Business Wire | Feb 9, 2021 08:00AM EST

Motorcar Parts of America Reports Fiscal 2021 Third Quarter

Feb. 09, 2021

LOS ANGELES--(BUSINESS WIRE)--Feb. 09, 2021--Motorcar Parts of America, Inc. (Nasdaq: MPAA) today reported results for its fiscal 2021 third quarter ended December 31, 2020 -- reflecting increased profitability, positive cash flow from operations and continued debt reduction.

Net sales for the fiscal 2021 third quarter were $122.6 million compared with $125.6 million for the same period a year earlier, impacted by continued COVID-19 related challenges.

Net income for the fiscal 2021 third quarter was $8.5 million, or $0.44 per diluted share, compared with net income of $865,000, or $0.04 per diluted share, a year ago. Additional details of items impacting net income are shown in Exhibit 1.

"We continued to experience solid product demand for the third quarter, which was impacted by supply chain challenges due to the global pandemic -- resulting in order delays of approximately $17 million, which are expected to be realized between the current fiscal fourth quarter and the first quarter of the new fiscal year. Notwithstanding, we reported significant increases in profitability for the quarter and nine-month period on a year-over-year basis, with strong positive cash flow while building inventory for increasing demand," said Selwyn Joffe, chairman, president and chief executive officer of Motorcar Parts of America.

"As vaccination programs gain momentum across the country, and life returns to more normal patterns, we expect further increased demand for our products," Joffe added.

Results for the fiscal third quarter were impacted by approximately $1.6 million on a pre-tax basis, or $0.06 per share on a tax-effected basis, for cost of goods sold and operating expenses related to safety and health initiatives associated with COVID-19. Approximately $723,000 of the $1.6 million relates to incremental bonuses and wages paid to the company's dedicated operating employees on the front line. The balance relates to the costs of personal protection equipment (PPE) and social distancing initiatives.

Cash generated from operating activities was $33.2 million for the fiscal 2021 third quarter and net debt for the same period was reduced by 29.1 percent, or $27.8 million, to $67.6 million at December 31, 2020 from $95.4 million at September 30, 2020.

Gross profit for the fiscal 2021 third quarter was $24.2 million compared with $27.7 million a year earlier. Gross profit as a percentage of net sales for the fiscal 2021 third quarter was 19.8 percent compared with 22.0 percent a year earlier - reflecting in part the impact of supply chain challenges due to the global pandemic mentioned above, including higher freight and handling costs. Additional factors impacting gross profit are shown in Exhibit 3.

Nine-Month Results

Net sales for the fiscal 2021 nine-month period were $372.7 million compared with $385.1 million a year earlier, impacted by the sharp drop in demand in April due to the global pandemic. In addition, net sales were impacted by current pandemic supply chain challenges in the third quarter, resulting in order delays of approximately $17 million. This was partially offset by the benefit of $12.8 million due to a realignment of inventory at two customer distribution centers with expected future sales benefits as product mix changes.

Net income for the fiscal 2021 nine-month period was $20.6 million, or $1.07 per diluted share, compared with net income of $903,000, or $0.05 per diluted share, a year ago. Additional details of items impacting net income are shown in Exhibit 2.

Cash generated from operating activities was $72.5 million during the nine months ended December 31, 2020, and net debt was reduced by 46.6 percent, or $58.9 million, to $67.6 million at December 31, 2020 from $126.5 million at March 31, 2020.

Gross profit for the fiscal 2021 nine-month period was $77.4 million compared with $81.8 million a year earlier. Gross profit as a percentage of net sales for the fiscal 2021 nine-month period was 20.8 percent compared with 21.2 percent a year earlier - reflecting in part the impact of supply chain challenges due to the global pandemic mentioned above, including higher freight and handling costs. Additional factors impacting gross profit are shown in Exhibit 4.

FISCAL 2021 OUTLOOK

"Given the ongoing global pandemic and near-term related considerations, the company believes it is still not prudent to provide annual sales and gross margin guidance for fiscal 2021. However, we are encouraged by continued strong customer demand for our aftermarket parts - notwithstanding the near-term impact to sales by supply chain and other challenges related to COVID-19.

