
10,427,000
  
Depreciation and amortization
    
2,679,000
      
354,000
      
3,033,000
  
Segment assets
    
1,063,301,000
      
52,368,000
      
1,115,669,000
  
Capital expenditures
    
40,000
      
-
      
40,000
  

   
Three Months Ended
  
 
  
June 30,
  
Net sales
  
2024
    
2023
  
Total net sales for reportable segment
  
$
158,219,000
    
$
149,879,000
  
Other net sales
     11,712,000       10,053,000  
Elimination of intersegment net sales
    
(44,000
)
    
(227,000
)
Total consolidated net sales
  
$
169,887,000
    
$
159,705,000
  

   
Three Months Ended
  
 
  
June 30,
  
Profit or loss
  
2024
    
2023
  
Total operating (loss) income for reportable segment
  
$
(6,459,000
)
  
$
11,506,000
  
Other operating loss
     (6,000 )     (1,079,000 )
Elimination of intersegment operating income
    
9,000
      
14,000
  
Interest expense, net
     (14,387,000 )     (11,720,000 )
Change in fair value of compound net derivative liability
    
2,580,000
      
(140,000
)
Total consolidated loss before income tax benefit
  
$
(18,263,000
)
  
$
(1,419,000
)

Assets
  
June 30, 2024
    
March 31, 2024
  
Total assets for reportable segment
  
$
989,363,000
    
$
1,019,811,000
  
Other assets
    
55,297,000
      
54,946,000
  
Elimination of intersegment assets
    
(66,705,000
)
    
(62,755,000
)
Total consolidated assets
  
$
977,955,000
    
$
1,012,002,000
 


(1)
The operating (loss) income for the Company's Hard Parts segment for the three months ended June 30, 2024 and 2023 includes the foreign exchange impact of lease liabilities and forward contracts, which were a loss of $11,078,000 and a gain of $4,270,000, respectively.
v3.24.2.u1
Share Repurchases
 3 Months Ended
Jun. 30, 2024
Share Repurchases [Abstract]  
Share Repurchases

19. Share Repurchases

In August 2018, the Company’s board of directors approved an increase in its share repurchase program from $20,000,000 to $37,000,000 of its common stock. During the three months ended June 30, 2024, the Company did not repurchase any shares of its common stock. As of June 30, 2024, $18,745,000 has been utilized and $18,255,000 remains available to repurchase shares under the authorized share repurchase program, subject to the limit in the Company’s Credit Facility. The Company retired the 837,007 shares repurchased under this program through June 30, 2024. The Company’s share repurchase program does not obligate it to acquire any specific number of shares and shares may be repurchased in privately negotiated and/or open market transactions.
v3.24.2.u1
Related Party Transactions
 3 Months Ended
Jun. 30, 2024
Related Party Transactions [Abstract]  
Related Party Transactions
20. Related Party Transactions
Lease

In December 2022, the Company entered into an operating lease for its 35,000 square foot manufacturing, warehouse, and office facility in Ontario, Canada, with a company co-owned by a member of management. The lease, which commenced January 1, 2023, has an initial term of one year with a base rent of approximately $27,000 per month and includes options to renew for up to four years. In November 2023, the Company exercised one of these options to renew for an additional one-year period. The rent expense recorded for the related party lease was $81,000 for the three months ended June 30, 2024 and 2023.

Convertible Note and Election of Director

In connection with the issuance and sale of the Company’s Convertible Notes on March 31, 2023 (see Note 7), the Board appointed Douglas Trussler, a co-founder of Bison Capital, to the Board. Mr. Trussler’s compensation will be consistent with the Company’s previously disclosed standard compensation practices for non-employee directors, which are described in the Company’s Definitive Proxy Statement, filed with the SEC on July 26, 2024.
v3.24.2.u1
Insider Trading Arrangements
 3 Months Ended
Jun. 30, 2024
Insider Trading Arrangements [Line Items]  
Rule 10b5-1 Arrangement Adopted [Flag] false
Non-Rule 10b5-1 Arrangement Adopted [Flag] false
Rule 10b5-1 Arrangement Terminated [Flag] false
Non-Rule 10b5-1 Arrangement Terminated [Flag] false
v3.24.2.u1
Basis of Presentation and New Accounting Pronouncements (Policies)
 3 Months Ended
Jun. 30, 2024
Basis of Presentation and New Accounting Pronouncements [Abstract]  
Basis of Presentation
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2025. This report should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the fiscal year ended March 31, 2024, which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on June 11, 2024, and the 10-K/A for the fiscal year ended March 31, 2024 as filed with the SEC on June 28, 2024.

The accompanying condensed consolidated financial statements have been prepared on a consistent basis with, and there have been no material changes to, except as noted below, the accounting policies described in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements that are presented in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2024.
Accounting Pronouncements Not Yet Adopted
Accounting Pronouncements Not Yet Adopted

Disclosure Improvements

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. This standard was issued in response to the SEC’s disclosure update and simplification initiative, which affects a variety of topics within the Accounting Standards Codification. The amendments apply to all reporting entities within the scope of the affected topics unless otherwise indicated. The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The Company is currently evaluating the impact this guidance will have on its financial statement disclosures.

Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This standard requires the Company to disclose significant segment expenses that are regularly provided to the CODM and are included within each reported measure of segment operating results. The standard also requires the Company to disclose the total amount of any other items included in segment operating results, which were not deemed to be significant expenses for separate disclosure, along with a qualitative description of the composition of these other items. In addition, the standard also requires disclosure of the CODM’s title and position, as well as detail on how the CODM uses the reported measure of segment operating results to evaluate segment performance and allocate resources. The standard also aligns interim segment reporting disclosure requirements with annual segment reporting disclosure requirements. This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact this guidance will have on its financial statement disclosures.

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740). This standard requires the Company to provide further disaggregated income tax disclosures for specific categories on the effective tax rate reconciliation, as well as additional information about federal, state/local and foreign income taxes. The standard also requires the Company to annually disclose its income taxes paid (net of refunds received), disaggregated by jurisdiction.  This guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The standard is to be applied prospective basis, although optional retrospective application is permitted. The Company is currently evaluating the impact this guidance will have on its financial statement disclosures.
v3.24.2.u1
Accounts Receivable - Net (Tables)
 3 Months Ended
Jun. 30, 2024
Accounts Receivable - Net [Abstract]  
Accounts Receivable
Accounts receivable — net is comprised of the following:
 
  
June 30, 2024
    
March 31, 2024
  
Accounts receivable — trade
  
$
104,734,000
    
$
118,500,000
  
Allowance for credit losses
    
(73,000
)
    
(189,000
)
Customer payment discrepancies
    
(1,288,000
)
    
(1,206,000
)
Customer returns RGA issued
    
(24,749,000
)
    
(20,809,000
)
Total accounts receivable — net
  
$
78,624,000
    
$
96,296,000
  
v3.24.2.u1
Inventory - Net (Tables)
 3 Months Ended
Jun. 30, 2024
Inventory - Net [Abstract]  
Inventory Net
Inventory — net is comprised of the following:
 
