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

Motorcar Parts of America Reports Strong Fiscal 2022 Second Quarter

Nov. 09, 2021

LOS ANGELES--(BUSINESS WIRE)--Nov. 09, 2021--Motorcar Parts of America, Inc. (Nasdaq: MPAA) today reported results for its fiscal 2022 second quarter ended September 30, 2021 - reflecting record sales for a quarter and six-month period.

Net sales for the fiscal 2022 second quarter increased 13.5 percent to $175.5 million from $154.7 million a year ago, and 16.7 percent from the pre-COVID-19 fiscal second quarter two years ago. Net sales for the three months ended September 30, 2021 included $13.7 million in core revenue compared with $12.8 million in the prior-year second quarter period, due to a realignment of inventory at customer distribution centers with expected future sales benefits as product mix changes.

Net income for the fiscal 2022 second quarter was $3.7 million, or $0.19 per diluted share, compared with $15.2 million, or $0.78 per diluted share, a year ago. Details of items impacting net income totaling $0.49 per diluted share are shown in Exhibit 1.

"Net sales and profitability for the fiscal second quarter benefitted from continued strong demand for non-discretionary aftermarket parts, notwithstanding global supply chain challenges and disruptions that restrained our record sales performance. The company's ongoing success continues to benefit from our multi-year strategic footprint expansion, with additional efficiencies expected to be realized moving forward," said Selwyn Joffe, chairman, president and chief executive officer of Motorcar Parts of America.

He emphasized that the company has instituted price increases to mitigate ongoing freight and supply chain cost increases, and that the demand outlook continues to be strong. Joffe noted that the gross margins for the quarter only reflect a small portion of the price increases.

"In addition, our presence in the electric vehicle market is continuing to gain momentum -- driven by increasing demand for battery power emulation, testing and development of inverters, electric motors, and high-speed battery-charging station applications offered by our wholly owned D&V subsidiary," Joffe added.

Gross profit and operating expenses for the fiscal second quarter continued to be impacted by COVID-19 expenses related to safety, health initiatives, inefficiencies in the supply chain and incrementally higher freight costs totaling approximately $6.0 million on a pre-tax basis, or $0.23 per share on a tax-effected basis.

Net cash used in operating activities was $19.6 million for the fiscal 2022 second quarter and net debt was $120.6 million at September 30, 2021 compared with $97.6 million at June 30, 2021, reflecting working capital requirements to support the record sales for the quarter and inventory increases for anticipated business growth.

Gross profit for the fiscal 2022 second quarter was $36.0 million compared with $39.7 million a year earlier. Gross profit as a percentage of net sales for the fiscal 2022 second quarter was 20.5 percent compared with 25.7 percent a year earlier. Gross margin was primarily impacted by higher costs related to COVID-19; brake caliper start-up costs and other product relocation expenses related to the expansion in Mexico; and other items, including non-cash and non-economic expenses totaling 5.1 percent, as detailed in Exhibit 3 of the press release. In addition to the above items, gross profit was further impacted by growth initiatives in connection with the expansion of the company's new product lines, and inflationary costs related to the global pandemic, especially disruptions with worldwide supply chain and logistics services.

Six-Month Results

Net sales for the fiscal 2022 six-month period increased 29.8 percent to $324.6 million from $250.1 million a year earlier, and 25.1 percent from the pre-COVID-19 fiscal six-month period two years ago. Net sales for the six months ended September 30, 2021 included $13.7 million in core revenue compared with $12.8 million in the prior-year period, as discussed above.

Net income for the fiscal 2022 six-month period was $4.5 million, or $0.23 per diluted share, compared with net income of $12.2 million, or $0.63 per diluted share, a year ago. Details of items impacting net income totaling $0.88 per diluted share are shown in Exhibit 2.

Net cash used in operating activities was $24.3 million during the six months ended September 30, 2021, and net debt was $120.6 million at September 30, 2021 compared with $88.9 million at March 31, 2021, reflecting working capital requirements to support the record sales for the six-month period and inventory increases for anticipated business growth.

Gross profit for the fiscal 2022 six-month period was $59.5 million compared with $53.1 million a year earlier. Gross profit as a percentage of net sales for the fiscal 2022 six-month period was 18.3 percent compared with 21.2 percent a year earlier. Details of items impacting gross profit as a percentage of net sales totaling 5.9 percent are shown in Exhibit 4.

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 November 9, 2021 through 8:59 p.m. Pacific time on November 16, 2021 by calling (800)-585-8367 (domestic) or (416)-621-4642 (international) and using access code: 9954318.