"As I stated last quarter, our industry is resilient, and we are continuing to execute our strategic plans for growth and profitability. We are guardedly optimistic about the near- and long-term opportunities as an essential supplier in the $125 billion hard parts industry and an evolving supplier to the fast-growing electric vehicle and aerospace market," Joffe said.

Use of Non-GAAP Measure

This press release includes the following non-GAAP measure - EBITDA, which is not a measure of financial performance under GAAP and should not be considered as an alternative to net income as a measure of financial performance. The company believes this non-GAAP measure, when considered together with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to the company's results of operations. However, this non-GAAP measure has significant limitations in that it does not reflect all the costs and other items associated with the operation of the company's business as determined in accordance with GAAP. In addition, the company's non-GAAP measures may be calculated differently and are therefore not comparable to similar measures by other companies. Therefore, investors should consider non-GAAP measures in addition to, and not as a substitute for, or superior to, measures of financial performance in accordance with GAAP. For a reconciliation of EBITDA to its corresponding GAAP measures, see the financial tables included in this press release. Also, refer to our Form 8-K to which this release is attached, and other filings we make with the SEC, for further information regarding these measures.

Teleconference and Web Cast

Selwyn Joffe, chairman, president and chief executive officer, and David Lee, chief financial officer, will host an investor conference call today at 10:00 a.m. Pacific time to discuss the company's financial results and operations.

The call will be open to all interested investors either through a live audio Web broadcast at www.motorcarparts.com or live by calling (833)-968-1924 (domestic) or (825)-312-2355 (international). For those who are not available to listen to the live broadcast, the call will be archived on Motorcar Parts of America's website www.motorcarparts.com. A telephone playback of the conference call will also be available from approximately 1:00 p.m. Pacific time on February 9, 2021 through 8:59 p.m. Pacific time on February 16, 2021 by calling (800)-585-8367 (domestic) or (416)-621-4642 (international) and using access code: 1652414.

About Motorcar Parts of America, Inc.

Motorcar Parts of America, Inc. is a remanufacturer, manufacturer, and distributor of automotive aftermarket parts -- including alternators, starters, wheel bearings and hub assemblies, brake calipers, brake master cylinders, brake power boosters, turbochargers, and diagnostic testing equipment utilized in imported and domestic passenger vehicles, light trucks, and heavy-duty applications. Its products are sold to automotive retail outlets and the professional repair market throughout the United States, Canada, and Mexico, with facilities located in California, New York, Mexico, Malaysia, China and India, and administrative offices located in California, Tennessee, Mexico, Singapore, Malaysia, and Canada. In addition, the company's electrical vehicle subsidiary designs and manufactures testing solutions for performance, endurance, and production of multiple components in the electric power train - providing simulation, emulation, and production applications for the electrification of both automotive and aerospace industries, including electric vehicle charging systems. Additional information is available at www.motorcarparts.com.

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain forward-looking statements. The statements contained in this press release that are not historical facts are forward-looking statements based on the company's current expectations and beliefs concerning future developments and their potential effects on the company. These forward-looking statements involve significant risks and uncertainties (some of which are beyond the control of the company) and are subject to change based upon various factors. Reference is also made to the Risk Factors set forth in the company's Form 10-K Annual Report filed with the Securities and Exchange Commission (SEC) in June 2020 and in its Forms 10-Q filed with the SEC for additional risks and uncertainties facing the company. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise.

MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(Unaudited)

Three Months Ended Nine Months Ended

December 31, December 31,

2020 2019 2020 2019

Net sales $ 122,568,000 $ 125,574,000 $ 372,654,000 $ 385,096,000

Cost of goods 98,327,000 97,913,000 295,300,000 303,279,000 soldGross profit 24,241,000 27,661,000 77,354,000 81,817,000

Operatingexpenses:General and 14,005,000 14,390,000 38,210,000 39,410,000 administrativeSales and 4,698,000 5,623,000 13,224,000 15,990,000 marketingResearch and 2,100,000 2,174,000 6,014,000 6,694,000 developmentForeignexchangeimpact of (12,455,000 ) (3,772,000 ) (21,257,000 ) (2,507,000 )leaseliabilitiesand forwardcontractsTotal 8,348,000 18,415,000 36,191,000 59,587,000 operatingexpensesOperating 15,893,000 9,246,000 41,163,000 22,230,000 incomeInterest 4,051,000 6,879,000 12,074,000 19,575,000 expense, netIncome before 11,842,000 2,367,000 29,089,000 2,655,000 income taxexpenseIncome tax 3,373,000 1,502,000 8,448,000 1,752,000 expenseNet income $ 8,469,000 $ 865,000 $ 20,641,000 $ 903,000

Basic net $ 0.44 $ 0.05 $ 1.09 $ 0.05 income pershareDiluted net $ 0.44 $ 0.04 $ 1.07 $ 0.05 income pershareWeightedaverage numberof sharesoutstanding:Basic 19,053,232 18,961,517 19,016,302 18,895,893

Diluted 19,436,793 19,305,805 19,333,758 19,263,114

MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2020March 31, 2020ASSETS(Unaudited)Current assets:Cash and cash equivalents$

12,800,000

$

49,616,000

Short-term investments1,508,000

850,000

Accounts receivable - net45,271,000

91,748,000

Inventory296,281,000

234,680,000

Contract assets25,382,000

20,332,000

Prepaid expenses and other current assets13,866,000

11,890,000

Total current assets395,108,000

409,116,000

Plant and equipment - net54,464,000

44,957,000

Operating lease assets74,685,000

53,029,000

Long-term deferred income taxes16,603,000

18,950,000

Long-term contract assets248,544,000

239,540,000

Goodwill and intangible assets - net8,876,000

9,598,000

Other assets956,000

1,839,000

TOTAL ASSETS$

799,236,000

$

777,029,000

LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities:Accounts payable and accrued liabilities$

146,073,000

$

95,083,000

Customer finished goods returns accrual34,267,000

25,326,000

Contract liabilities44,778,000

27,911,000

Revolving loan59,000,000

152,000,000

Other current liabilities4,798,000

9,390,000

Operating lease liabilities6,232,000

5,104,000

Current portion of term loan3,678,000

3,678,000

Total current liabilities298,826,000

318,492,000

Term loan, less current portion17,705,000

20,462,000

Long-term contract liabilities104,583,000

92,101,000

Long-term deferred income taxes73,000

79,000

Long-term operating lease liabilities71,569,000

61,425,000

Other liabilities6,796,000

8,950,000

Total liabilities499,552,000

501,509,000

Commitments and contingenciesShareholders' equity:Preferred stock; par value $.01 per share, 5,000,000 shares authorized; none issued-

-

Series A junior participating preferred stock; par value $.01 per share, 20,000 shares authorized; none issued-

-

Common stock; par value $.01 per share, 50,000,000 shares authorized; 19,056,292 and 18,969,380 shares issued and outstanding at December 31, 2020 and March 31, 2020, respectively191,000

190,000

Additional paid-in capital222,193,000

218,581,000

Retained earnings84,758,000

64,117,000

Accumulated other comprehensive loss(7,458,000

)

(7,368,000

)

Total shareholders' equity299,684,000

275,520,000

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$

799,236,000

$

777,029,000

Additional Information and Non-GAAP Financial Measures

To supplement the consolidated financial statements presented in accordance with U.S. generally accepted accounting principles ("GAAP"), the company has included the following additional information and non-GAAP financial measures for the three and nine months ended December 31, 2020 and 2019. Among other things, the company uses such additional information and non-GAAP adjusted financial measures in addition to and together with corresponding GAAP measures to help analyze the performance of its business.

The company believes this information helps provide a more complete understanding of the company's results of operations and the factors and trends affecting the company's business. However, this information should be considered as a supplement to, and not as a substitute for, or superior to, information contained in the company's financial statements prepared in accordance with GAAP. In addition, the company's non-GAAP measures may be calculated differently and are therefore not comparable to similar measures by other companies.