  
June 30, 2024
    
March 31, 2024
  
Inventory — net
            
Raw materials
  
$
160,187,000
    
$
158,819,000
  
Work-in-process
    
10,467,000
      
7,943,000
  
Finished goods
    
230,269,000
      
227,650,000
  
 
    
400,923,000
      
394,412,000
  
Less allowance for excess and obsolete inventory
    
(17,615,000
)
    
(17,372,000
)
Inventory
    
383,308,000
      
377,040,000
  
Inventory unreturned
    
19,623,000
      
20,288,000
  
Total inventory — net
  
$
402,931,000
    
$
397,328,000
  
v3.24.2.u1
Contract Assets (Tables)
 3 Months Ended
Jun. 30, 2024
Contract Assets [Abstract]  
Contract Assets
Contract assets are comprised of the following:
 
  
June 30, 2024
    
March 31, 2024
  
Short-term contract assets
            
Cores expected to be returned by customers
  
$
15,715,000
    
$
15,409,000
  
Core premiums paid to customers     9,502,000       9,567,000  
Upfront payments to customers
    
1,352,000
      
1,407,000
  
Finished goods premiums paid to customers
    
748,000
      
756,000
  
Total short-term contract assets
  
$
27,317,000
    
$
27,139,000
  

               
Remanufactured cores held at customers’ locations
  
$
277,247,000
    
$
279,427,000
  
Core premiums paid to customers     27,914,000       30,227,000  
Long-term core inventory deposits     5,569,000       5,569,000  
Upfront payments to customers     2,405,000       2,718,000  
Finished goods premiums paid to customers
    
2,328,000
      
2,341,000
  
 Total long-term contract assets
  
$
315,463,000
    
$
320,282,000
  
v3.24.2.u1
Significant Customer and Other Information (Tables)
 3 Months Ended
Jun. 30, 2024
Significant Customer and Other Information [Abstract]  
Concentrations of Risk
Significant Customer Concentrations
The largest customers accounted for the following percentage of consolidated net sales:
   
Three Months Ended
  
 
  
June 30,
  
 
  
2024
    
2023
  
Net sales
            
Customer A
    
40
%
    
34
%
Customer C
   
28
%
    
28
%
Customer B
   
17
%
    
20
%
Customer D
    4 %     5 %

Revenues for Customers A through C were derived from the Hard Parts segment and Test Solutions and Diagnostic Equipment segment. Revenues for Customer D were derived from the Hard Parts segment. See Note 18 for a discussion of the Company’s segments.

The largest customers accounted for the following percentage of accounts receivable – trade:
 
  
June 30, 2024
    
March 31, 2024
  
Accounts receivable - trade
            
Customer A
    
38
%
    
35
%
Customer B
   
18
%
    
25
%
Customer C
   
12
%
    
13
%
Customer D     10 %     6 %

Geographic and Product Information
The Company’s products are sold predominantly in North America and accounted for the following percentages of consolidated net sales:
   
Three Months Ended
  
 
  
June 30,
  
 
  
2024
    
2023
  
Product line
            
Rotating electrical products
    
65
%
    
64
%
Brake-related products
    
24
%
    
22
%
Wheel hub products
    
7
%
    
11
%
Other products
    
4
%
    
3
%
 
   
100
%
    
100
%
v3.24.2.u1
Debt (Tables)
 3 Months Ended
Jun. 30, 2024
Debt [Abstract]  
Convertible Debt

The Company’s Convertible Notes are comprised of the following:



   
June 30, 2024
    
March 31, 2024
 
             
Principal amount of Convertible Notes
  
$
35,209,000
    
$
32,000,000
  
Less: unamortized debt discount attributed to Compound Net Derivative Liability
    
(7,338,000
)
    
(7,576,000
)
Less: unamortized debt discount attributed to debt issuance costs
    
(1,025,000
)
    
(1,058,000
)
Carrying amount of the Convertible Notes
    
26,846,000
      
23,366,000
  
Plus: Compound Net Derivative Liability
    
4,830,000
      
7,410,000
  
Net carrying amount of Convertible Notes, related party
  
$
31,676,000
    
$
30,776,000
  
Total Interest Expense Recognized Related to Convertible Notes

Interest expense related to the Convertible Notes is as follows:


 
Three Months Ended
  
 
June 30,
  
 
2024
     2023
 
Contractual interest expense
  
$
880,000
     $  800,000
  
Accretion of debt discount
    
238,000
        201,000
  
Amortization of debt issuance costs
    
33,000
        27,000
  
Total interest expense
  
$
1,151,000
     $
 1,028,000
  
v3.24.2.u1
Contract Liabilities (Tables)
 3 Months Ended
Jun. 30, 2024
Contract Liabilities [Abstract]  
Contract Liabilities
Contract liabilities are comprised of the following:
 
  
June 30, 2024
    
March 31, 2024
  
Short-term contract liabilities
  
   

Customer allowances earned
  
$
23,267,000
    
$
19,789,000
  
Customer core returns accruals
    
11,040,000
      
10,448,000
  
Accrued core payment
    
3,383,000
      
3,476,000
  
Core bank liability
    
1,753,000
      
1,739,000
  
Customer deposits
    
1,703,000
      
1,735,000
  
Finished goods liabilities
   
358,000
      
404,000
  
Total short-term contract liabilities
  
$
41,504,000
    
$
37,591,000
  
Long-term contract liabilities
                
Customer core returns accruals
  
$
192,813,000
    
$
193,545,000
  
Core bank liability
    
11,399,000
      
11,843,000
  
Accrued core payment
    
6,070,000
      
6,535,000
  
Finished goods liabilities
    
96,000
      
145,000
  
Total long-term contract liabilities
  
$
210,378,000
    
$
212,068,000
  
v3.24.2.u1
Leases (Tables)
 3 Months Ended
Jun. 30, 2024
Leases [Abstract]  
Balance Sheet Information for Leases
Balance sheet information for leases is as follows:
Leases
  
Classification
  
June 30, 2024
    
March 31, 2024
  
Assets:
  
 
            
Operating
  
Operating lease assets
  
$
77,057,000
    
$
83,973,000
  
Finance
  
Plant and equipment
    
4,239,000
      
4,611,000
  
Total leased assets
  
 
  
$
81,296,000
    
$
88,584,000
  
 
  
 
                
Liabilities:
  
 
                
Current
  
 
                
Operating
  
Operating lease liabilities
  
$
9,083,000
    
$
8,319,000
  
Finance
  
Other current liabilities
    
1,427,000
      
1,585,000
  
Long-term
  
 
                
Operating
  
Long-term operating lease liabilities
    
71,044,000
      
72,240,000
  
Finance
  
Other liabilities
    
1,577,000
      
1,893,000
  
Total lease liabilities
  
 
  
$
83,131,000
    
$
84,037,000
  
Lease Cost Recognized in Consolidated Statement of Operations
Lease cost recognized in the condensed consolidated statements of operations is as follows:
   