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 2021 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 Six Months Ended September 30, September 30, 2021 2020 2021 2020

Net sales $ 175,548,00 $ 154,730,000 $ 324,582,000 $ 250,086,000

Cost of goods 139,597,000 115,004,000 265,060,000 196,973,000 soldGross profit 35,951,000 39,726,000 59,522,000 53,113,000

Operatingexpenses:General and 14,465,000 12,518,000 26,951,000 24,205,000 administrativeSales and 5,520,000 4,326,000 10,888,000 8,526,000 marketingResearch and 2,495,000 1,972,000 4,996,000 3,914,000 developmentForeignexchange impactof lease 3,917,000 (3,985,000 ) 1,384,000 (8,802,000 )liabilities andforwardcontractsTotal operating 26,397,000 14,831,000 44,219,000 27,843,000 expensesOperating 9,554,000 24,895,000 15,303,000 25,270,000 incomeInterest 3,620,000 3,614,000 7,561,000 8,023,000 expense, netIncome before 5,934,000 21,281,000 7,742,000 17,247,000 income taxexpenseIncome tax 2,251,000 6,097,000 3,198,000 5,075,000 expense Net income $ 3,683,000 $ 15,184,000 $ 4,544,000 $ 12,172,000

Basic net $ 0.19 $ 0.80 $ 0.24 $ 0.64 income pershareDiluted net $ 0.19 $ 0.78 $ 0.23 $ 0.63 income pershareWeightedaverage numberof sharesoutstanding:Basic 19,135,356 19,022,414 19,094,904 18,999,461

Diluted 19,619,774 19,345,311 19,638,045 19,289,765

MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

September 30, 2021March 31, 2021ASSETS(Unaudited)Current assets:Cash and cash equivalents$

17,911,000

$

15,523,000

Short-term investments2,072,000

1,652,000

Accounts receivable - net60,663,000

63,122,000

Inventory330,494,000

302,913,000

Contract assets32,329,000

26,940,000

Prepaid expenses and other current assets12,952,000

12,706,000

Total current assets456,421,000

422,856,000

Plant and equipment - net51,236,000

53,854,000

Operating lease assets84,576,000

71,513,000

Long-term deferred income taxes19,861,000

19,381,000

Long-term contract assets305,991,000

270,213,000

Goodwill and intangible assets - net7,713,000

8,534,000

Other assets1,414,000

1,531,000

TOTAL ASSETS$

927,212,000

$

847,882,000

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

127,991,000

$

152,735,000

Customer finished goods returns accrual34,539,000

31,524,000

Contract liabilities49,843,000

41,072,000

Revolving loan120,000,000

84,000,000

Other current liabilities6,638,000

6,683,000

Operating lease liabilities6,033,000

6,439,000

Current portion of term loan3,670,000

3,678,000

Total current liabilities348,714,000

326,131,000

Term loan, less current portion14,877,000

16,786,000

Long-term contract liabilities162,007,000

125,223,000

Long-term deferred income taxes74,000

73,000

Long-term operating lease liabilities83,998,000

70,551,000

Other liabilities7,295,000

7,973,000

Total liabilities616,965,000

546,737,000

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;19,172,755 and 19,045,386 shares issued and outstanding at September 30, 2021 andMarch 31, 2021, respectively192,000

190,000

Additional paid-in capital225,170,000

223,058,000

Retained earnings90,137,000

85,593,000

Accumulated other comprehensive loss(5,252,000

)

(7,696,000

)

Total shareholders' equity310,247,000

301,145,000

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$

927,212,000

$

847,882,000

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 six months ended September 30, 2021 and 2020. 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

September 30, March 31, 2021 2021ASSETS (Unaudited)Current assets:Cash and cash equivalents $ 17,911,000 $ 15,523,000

Short-term investments 2,072,000 1,652,000

Accounts receivable - net 60,663,000 63,122,000

Inventory 330,494,000 302,913,000

Contract assets 32,329,000 26,940,000

Prepaid expenses and other current assets 12,952,000 12,706,000

Total current assets 456,421,000 422,856,000

Plant and equipment - net 51,236,000 53,854,000

Operating lease assets 84,576,000 71,513,000

Long-term deferred income taxes 19,861,000 19,381,000

Long-term contract assets 305,991,000 270,213,000

Goodwill and intangible assets - net 7,713,000 8,534,000

Other assets 1,414,000 1,531,000

TOTAL ASSETS $ 927,212,000 $ 847,882,000

LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities:Accounts payable and accrued liabilities $ 127,991,000 $ 152,735,000