The company defines EBITDA as earnings before interest, taxes, depreciation, and amortization. A reconciliation of EBITDA to net income is provided below along with information regarding such items.

MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, March 31, 2020 2020ASSETS (Unaudited)Current assets:Cash and cash equivalents $ 12,800,000 $ 49,616,000

Short-term investments 1,508,000 850,000

Accounts receivable - net 45,271,000 91,748,000

Inventory 296,281,000 234,680,000

Contract assets 25,382,000 20,332,000

Prepaid expenses and other current assets 13,866,000 11,890,000

Total current assets 395,108,000 409,116,000

Plant and equipment - net 54,464,000 44,957,000

Operating lease assets 74,685,000 53,029,000

Long-term deferred income taxes 16,603,000 18,950,000

Long-term contract assets 248,544,000 239,540,000

Goodwill and intangible assets - net 8,876,000 9,598,000

Other assets 956,000 1,839,000

TOTAL ASSETS $ 799,236,000 $ 777,029,000

LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities:Accounts payable and accrued liabilities $ 146,073,000 $ 95,083,000

Customer finished goods returns accrual 34,267,000 25,326,000

Contract liabilities 44,778,000 27,911,000

Revolving loan 59,000,000 152,000,000

Other current liabilities 4,798,000 9,390,000

Operating lease liabilities 6,232,000 5,104,000

Current portion of term loan 3,678,000 3,678,000

Total current liabilities 298,826,000 318,492,000

Term loan, less current portion 17,705,000 20,462,000

Long-term contract liabilities 104,583,000 92,101,000

Long-term deferred income taxes 73,000 79,000

Long-term operating lease liabilities 71,569,000 61,425,000

Other liabilities 6,796,000 8,950,000

Total liabilities 499,552,000 501,509,000

Commitments and contingenciesShareholders' equity:Preferred stock; par value $.01 per share, - - 5,000,000 shares authorized; none issuedSeries A junior participating preferred - - stock; par value $.01 per share, 20,000shares authorized; none issuedCommon stock; par value $.01 per share,50,000,000 shares authorized; 19,056,292 and 191,000 190,000 18,969,380 shares issued and outstanding atDecember 31, 2020 and March 31, 2020,respectivelyAdditional paid-in capital 222,193,000 218,581,000

Retained earnings 84,758,000 64,117,000

Accumulated other comprehensive loss (7,458,000 ) (7,368,000 )

Total shareholders' equity 299,684,000 275,520,000

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 799,236,000 $ 777,029,000

Additional Information and Non-GAAP Financial Measures

To supplement the consolidated financial statements presented in accordance with U.S. generally accepted accounting principles ("GAAP"), the company has included the following additional information and non-GAAP financial measures for the three and nine months ended December 31, 2020 and 2019. Among other things, the company uses such additional information and non-GAAP adjusted financial measures in addition to and together with corresponding GAAP measures to help analyze the performance of its business.

The company believes this information helps provide a more complete understanding of the company's results of operations and the factors and trends affecting the company's business. However, this information should be considered as a supplement to, and not as a substitute for, or superior to, information contained in the company's financial statements prepared in accordance with GAAP. In addition, the company's non-GAAP measures may be calculated differently and are therefore not comparable to similar measures by other companies.

The company defines EBITDA as earnings before interest, taxes, depreciation, and amortization. A reconciliation of EBITDA to net income is provided below along with information regarding such items.