Three Months Ended
  
 
  
June 30,
  
 
  
2024
    
2023
  
Lease cost
            
Operating lease cost
  
$
3,759,000
    
$
3,742,000
  
Short-term lease cost
    
312,000
      
293,000
  
Variable lease cost
    
164,000
      
186,000
  
Finance lease cost:
                
Amortization of finance lease assets
    
358,000
      
403,000
  
Interest on finance lease liabilities
    
51,000
      
62,000
  
Total lease cost
  
$
4,644,000
    
$
4,686,000
  
Maturity of Lease Commitments
Maturities of lease commitments at June 30, 2024 by fiscal year were as follows:
Maturity of lease liabilities
  
Operating Leases
    
Finance Leases
    
Total
  
2025 - remaining nine months
  
$
10,093,000
    
$
1,231,000
    
$
11,324,000
  
2026
    
13,272,000
      
1,014,000
      
14,286,000
  
2027
    
11,421,000
      
523,000
      
11,944,000
  
2028
    
10,929,000
      
363,000
      
11,292,000
  
2029
    
11,126,000
      
169,000
      
11,295,000
  
Thereafter
    
43,462,000
      
-
      
43,462,000
  
Total lease payments
    
100,303,000
      
3,300,000
      
103,603,000
  
Less amount representing interest
    
(20,176,000
)
    
(296,000
)
    
(20,472,000
)
Present value of lease liabilities
  
$
80,127,000
    
$
3,004,000
    
$
83,131,000
  
Other Information about Leases
Other information about leases is as follows:
 
  
June 30, 2024
    
March 31, 2024
  
Lease term and discount rate
            
Weighted-average remaining lease term (years):
            
Finance leases
    
2.7
      
2.8
  
Operating leases
    
8.0
      
8.3
  
Weighted-average discount rate:
                
Finance leases
    
6.5
%
    
6.4
%
Operating leases
    
5.8
%
    
5.8
%
v3.24.2.u1
Accounts Receivable Discount Programs (Tables)
 3 Months Ended
Jun. 30, 2024
Accounts Receivable Discount Programs [Abstract]  
Accounts Receivable Discount Programs
The following is a summary of accounts receivable discount programs:
   
Three Months Ended
  
 
  
June 30,
  
 
  
2024
    
2023
  
Receivables discounted
  
$
144,541,000
    
$
104,332,000
  
Weighted average number of days collection was accelerated
    
342
      
337
  
Annualized weighted average discount rate
    
6.9
%
    
6.4
%
Amount of discount recognized as interest expense
  
$
9,507,000
    
$
6,252,000
  
v3.24.2.u1
Net Loss per Share (Tables)
 3 Months Ended
Jun. 30, 2024
Net Loss per Share [Abstract]  
Reconciliation of Basic and Diluted Net Loss Per Share
The following presents a reconciliation of basic and diluted net loss per share:
   
Three Months Ended
  
 
  
June 30,
  
 
  
2024
    
2023
  
Net loss
  
$
(18,085,000
)
  
$
(1,410,000
)
Basic shares
    
19,674,539
      
19,508,626
  
Effect of potentially dilutive securities
    
-
      
-
  
Diluted shares
    
19,674,539
      
19,508,626
  
Net loss per share:
                
Basic net loss per share
  
$
(0.92
)
  
$
(0.07
)
Diluted net loss per share
  
$
(0.92
)
  
$
(0.07
)
v3.24.2.u1
Financial Risk Management and Derivatives (Tables)
 3 Months Ended
Jun. 30, 2024
Financial Risk Management and Derivatives [Abstract]  
Derivative Instruments on Consolidated Statements of Operations
The following shows the effect of derivative instruments on the condensed consolidated statements of operations:

 
Foreign Exchange Impact of Lease Liabilities and Forward Contracts
  
   
Three Months Ended
  
  Derivatives Not Designated as
  
June 30,
  
Hedging Instruments
  
2024
    
2023
  
(Loss) gain from forward foreign currency exchange contracts
  
$
(5,369,000
)
  
$
500,000
v3.24.2.u1
Fair Value Measurements (Tables)
 3 Months Ended
Jun. 30, 2024
Fair Value Measurements [Abstract]  
Financial Assets and Liabilities Measured at Fair Value Recurring Basis
The following summarizes financial assets and liabilities measured at fair value, by level within the fair value hierarchy:

   
June 30, 2024
    
March 31, 2024
  
         
Fair Value Measurements
          
Fair Value Measurements
  
         
Using Inputs Considered as
          
Using Inputs Considered as
  
   
Fair Value
    
Level 1
    
Level 2
    
Level 3
    
Fair Value
    
Level 1
    
Level 2
    
Level 3
  
Assets
                                                
Short-term investments                                                
 Mutual funds
  
$
1,887,000
    
$
1,887,000
    
$
-
    
$
-
    
$
1,837,000
    
$
1,837,000
    
$
-
    
$
-
  
Prepaid expenses and other current assets                                                                
Forward foreign currency exchange contracts
    
-
      
-
      
-
      
-
      
2,516,000
      
-
      
2,516,000
      
-
  
                                                                 
Liabilities
                                                                
Other current liabilities
                                                                
Deferred compensation
    
1,887,000
      
1,887,000
      
-
      
-
      
1,837,000
      
1,837,000
      
-
      
-
  
Forward foreign currency exchange contracts
     2,853,000       -       2,853,000       -       -       -       -       -  
Convertible notes, related party
                                                                
Compound Net Derivative Liability
     4,830,000       -       -       4,830,000       7,410,000       -       -       7,410,000  
Fair Value Assumptions
The following assumptions were used to determine the fair value of the Compound Net Derivative Liability:
   
June 30, 2024
    
March 31, 2024
  
Risk free interest rate
    
4.41
%
    
4.36
%
Cost of equity
    
22.90
%
    
23.20
%
Weighted average cost of capital     13.90 %     14.90 %
Expected volatility of MPA common stock     50.00 %     50.00 %
EBITDA volatility     40.00 %     40.00 %
Activity for Level 3 Fair Value Measurements
The following summarizes the activity for Level 3 fair value measurements:
   
Three Months Ended
  
   
June 30,
  
 
   2024     2023
  
Beginning balance
  
$
7,410,000
     $ 8,430,000  
Changes in fair value of Compound Net Derivative Liability included in earnings
    
(2,580,000
)
    
140,000
  
Ending balance
  
$
4,830,000
     $ 8,570,000  
v3.24.2.u1
Share-based Payments (Tables)
 3 Months Ended
Jun. 30, 2024
Share-based Payments [Abstract]  
Stock Option Transactions
The following is a summary of stock option transactions:

   
Number of
    
Weighted Average
  
 
  
Shares
    
Exercise Price
  
Outstanding at March 31, 2024
    
1,108,017
    
$
20.29
  
Granted
    
-
    
$
-
  
Exercised
    
-
 
$
-
  
Forfeited/Cancelled
    
(1,383
)
  