Items Impacting NetIncome for the Three Exhibit 1Months Ended December31, 2020 and 2019

Three Months Ended December 31,

2020 2019

$ Per Share $ Per Share

GAAP net income $ 8,469,000 $ 0.44 $ 865,000 $ 0.04

Items impacting netincomeCustomer allowances - - 777,000 0.04 related to new businessCore buy-back premium 1,528,000 0.08 1,326,000 0.07 amortization impactingnet salesImpact of tariffs (688,000 ) (0.04 ) - -

New product line 4,550,000 0.23 2,815,000 0.15 start-up costs andtransition expenses (a)Revaluation - cores on 1,304,000 0.07 2,395,000 0.12 customers' shelvesCOVID-related expenses 1,610,000 0.08 - - (b)Earn-out accruals and 44,000 0.00 310,000 0.02 severanceShare-based compensation 1,498,000 0.08 1,071,000 0.06 expensesForeign exchange impact (12,455,000 ) (0.64 ) (3,772,000 ) (0.20 )of lease liabilities andforward contracts.Tax effect (c) 652,000 0.03 (1,231,000 ) (0.06 )

(a) Consists of $4,217,000 included in cost of goods sold and $333,000 included in operating expenses for the three months ended December 31, 2020 and $2,148,000 included in cost of goods sold and $667,000 included in operating expenses for the three months ended December 31, 2019.(b) Consists of $1,052,000 included in cost of goods sold and $558,000 included in operating expenses for the three months ended December 31, 2020.(c) Tax effect is calculated by applying an income tax rate of 25.0% to items listed above; this rate may differ from the period's actual income tax rate. Historically, the company calculated the tax impact by applying an income tax rate of 25.0% to adjusted pre-tax income; if calculated on that basis, the tax effect would have been ($320,000) or ($0.02) per share for three months ended December 31, 2019.(a) Consists of $4,217,000 included in cost of goods sold and $333,000 includedin operating expenses for the three months ended December 31, 2020 and$2,148,000 included in cost of goods sold and $667,000 included in operatingexpenses for the three months ended December 31, 2019.(b) Consists of $1,052,000 included in cost of goods sold and $558,000 includedin operating expenses for the three months ended December 31, 2020.(c) Tax effect is calculated by applying an income tax rate of 25.0% to itemslisted above; this rate may differ from the period's actual income tax rate.Historically, the company calculated the tax impact by applying an income taxrate of 25.0% to adjusted pre-tax income; if calculated on that basis, the taxeffect would have been ($320,000) or ($0.02) per share for three months endedDecember 31, 2019.Items Impacting Net Income for the Nine Months Ended December 31, 2020 and 2019

Exhibit 2

Nine Months Ended December 31,

2020

2019

$

Per Share

$

Per Share

GAAP net income$

20,641,000

$

1.07

$

903,000

$

0.05

Items impacting net incomeCustomer allowances, return accruals and changeover costs (a) related to new business, net of costs307,000

0.02

1,231,000

0.06

Core buy-back premium amortization impacting net sales4,269,000

0.22

3,543,000

0.18

Impact of tariffs(3,535,000

)

(0.18

)

1,067,000

0.06

Cost in connection with a cancelled contract-

133,000

0.01

New product line start-up costs and transition expenses (b)12,564,000

0.65

7,465,000

0.39

Revaluation - cores on customers' shelves, and gain due to realignment of inventory at two customer distribution centers(811,000

)

(0.04

)

9,867,000

0.51

COVID-related expenses (c)5,953,000

0.31

-

-

Acquisition costs, earn-out accruals, severance and restatement-related fees19,000

0.00

292,000

0.02

Share-based compensation expenses3,759,000

0.19

3,112,000

0.16

Foreign exchange impact of lease liabilities and forward contracts(21,257,000

)

(1.10

)

(2,507,000

)

(0.13

)

Tax effect (d)(317,000

)

(0.02

)

(6,051,000

)

(0.31

)

Items Impacting NetIncome for the Nine Exhibit 2Months Ended December31, 2020 and 2019

Nine Months Ended December 31,

2020 2019

$ Per Share $ Per Share

GAAP net income $ 20,641,000 $ 1.07 $ 903,000 $ 0.05

Items impacting netincomeCustomer allowances,return accruals and 307,000 0.02 1,231,000 0.06 changeover costs (a)related to new business,net of costsCore buy-back premium 4,269,000 0.22 3,543,000 0.18 amortization impactingnet salesImpact of tariffs (3,535,000 ) (0.18 ) 1,067,000 0.06