$
17.29
  
Expired     (36,733 )   $ 22.93  
Outstanding at June 30, 2024
    
1,069,901
    
$
20.21
  
Restricted Stock Units Activity
The following is a summary of non-vested RSUs:

 
  
Number of
Shares
    
Weighted Average
Grant Date Fair
Value
  
Outstanding at March 31, 2024
    
240,923
    
$
12.23
  
Granted
    
207,050
    
$
6.69
  
Vested
    
(86,559
)
  
$
16.63
  
Forfeited/Cancelled
    
(762
)
  
$
11.04
  
Outstanding at June 30, 2024
    
360,652
    
$
8.00
  
Monte Carlo Valuation Model Assumptions Used in Determining Fair Value of TSR Awards The following table summarizes the assumptions used in determining the fair value of these awards subject to market conditions:

    Three Months Ended  
   
June 30,
  
   
2024
    
2023
  
Risk free interest rate
    
4.45
%
     4.32 %
Expected life in years
     3.0
       0.8-1.8  
Expected volatility of MPA common stock
    
59.80
%
    
54.20
%
Average correlation coefficient of peer companies
    
16.50
%
     -
 %
Expected dividend yield
    
-
       -  
Grant date fair value
  
$
8.65
    
$
3.57-5.06
  
Performance Stock Units Activity
The following is a summary of non-vested PSUs:

 
  
Number of
Shares
    
Weighted Average
Grant Date Fair
Value
  
Outstanding at March 31, 2024
    
773,923
    
$
7.73
  
Granted
    
155,391
    
$
8.65
  
Added by performance factor
    10,952
     $
22.27
  
Vested
    
(32,848
)
  
$
22.27
  
Forfeited/Cancelled
    
(52,137
)
  
$
23.27
  
Outstanding at June 30, 2024
    
855,281
    
$
6.58
  
v3.24.2.u1
Commitments and Contingencies (Tables)
 3 Months Ended
Jun. 30, 2024
Commitments and Contingencies [Abstract]  
Changes in Warranty Returns
The following summarizes the changes in the warranty returns:

   
Three Months Ended
  
 
  
June 30,
  
 
  
2024
    
2023
  
Balance at beginning of period
  
$
19,326,000
    
$
19,830,000
  
Charged to expense
    
33,352,000
      
31,112,000
  
Amounts processed
    
(37,632,000
)
    
(34,265,000
)
Balance at end of period
  
$
15,046,000
    
$
16,677,000
  
v3.24.2.u1
Segment Information (Tables)
 3 Months Ended
Jun. 30, 2024
Segment Information [Abstract]  
Financial Information Relating to Segments

Financial information relating to the Company’s segments is as follows:
   
Three Months Ended June 30, 2024
  
   
Hard Parts
    
All Other
    
Total
  
Net sales to external customers
  
$
158,187,000
    
$
11,700,000
    
$
169,887,000
  
Intersegment sales
    
32,000
      
12,000
      
44,000
  
Operating loss
    
(6,459,000
)(1)
    
(6,000
)
    
(6,465,000
)
Depreciation and amortization
    
2,525,000
      
204,000
      
2,729,000
  
Segment assets
    
989,363,000
      
55,297,000
      
1,044,660,000
  
Capital expenditures
    
253,000
      
237,000
      
490,000
  


   
Three Months Ended June 30, 2023
  
   
Hard Parts
    
All Other
    
Total
  
Net sales to external customers
  
$
149,747,000
    
$
9,958,000
    
$
159,705,000
  
Intersegment sales
    
132,000
      
95,000
      
227,000
  
Operating income (loss)
    
11,506,000
 (1)
   
(1,079,000
)
    
10,427,000
  
Depreciation and amortization
    
2,679,000
      
354,000
      
3,033,000
  
Segment assets
    
1,063,301,000
      
52,368,000
      
1,115,669,000
  
Capital expenditures
    
40,000
      
-
      
40,000
  

   
Three Months Ended
  
 
  
June 30,
  
Net sales
  
2024
    
2023
  
Total net sales for reportable segment
  
$
158,219,000
    
$
149,879,000
  
Other net sales
     11,712,000       10,053,000  
Elimination of intersegment net sales
    
(44,000
)
    
(227,000
)
Total consolidated net sales
  
$
169,887,000
    
$
159,705,000
  

   
Three Months Ended
  
 
  
June 30,
  
Profit or loss
  
2024
    
2023
  
Total operating (loss) income for reportable segment
  
$
(6,459,000
)
  
$
11,506,000
  
Other operating loss
     (6,000 )     (1,079,000 )
Elimination of intersegment operating income
    
9,000
      
14,000
  
Interest expense, net
     (14,387,000 )     (11,720,000 )
Change in fair value of compound net derivative liability
    
2,580,000
      
(140,000
)
Total consolidated loss before income tax benefit
  
$
(18,263,000
)
  
$
(1,419,000
)

Assets
  
June 30, 2024
    
March 31, 2024
  
Total assets for reportable segment
  
$
989,363,000
    
$
1,019,811,000
  
Other assets
    
55,297,000
      
54,946,000
  
Elimination of intersegment assets
    
(66,705,000
)
    