Cost in connection with - 133,000 0.01 a cancelled contractNew product line 12,564,000 0.65 7,465,000 0.39 start-up costs andtransition expenses (b)Revaluation - cores oncustomers' shelves, andgain due to realignment (811,000 ) (0.04 ) 9,867,000 0.51 of inventory at twocustomer distributioncentersCOVID-related expenses 5,953,000 0.31 - - (c)Acquisition costs,earn-out accruals, 19,000 0.00 292,000 0.02 severance andrestatement-related feesShare-based compensation 3,759,000 0.19 3,112,000 0.16 expensesForeign exchange impact (21,257,000 ) (1.10 ) (2,507,000 ) (0.13 )of lease liabilities andforward contractsTax effect (d) (317,000 ) (0.02 ) (6,051,000 ) (0.31 )

(a) Includes changeover costs related to new business of $112,000 recorded in operating expenses for the nine months ended December 31, 2019.(b) Consists of $11,572,000 included in cost of goods sold and $992,000 included in operating expenses for the nine months ended December 31, 2020 and $5,829,000 included in cost of goods sold and $1,636,000 included in operating expenses for the nine months ended December 31, 2019.(c) Consists of $4,425,000 included in cost of goods sold and $1,528,000 included in operating expenses for the nine months ended December 31, 2020.(d) Tax effect is calculated by applying an income tax rate of 25.0% to items listed above; this rate may differ from the period's actual income tax rate. Historically, the company calculated the tax impact by applying an income tax rate of 25.0% to adjusted pre-tax income; if calculated on that basis, the tax effect would have been ($4,963,000) or ($0.26) per share for nine months ended December 31, 2019.(a) Includes changeover costs related to new business of $112,000 recorded inoperating expenses for the nine months ended December 31, 2019.(b) Consists of $11,572,000 included in cost of goods sold and $992,000included in operating expenses for the nine months ended December 31, 2020 and$5,829,000 included in cost of goods sold and $1,636,000 included in operatingexpenses for the nine months ended December 31, 2019.(c) Consists of $4,425,000 included in cost of goods sold and $1,528,000included in operating expenses for the nine months ended December 31, 2020.(d) Tax effect is calculated by applying an income tax rate of 25.0% to itemslisted above; this rate may differ from the period's actual income tax rate.Historically, the company calculated the tax impact by applying an income taxrate of 25.0% to adjusted pre-tax income; if calculated on that basis, the taxeffect would have been ($4,963,000) or ($0.26) per share for nine months endedDecember 31, 2019.Items Impacting Gross Profit for the Three Months Ended December 31, 2020 and 2019

Exhibit 3

Three Months Ended December 31,2020

2019

$

Gross Margin

$

Gross Margin

GAAP gross profit$

24,241,000

19.8

%

$

27,661,000

22.0

%

Items impacting gross profitCustomer allowances related to new business-

-

777,000

0.6

%

Core buy-back premium amortization impacting net sales1,528,000

1.2

%

1,326,000

1.1

%

Impact of tariffs(688,000

)

-0.6

%

-

-

New product line start-up costs and transition expenses4,217,000

3.4

%

2,148,000

1.7

%

Revaluation - cores on customers' shelves1,304,000

1.1

%

2,395,000

1.9

%

COVID-related expenses1,052,000

0.9

%

-

-

Items Impacting Gross Profit forthe Three Months Ended December Exhibit 331, 2020 and 2019

Three Months Ended December 31, 2020 2019

$ Gross $ Gross Margin Margin

GAAP gross profit $ 24,241,000 19.8 % $ 27,661,000 22.0 %

Items impacting gross profitCustomer allowances related to - - 777,000 0.6 %new businessCore buy-back premium 1,528,000 1.2 % 1,326,000 1.1 %amortization impacting net salesImpact of tariffs (688,000 ) -0.6 % - -

New product line start-up costs 4,217,000 3.4 % 2,148,000 1.7 %and transition expensesRevaluation - cores on customers' 1,304,000 1.1 % 2,395,000 1.9 %shelvesCOVID-related expenses 1,052,000 0.9 % - -