(62,755,000
)
Total consolidated assets
  
$
977,955,000
    
$
1,012,002,000
 


(1)
The operating (loss) income for the Company's Hard Parts segment for the three months ended June 30, 2024 and 2023 includes the foreign exchange impact of lease liabilities and forward contracts, which were a loss of $11,078,000 and a gain of $4,270,000, respectively.
v3.24.2.u1
Accounts Receivable - Net (Details) - USD ($)
Jun. 30, 2024
Mar. 31, 2024
Components of accounts receivable [Abstract]    
Accounts receivable - trade $ 104,734,000 $ 118,500,000
Allowance for credit losses (73,000) (189,000)
Customer payment discrepancies (1,288,000) (1,206,000)
Customer returns RGA issued (24,749,000) (20,809,000)
Total accounts receivable - net $ 78,624,000 $ 96,296,000
v3.24.2.u1
Inventory - Net (Details) - USD ($)
Jun. 30, 2024
Mar. 31, 2024
Inventory - net [Abstract]    
Raw materials $ 160,187,000 $ 158,819,000
Work-in-process 10,467,000 7,943,000
Finished goods 230,269,000 227,650,000
Inventory, gross 400,923,000 394,412,000
Less allowance for excess and obsolete inventory (17,615,000) (17,372,000)
Inventory 383,308,000 377,040,000
Inventory unreturned 19,623,000 20,288,000
Total Inventory - net $ 402,931,000 $ 397,328,000
v3.24.2.u1
Contract Assets (Details) - USD ($)
 3 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Mar. 31, 2024
Contract Assets [Abstract]      
Long-term contract assets, write-down $ 394,000 $ 778,000  
Short-term contract assets [Abstract]      
Cores expected to be returned by customers 15,715,000   $ 15,409,000
Core premiums paid to customers 9,502,000   9,567,000
Upfront payments to customers 1,352,000   1,407,000
Finished goods premiums paid to customers 748,000   756,000
Total short-term contract assets 27,317,000   27,139,000
Long-term contract assets [Abstract]      
Remanufactured cores held at customers' locations 277,247,000   279,427,000
Core premiums paid to customers 27,914,000   30,227,000
Long-term core inventory deposits 5,569,000   5,569,000
Upfront payments to customers 2,405,000   2,718,000
Finished goods premiums paid to customers 2,328,000   2,341,000
Total long-term contract assets $ 315,463,000   $ 320,282,000
v3.24.2.u1
Significant Customer and Other Information (Details)
 3 Months Ended
Jun. 30, 2024
Mar. 31, 2024
Jun. 30, 2023
Net Sales [Member] | Customer Concentration Risk [Member] | Customer A [Member]      
Concentration Risk [Abstract]      
Concentration risk percentage 40.00%   34.00%
Net Sales [Member] | Customer Concentration Risk [Member] | Customer C [Member]      
Concentration Risk [Abstract]      
Concentration risk percentage 28.00%   28.00%
Net Sales [Member] | Customer Concentration Risk [Member] | Customer B [Member]      
Concentration Risk [Abstract]      
Concentration risk percentage 17.00%   20.00%
Net Sales [Member] | Customer Concentration Risk [Member] | Customer D [Member]      
Concentration Risk [Abstract]      
Concentration risk percentage 4.00%   5.00%
Net Sales [Member] | Product Concentration Risk [Member]      
Concentration Risk [Abstract]      
Concentration risk percentage 100.00%   100.00%
Net Sales [Member] | Product Concentration Risk [Member] | Rotating Electrical Products [Member]      
Concentration Risk [Abstract]      
Concentration risk percentage 65.00%   64.00%
Net Sales [Member] | Product Concentration Risk [Member] | Brake-Related Products [Member]      
Concentration Risk [Abstract]      
Concentration risk percentage 24.00%   22.00%
Net Sales [Member] | Product Concentration Risk [Member] | Wheel Hub Products [Member]      
Concentration Risk [Abstract]      
Concentration risk percentage 7.00%   11.00%
Net Sales [Member] | Product Concentration Risk [Member] | Other Products [Member]      
Concentration Risk [Abstract]      
Concentration risk percentage 4.00%   3.00%
Accounts Receivable - Trade [Member] | Customer Concentration Risk [Member] | Customer A [Member]      
Concentration Risk [Abstract]      
Concentration risk percentage 38.00% 35.00%  
Accounts Receivable - Trade [Member] | Customer Concentration Risk [Member] | Customer C [Member]      
Concentration Risk [Abstract]      
Concentration risk percentage 12.00% 13.00%  
Accounts Receivable - Trade [Member] | Customer Concentration Risk [Member] | Customer B [Member]      
Concentration Risk [Abstract]      
Concentration risk percentage 18.00% 25.00%  
Accounts Receivable - Trade [Member] | Customer Concentration Risk [Member] | Customer D [Member]      
Concentration Risk [Abstract]      
Concentration risk percentage 10.00% 6.00%  
v3.24.2.u1
Debt, Revolving Facility and Term loans (Details) - USD ($)
 3 Months Ended
Jun. 30, 2024
Mar. 31, 2024
Revolving Facility [Member]    
Amended Credit Facility [Abstract]    
Interest rate at end of period 8.58% 8.43%
Revolving Facility [Member] | Letters of Credit [Member]    
Amended Credit Facility [Abstract]    
Outstanding balance under revolving loan $ 6,370,000  
Credit Facility [Member]    
Amended Credit Facility [Abstract]    
Maximum borrowing capacity $ 268,620,000  
Debt instrument, maturity date Dec. 12, 2028  
Percentage of aggregate revolving commitments 22.50%  
Credit Facility [Member] | Revolving Facility [Member]    
Amended Credit Facility [Abstract]    
Maximum borrowing capacity $ 238,620,000  
Outstanding balance under revolving loan 143,834,000 $ 128,000,000
Amount available under revolving facility 82,174,000  
Credit Facility [Member] | Term Loans [Member]    
Amended Credit Facility [Abstract]    
Maximum borrowing capacity $ 30,000,000  
v3.24.2.u1
Debt, Convertible Notes (Details) - USD ($)
 3 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Mar. 31, 2024
Mar. 31, 2023
Convertible Notes [Abstract]        
Net carrying amount of Convertible Notes, related party $ 31,676,000   $ 30,776,000  
Interest paid in-kind $ 3,209,000 $ 0    
Derivative Liability, Statement of Financial Position [Extensible Enumeration] Net carrying amount of Convertible Notes, related party   Net carrying amount of Convertible Notes, related party  
Derivative Asset, Statement of Financial Position [Extensible Enumeration] Net carrying amount of Convertible Notes, related party   Net carrying amount of Convertible Notes, related party  
Change in fair value of compound net derivative liability $ 2,580,000 (140,000)    
Interest Expense [Abstract]        
Contractual interest expense 880,000 800,000    
Amortization of debt issuance costs 537,000 464,000    
Convertible Notes [Member]        
Convertible Notes [Abstract]        
Principal amount of Convertible Notes 35,209,000   $ 32,000,000 $ 32,000,000
Less: unamortized debt discount attributed to Compound Net Derivative Liability (7,338,000)   (7,576,000)  
Less: unamortized debt discount attributed to debt issuance costs (1,025,000)   (1,058,000)  
Carrying amount of the Convertible Notes 26,846,000   23,366,000  
Plus: Compound Net Derivative Liability 4,830,000   7,410,000  
Net carrying amount of Convertible Notes, related party $ 31,676,000   $ 30,776,000  
Interest rate 18.30%   18.30% 10.00%
Interest paid in-kind $ 3,209,000      
Conversion price (in dollars per share) $ 15      
Warrants maturity date Mar. 30, 2029      
Warrants fair value $ 0   $ 0  
Derivative liability 5,800,000   9,800,000  
Derivative assets 970,000   $ 2,390,000  
Change in fair value of compound net derivative liability 2,580,000 (140,000)    
Interest Expense [Abstract]        
Contractual interest expense 880,000 800,000    
Accretion of debt discount 238,000 201,000    
Amortization of debt issuance costs 33,000 27,000    
Total interest expense 1,151,000 $ 1,028,000    
Convertible Notes Principal plus interest, Fiscal Year Future payment [Abstract]        
Total payments $ 56,704,000      
v3.24.2.u1
Contract Liabilities (Details) - USD ($)
Jun. 30, 2024
Mar. 31, 2024
Short-term contract liabilities [Abstract]    
Customer allowances earned $ 23,267,000 $ 19,789,000
Customer core returns accruals 11,040,000 10,448,000
Accrued core payment 3,383,000 3,476,000
Core bank liability 1,753,000 1,739,000
Customer deposits 1,703,000 1,735,000
Finished goods liabilities 358,000 404,000
Total short-term contract liabilities 41,504,000 37,591,000
Long-term contract liabilities [Abstract]    
Customer core returns accruals 192,813,000 193,545,000
Core bank liability 11,399,000 11,843,000
Accrued core payment 6,070,000 6,535,000
Finished goods liabilities 96,000 145,000
Total long-term contract liabilities $ 210,378,000 $ 212,068,000
v3.24.2.u1
Leases, General Information (Details) - USD ($)
 3 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Leases [Abstract]    
(Loss) gain in foreign currency-denominated lease liabilities $ (5,709,000) $ 3,770,000
v3.24.2.u1
Leases, Balance Sheet Information (Details) - USD ($)
Jun. 30, 2024
Mar. 31, 2024
Assets [Abstract]    
Operating, Operating lease assets $ 77,057,000 $ 83,973,000
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] Operating, Operating lease assets Operating, Operating lease assets
Finance, Plant and equipment $ 4,239,000 $ 4,611,000
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] Plant and equipment - net Plant and equipment - net
Total leased assets $ 81,296,000 $ 88,584,000
Current [Abstract]    
Operating, Operating lease liabilities $ 9,083,000 $ 8,319,000
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] Operating, Operating lease liabilities Operating, Operating lease liabilities
Finance, Other current liabilities $ 1,427,000 $ 1,585,000
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] Other current liabilities Other current liabilities
Long-term [Abstract]    
Operating, Long-term operating lease liabilities $ 71,044,000 $ 72,240,000
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] Operating, Long-term operating lease liabilities Operating, Long-term operating lease liabilities
Finance, Other liabilities $ 1,577,000 $ 1,893,000
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] Other liabilities Other liabilities
Total lease liabilities $ 83,131,000 $ 84,037,000
v3.24.2.u1
Leases, Cost Recognized in Consolidated Statements of Income (Details) - USD ($)
 3 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Lease cost [Abstract]    
Operating lease cost $ 3,759,000 $ 3,742,000
Short-term lease cost 312,000 293,000
Variable lease cost 164,000 186,000
Finance lease cost [Abstract]    
Amortization of finance lease assets 358,000 403,000
Interest on finance lease liabilities 51,000 62,000
Total lease cost $ 4,644,000 $ 4,686,000
v3.24.2.u1
Leases, Maturities of Lease Commitments (Details) - USD ($)
Jun. 30, 2024
Mar. 31, 2024
Operating Leases [Abstract]    
2025 - remaining nine months $ 10,093,000  
2026 13,272,000  
2027 11,421,000  
2028 10,929,000  
2029 11,126,000  
Thereafter 43,462,000  
Total lease payments 100,303,000  
Less amount representing interest (20,176,000)  
Present value of lease liabilities 80,127,000  
Finance Leases [Abstract]    
2025 - remaining nine months 1,231,000  
2026 1,014,000  
2027 523,000  
2028 363,000  
2029 169,000  
Thereafter 0  
Total lease payments 3,300,000  
Less amount representing interest (296,000)  
Present value of lease liabilities 3,004,000  
Total [Abstract]    
2025 - remaining nine months 11,324,000  
2026 14,286,000  
2027 11,944,000  
2028 11,292,000  
2029 11,295,000  
Thereafter 43,462,000  
Total lease payments 103,603,000  
Less amount representing interest (20,472,000)  
Present value of lease liabilities $ 83,131,000 $ 84,037,000
v3.24.2.u1
Leases, Other Information (Details)
Jun. 30, 2024
Mar. 31, 2024
Weighted-average remaining lease term (years) [Abstract]    
Finance leases 2 years 8 months 12 days 2 years 9 months 18 days
Operating leases 8 years 8 years 3 months 18 days
Weighted-average discount rate [Abstract]    
Finance leases 6.50% 6.40%
Operating leases 5.80% 5.80%
v3.24.2.u1
Accounts Receivable Discount Programs (Details) - USD ($)
 3 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Accounts Receivable Discount Programs [Abstract]    
Receivables discounted $ 144,541,000 $ 104,332,000
Weighted average number of days collection was accelerated 342 days 337 days
Annualized weighted average discount rate 6.90% 6.40%
Amount of discount recognized as interest expense $ 9,507,000 $ 6,252,000
v3.24.2.u1
Supplier Finance Programs (Details)
Jun. 30, 2024
USD ($)
Supplier Finance Programs [Abstract]  
Amount available under program $ 15,000,000
Outstanding supplier obligations $ 12,773,000
Supplier Finance Program, Obligation, Statement of Financial Position [Extensible Enumeration] Accounts Payable and Accrued Liabilities, Current
v3.24.2.u1
Net Loss per Share (Details) - USD ($)
 3 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Reconciliation of basic and diluted net loss per share [Abstract]    
Net loss $ (18,085,000) $ (1,410,000)
Basic shares (in shares) 19,674,539 19,508,626
Effect of potentially dilutive securities (in shares) 0 0
Diluted shares (in shares) 19,674,539 19,508,626
Net loss per share, Basic [Abstract]    
Basic net loss per share (in dollars per share) $ (0.92) $ (0.07)
Net loss per share, Diluted [Abstract]    
Diluted net loss per share (in dollars per share) $ (0.92) $ (0.07)
Potential Common Shares [Member]    
Antidilutive Securities [Abstract]    
Antidilutive shares excluded from computation of earnings per share (in shares) 2,285,834 2,067,168
Convertible Notes [Member]    
Antidilutive Securities [Abstract]    
Antidilutive shares excluded from computation of earnings per share (in shares) 2,405,941 2,186,667
v3.24.2.u1
Income Taxes (Details) - USD ($)
 3 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Income Taxes [Abstract]    
Income tax expense (benefit) $ (178,000) $ (9,000)
Effective income tax rate 1.00% 0.60%
State of California [Member]    
Income Tax Examination [Abstract]    
Tax years under examination 2020 2021 2022  
v3.24.2.u1
Financial Risk Management and Derivatives (Details) - USD ($)
 3 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Mar. 31, 2024
Foreign Currency Exchange Contracts [Abstract]      