Items Impacting Gross Profit for the Nine Months Ended December 31, 2020 and 2019

Exhibit 4

Nine Months Ended December 31,

2020

2019

$

Gross Margin

$

Gross Margin

GAAP gross profit$

77,354,000

20.8

%

$

81,817,000

21.2

%

Items impacting gross profitCustomer allowances and return accruals related to new business, net of costs307,000

0.1

%

1,119,000

0.3

%

Core buy-back premium amortization impacting net sales4,269,000

1.1

%

3,543,000

0.9

%

Impact of tariffs(3,535,000

)

-0.9

%

1,067,000

0.3

%

Cost in connection with a cancelled contract-

-

133,000

0.0

%

New product line start-up costs and transition expenses11,572,000

3.1

%

5,829,000

1.5

%

Revaluation - cores on customers' shelves, and gain due to realignment of inventory at two customer distribution centers (a)(811,000

)

0.5

%

9,867,000

2.6

%

COVID-related expenses4,425,000

1.2

%

-

-

(a) Gross profit and gross margin impact to net sales and cost of goods sold

Items Impacting Gross Profit forthe Nine Months Ended December Exhibit 431, 2020 and 2019

Nine Months Ended December 31,

2020 2019

$ Gross $ Gross Margin Margin

GAAP gross profit $ 77,354,000 20.8 % $ 81,817,000 21.2 %

Items impacting gross profitCustomer allowances and return 307,000 0.1 % 1,119,000 0.3 %accruals related to new business,net of costsCore buy-back premium 4,269,000 1.1 % 3,543,000 0.9 %amortization impacting net salesImpact of tariffs (3,535,000 ) -0.9 % 1,067,000 0.3 %

Cost in connection with a - - 133,000 0.0 %cancelled contractNew product line start-up costs 11,572,000 3.1 % 5,829,000 1.5 %and transition expensesRevaluation - cores on customers'shelves, and gain due to (811,000 ) 0.5 % 9,867,000 2.6 %realignment of inventory at twocustomer distribution centers (a)COVID-related expenses 4,425,000 1.2 % - -

(a) Gross profit and gross margin impact to net sales and cost of goods sold

Items ImpactingEBITDA for theThree and Nine Exhibit 5Months EndedDecember 31, 2020and 2019

Three Months Ended December 31, Nine Months Ended December 31,

2020 2019 2020 2019

GAAP net income $ 8,469,000 $ 865,000 $ 20,641,000 $ 903,000

Interest expense, 4,051,000 6,879,000 12,074,000 19,575,000 netIncome tax expense 3,373,000 1,502,000 8,448,000 1,752,000

Depreciation and 2,857,000 2,400,000 8,090,000 7,019,000 amortizationEBITDA $ 18,750,000 $ 11,646,000 $ 49,253,000 $ 29,249,000

Items impactingEBITDACustomerallowances, returnaccruals and - 777,000 307,000 1,231,000 changeover costsrelated to newbusiness, net ofcostsCore buy-backpremium 1,528,000 1,326,000 4,269,000 3,543,000 amortizationimpacting net salesImpact of tariffs (688,000 ) - (3,535,000 ) 1,067,000

Cost in connection - - - 133,000 with a cancelledcontractNew product linestart-up costs and 4,421,000 2,733,000 12,235,000 7,246,000 transition expenses(a)Revaluation - coreson customers'shelves, and gaindue to realignment 1,304,000 2,395,000 (811,000 ) 9,867,000 of inventory at twocustomerdistributioncentersCOVID-related 1,610,000 - 5,953,000 - expensesAcquisition costs,earn-out accruals, 44,000 310,000 19,000 292,000 severance andrestatement-relatedfeesShare-based 1,498,000 1,071,000 3,759,000 3,112,000 compensationexpensesForeign exchangeimpact of lease (12,455,000 ) (3,772,000 ) (21,257,000 ) (2,507,000 )liabilities andforward contracts (a) Excludes depreciation, which is included in the depreciation and amortization line item.

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CONTACT: Gary S. Maier (310) 972-5124