Forward foreign currency exchange contracts included in other current liabilities $ 2,853,000    
Forward foreign currency exchange contracts included in prepaid and other current assets     $ 2,516,000
(Loss) Gain from Forward Foreign Currency Exchange Contracts [Member]      
Foreign Currency Exchange Contracts [Abstract]      
Notional amount of foreign currency derivatives 54,640,000   $ 54,092,000
(Loss) Gain from Forward Foreign Currency Exchange Contracts [Member] | Foreign Exchange Impact of Lease Liabilities and Forward Contracts [Member]      
Foreign Currency Exchange Contracts [Abstract]      
(Loss) gain from forward foreign currency exchange contracts $ (5,369,000) $ 500,000  
(Loss) Gain from Forward Foreign Currency Exchange Contracts [Member] | Maximum [Member]      
Foreign Currency Exchange Contracts [Abstract]      
Derivative, term of contract 1 year    
v3.24.2.u1
Fair Value Measurements (Details)
 3 Months Ended
Jun. 30, 2024
USD ($)
Jun. 30, 2023
USD ($)
Mar. 31, 2024
USD ($)
Change in contingent consideration measured at fair value recurring basis using significant unobservable inputs (Level 3) [Roll Forward]      
Net carrying amount of convertible notes $ 31,676,000   $ 30,776,000
Compound Net Derivative Liability [Member]      
Change in contingent consideration measured at fair value recurring basis using significant unobservable inputs (Level 3) [Roll Forward]      
Beginning balance 7,410,000 $ 8,430,000  
Changes in fair value of Compound Net Derivative Liability included in earnings (2,580,000) 140,000  
Ending balance 4,830,000 $ 8,570,000  
Net carrying amount of convertible notes $ 31,676,000   $ 30,776,000
Compound Net Derivative Liability [Member] | Risk Free Interest Rate [Member]      
Fair Value Valuation [Abstract]      
Assumptions for fair value of Compound Net Derivative Liability 0.0441   0.0436
Compound Net Derivative Liability [Member] | Cost of Equity [Member]      
Fair Value Valuation [Abstract]      
Assumptions for fair value of Compound Net Derivative Liability 0.229   0.232
Compound Net Derivative Liability [Member] | Weighted Average Cost of Capital [Member]      
Fair Value Valuation [Abstract]      
Assumptions for fair value of Compound Net Derivative Liability 0.139   0.149
Compound Net Derivative Liability [Member] | Expected Volatility of MPA Common Stock [Member]      
Fair Value Valuation [Abstract]      
Assumptions for fair value of Compound Net Derivative Liability 0.50   0.50
Compound Net Derivative Liability [Member] | EBITDA Volatility [Member]      
Fair Value Valuation [Abstract]      
Assumptions for fair value of Compound Net Derivative Liability 0.40   0.40
Level 3 [Member] | Convertible Notes [Member]      
Change in contingent consideration measured at fair value recurring basis using significant unobservable inputs (Level 3) [Roll Forward]      
Estimated fair value of convertible notes $ 34,267,000   $ 38,276,000
Recurring [Member]      
Short-term investments [Abstract]      
Mutual funds 1,887,000   1,837,000
Prepaid expense and other current assets [Abstract]      
Forward foreign currency exchange contracts 0   2,516,000
Other current liabilities [Abstract]      
Deferred compensation 1,887,000   1,837,000
Forward foreign currency exchange contracts 2,853,000   0
Convertible notes, related party [Abstract]      
Compound Net Derivative Liability 4,830,000   7,410,000
Recurring [Member] | Level 1 [Member]      
Short-term investments [Abstract]      
Mutual funds 1,887,000   1,837,000
Prepaid expense and other current assets [Abstract]      
Forward foreign currency exchange contracts 0   0
Other current liabilities [Abstract]      
Deferred compensation 1,887,000   1,837,000
Forward foreign currency exchange contracts 0   0
Convertible notes, related party [Abstract]      
Compound Net Derivative Liability 0   0
Recurring [Member] | Level 2 [Member]      
Short-term investments [Abstract]      
Mutual funds 0   0
Prepaid expense and other current assets [Abstract]      
Forward foreign currency exchange contracts 0   2,516,000
Other current liabilities [Abstract]      
Deferred compensation 0   0
Forward foreign currency exchange contracts 2,853,000   0
Convertible notes, related party [Abstract]      
Compound Net Derivative Liability 0   0
Recurring [Member] | Level 3 [Member]      
Short-term investments [Abstract]      
Mutual funds 0   0
Prepaid expense and other current assets [Abstract]      
Forward foreign currency exchange contracts 0   0
Other current liabilities [Abstract]      
Deferred compensation 0   0
Forward foreign currency exchange contracts 0   0
Convertible notes, related party [Abstract]      
Compound Net Derivative Liability $ 4,830,000   $ 7,410,000
v3.24.2.u1
Share-based Payments, Stock Options Activity (Details) - Stock Options [Member] - USD ($)
 3 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Number of Shares [Roll Forward]    
Outstanding at beginning of period (in shares) 1,108,017  
Granted (in shares) 0 0
Exercised (in shares) 0  
Forfeited/Cancelled (in shares) (1,383)  
Expired (in shares) (36,733)  
Outstanding at end of period (in shares) 1,069,901  
Weighted Average Exercise Price [Roll Forward]    
Outstanding at beginning of period (in dollars per share) $ 20.29  
Granted (in dollars per share) 0  
Exercised (in dollars per share) 0  
Forfeited/Cancelled (in dollars per share) 17.29  
Expired (in dollars per share) 22.93  
Outstanding at end of period (in dollars per share) $ 20.21  
Number of stock options unvested (in shares) 132,133  
Weighted average exercise price of stock options unvested (in dollars per share) $ 9.32  
Total unrecognized compensation expense $ 368,000  
Weighted average remaining vesting period over which compensation expense is expected to be recognized 2 years 2 months 12 days  
v3.24.2.u1
Share-based Payments, Restricted Stock Units (Details) - USD ($)
 3 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Restricted Stock [Member]    
Number of Shares [Roll Forward]    
Non-vested at beginning of period (in shares) 240,923  
Granted (in shares) 207,050  
Vested (in shares) (86,559)  
Forfeited/Cancelled (in shares) (762)  
Non-vested at end of period (in shares) 360,652  
Weighted Average Grant Date Fair Value [Roll Forward]    
Non-vested at beginning of period (in dollars per share) $ 12.23  
Granted (in dollars per share) 6.69  
Vested (in dollars per share) 16.63  
Forfeited/Cancelled (in dollars per share) 11.04  
Non-vested at end of period (in dollars per share) $ 8  
Total unrecognized compensation expense $ 2,270,000  
Weighted average remaining vesting period over which compensation expense is expected to be recognized 2 years 1 month 6 days  
Restricted Stock, Time-based [Member]    
Number of Shares [Roll Forward]    
Granted (in shares)   0
v3.24.2.u1
Share-based Payments, Performance Stock Units (Details) - Performance Stock Units [Member]
 3 Months Ended
Jun. 30, 2024
USD ($)
$ / shares
shares
Jun. 30, 2023
d
$ / shares
shares
Performance Stock Units ("PSUs") [Abstract]    
Number of trading days | d   30
Vesting period 3 years 3 years
Monte Carlo valuation model assumptions used in determining the fair value of the TSR awards [Abstract]    
Risk free interest rate 4.45% 4.32%
Expected life in years 3 years  
Expected volatility of MPA common stock 59.80% 54.20%
Average correlation coefficient of peer companies 16.50% 0.00%
Expected dividend yield 0.00% 0.00%
Grant date fair value (in dollars per share) $ 8.65  
Number of Shares [Roll Forward]    
Non-vested at beginning of period (in shares) | shares 773,923  
Granted (in shares) | shares 155,391 533,856
Added by performance factor (in shares) | shares 10,952  
Vested (in shares) | shares (32,848)  
Forfeited/Cancelled (in shares) | shares (52,137)  
Non-vested at end of period (in shares) | shares 855,281  
Weighted Average Grant Date Fair Value [Roll Forward]    
Non-vested at beginning of period (in dollars per share) $ 7.73  
Granted (in dollars per share) 8.65  
Added by performance factor (in dollars per share) 22.27  
Vested (in dollars per share) 22.27  
Forfeited/Cancelled (in dollars per share) 23.27  
Non-vested at end of period (in dollars per share) $ 6.58  
Total unrecognized compensation expense | $ $ 2,280,000  
Weighted average remaining vesting period over which compensation expense is expected to be recognized 2 years 1 month 6 days  
Market capitalization | $ $ 600,000,000  
Minimum [Member]    
Performance Stock Units ("PSUs") [Abstract]    
Awards vesting target percentage 0.00%  
Monte Carlo valuation model assumptions used in determining the fair value of the TSR awards [Abstract]    
Expected life in years   9 months 18 days
Grant date fair value (in dollars per share)   $ 3.57
Maximum [Member]    
Performance Stock Units ("PSUs") [Abstract]    
Awards vesting target percentage 150.00%  
Monte Carlo valuation model assumptions used in determining the fair value of the TSR awards [Abstract]    
Expected life in years   1 year 9 months 18 days
Grant date fair value (in dollars per share)   $ 5.06
Tranche One [Member]    
Performance Stock Units ("PSUs") [Abstract]    
Stock price (in dollars per share)   $ 10
Percentage of vesting of award   33.00%
Tranche Two [Member]    
Performance Stock Units ("PSUs") [Abstract]    
Stock price (in dollars per share)   $ 15
Percentage of vesting of award   33.00%
Tranche Three [Member]    
Performance Stock Units ("PSUs") [Abstract]    
Stock price (in dollars per share)   $ 20
Percentage of vesting of award   33.00%
Tranche Three [Member] | Minimum [Member]    
Performance Stock Units ("PSUs") [Abstract]    
Stock price (in dollars per share)   $ 17.5
Eligible vesting percentage for recipients   50.00%
Tranche Three [Member] | Maximum [Member]    
Performance Stock Units ("PSUs") [Abstract]    
Stock price (in dollars per share)   $ 25
Eligible vesting percentage for recipients   150.00%
v3.24.2.u1
Commitments and Contingencies (Details) - USD ($)
 3 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Change in warranty returns [Roll Forward]    
Balance at beginning of period $ 19,326,000 $ 19,830,000
Charged to expense 33,352,000 31,112,000
Amounts processed (37,632,000) (34,265,000)
Balance at end of period 15,046,000 $ 16,677,000
Customer Returns RGA Issued [Member]    
Change in warranty returns [Roll Forward]    
Balance at beginning of period 5,667,000  
Balance at end of period 5,251,000  
Customer Finished Goods Returns Accrual [Member]    
Change in warranty returns [Roll Forward]    
Balance at beginning of period 13,659,000  
Balance at end of period $ 9,795,000  
v3.24.2.u1
Segment Information (Details)
 3 Months Ended
Jun. 30, 2024
USD ($)
Segment
Jun. 30, 2023
USD ($)
Mar. 31, 2024
USD ($)
Segment Information [Abstract]      
Number of operating segments | Segment 3    
Selected Financial Data [Abstract]      
Net sales $ 169,887,000 $ 159,705,000  
Operating income (loss) (6,456,000) 10,441,000  
Segment assets 977,955,000   $ 1,012,002,000
Interest expense, net (14,387,000) (11,720,000)  
Change in fair value of compound net derivative liability 2,580,000 (140,000)  
Loss before income tax benefit (18,263,000) (1,419,000)  
Foreign exchange impact of lease liabilities and forward contracts (11,078,000) 4,270,000  
Hard Parts [Member]      
Selected Financial Data [Abstract]      
Net sales 158,187,000 149,747,000  
All Other [Member]      
Selected Financial Data [Abstract]      
Net sales 11,700,000 9,958,000  
Operating Segments [Member]      
Selected Financial Data [Abstract]      
Operating income (loss) (6,465,000) 10,427,000  
Depreciation and amortization 2,729,000 3,033,000  
Segment assets 1,044,660,000 1,115,669,000  
Capital expenditures 490,000 40,000  
Operating Segments [Member] | Hard Parts [Member]      
Selected Financial Data [Abstract]      
Net sales 158,219,000 149,879,000  
Operating income (loss) [1] (6,459,000) 11,506,000  
Depreciation and amortization 2,525,000 2,679,000  
Segment assets 989,363,000 1,063,301,000 1,019,811,000
Capital expenditures 253,000 40,000  
Foreign exchange impact of lease liabilities and forward contracts (11,078,000) 4,270,000  
Operating Segments [Member] | All Other [Member]      
Selected Financial Data [Abstract]      
Net sales 11,712,000 10,053,000  
Operating income (loss) (6,000) (1,079,000)  
Depreciation and amortization 204,000 354,000  
Segment assets 55,297,000 52,368,000 54,946,000
Capital expenditures 237,000 0  
Intersegment Sales [Member]      
Selected Financial Data [Abstract]      
Net sales (44,000) (227,000)  
Operating income (loss) 9,000 14,000  
Segment assets (66,705,000)   $ (62,755,000)
Intersegment Sales [Member] | Hard Parts [Member]      
Selected Financial Data [Abstract]      
Net sales (32,000) (132,000)  
Intersegment Sales [Member] | All Other [Member]      
Selected Financial Data [Abstract]      
Net sales $ (12,000) $ (95,000)  
[1] The operating (loss) income for the Company's Hard Parts segment for the three months ended June 30, 2024 and 2023 includes the foreign exchange impact of lease liabilities and forward contracts, which were a loss of $11,078,000 and a gain of $4,270,000, respectively.
v3.24.2.u1
Share Repurchases (Details) - Common Stock [Member] - USD ($)
 3 Months Ended
Jun. 30, 2024
Aug. 31, 2018
Stock Repurchase Program [Abstract]    
Stock repurchase program, approved amount $ 37,000,000 $ 20,000,000
Repurchase of shares (in shares) 0  
Shares utilized, amount $ 18,745,000  
Shares available for repurchase, amount $ 18,255,000  
Shares repurchased and retired (in shares) 837,007  
v3.24.2.u1
Related Party Transactions (Details) - Company Co-owned by Member of Management [Member] - Manufacturing Facility [Member]
 3 Months Ended
Jun. 30, 2024
USD ($)
Jun. 30, 2023
USD ($)
Dec. 31, 2022
USD ($)
ft²
Operating Lease [Abstract]      
Area of facility | ft²     35,000
Initial lease term 1 year    
Base rent     $ 27,000
Lease renewal term 4 years    
Lease additional renewal term 1 year    
Rent expenses $ 81,000 $ 81,000  
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