Customer finished goods returns accrual 34,539,000 31,524,000

Contract liabilities 49,843,000 41,072,000

Revolving loan 120,000,000 84,000,000

Other current liabilities 6,638,000 6,683,000

Operating lease liabilities 6,033,000 6,439,000

Current portion of term loan 3,670,000 3,678,000

Total current liabilities 348,714,000 326,131,000

Term loan, less current portion 14,877,000 16,786,000

Long-term contract liabilities 162,007,000 125,223,000

Long-term deferred income taxes 74,000 73,000

Long-term operating lease liabilities 83,998,000 70,551,000

Other liabilities 7,295,000 7,973,000

Total liabilities 616,965,000 546,737,000

Commitments and contingenciesShareholders' equity:Preferred stock; par value $.01 per share, - - 5,000,000 shares authorized; none issuedSeries A junior participating preferredstock; par value $.01 per share,20,000 shares authorized; none issued - -

Common stock; par value $.01 per share,50,000,000 shares authorized;19,172,755 and 19,045,386 shares issued andoutstanding at September 30, 2021 andMarch 31, 2021, respectively 192,000 190,000

Additional paid-in capital 225,170,000 223,058,000

Retained earnings 90,137,000 85,593,000

Accumulated other comprehensive loss (5,252,000 ) (7,696,000 )

Total shareholders' equity 310,247,000 301,145,000

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 927,212,000 $ 847,882,000

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 six months ended September 30, 2021 and 2020. 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 Net Income for the Three Months Ended Exhibit 1September 30, 2021 and 2020

Three Months Ended September 30, 2021 2020

$ Per Share $ Per Share

GAAP net income $ 3,683,000 $ 0.19 $ 15,184,000 $ 0.78

Items impacting netincomeCore and finished goodspremium amortization and $ 3,190,000 $ 0.16 $ 1,518,000 $ 0.08 new business returnaccrualsImpact of tariffs - - (2,847,000 ) (0.15 )

New product line start-up 884,000 0.05 4,428,000 0.23 costs and transitionexpenses (a)Revaluation - cores oncustomers' shelves, and (3,175,000 ) (0.16 ) (3,499,000 ) (0.18 )gain due to realignmentof inventory at customerdistribution centersIncreased expenses 6,025,000 0.31 2,048,000 0.11 related to COVID-19 (b)Share-based compensation 1,981,000 0.10 1,200,000 0.06 expenses and earn-outaccrualsForeign exchange impact 3,917,000 0.20 (3,985,000 ) (0.21 )of lease liabilities andforward contractsTax effect (c) (3,206,000 ) (0.16 ) 284,000 0.01

Total items impacting net $ 9,616,000 $ 0.49 $ (853,000 ) $ (0.04 )income(a)For the three-months ended September 30, 2021, consists of $797,000 included in cost of goods sold and $87,000 included in operating expenses. For the three-months ended September 30, 2020, consists of $4,054,000 included in cost of goods sold and $374,000 included in operating expenses.(b)For the three-months ended September 30, 2021, consists of higher expenses due to COVID-19 of $5,452,000 impacting gross profit (primarily related to increased freight costs) and $573,000 included in operating expenses. For the three-months ended September 30, 2020, consists of higher expenses due to COVID-19 of $1,533,000 impacting gross profit and $515,000 included in operating expenses.(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. For the three-months ended September 30, 2021, consists of $797,000 included in cost of goods sold and $87,000 included in operating expenses.(a) For the three-months ended September 30, 2020, consists of $4,054,000 included in cost of goods sold and $374,000 included in operating expenses. For the three-months ended September 30, 2021, consists of higher expenses due to COVID-19 of $5,452,000 impacting gross profit (primarily related to(b) increased freight costs) and $573,000 included in operating expenses. For the three-months ended September 30, 2020, consists of higher expenses due to COVID-19 of $1,533,000 impacting gross profit and $515,000 included in operating expenses. Tax effect is calculated by applying an income tax rate of 25.0% to items(c) listed above; this rate may differ from the period's actual income tax rate. Items Impacting Net Income for the Six Months Ended September 30, 2021 and 2020Exhibit 2

Six Months Ended September 30,2021

2020

$

Per Share

$

Per Share

GAAP net income$

4,544,000

$

0.23

$

12,172,000

$

0.63

Items impacting net incomeCore and finished goods premium amortization and new business return accruals$

5,867,000

$

0.30

$

3,048,000

$

0.16

Impact of tariffs-

-

(2,847,000

)

(0.15

)

New product line start-up costs and transition expenses (a)3,067,000

0.16

8,014,000

0.42

Revaluation - cores on customers' shelves, and gain due to realignment of inventory at customer distribution centers(2,191,000

)

(0.11

)

(2,115,000

)

(0.11

)

Increased expenses related to COVID-19 (b)11,322,000

0.58

4,343,000

0.23

Share-based compensation expenses and earn-out accruals3,524,000

0.18

2,236,000

0.12

Foreign exchange impact of lease liabilities and forward contracts1,384,000

0.07

(8,802,000

)

(0.46

)

Tax effect (c)(5,743,000

)

(0.29

)

(969,000

)

(0.05

)

Total items impacting net income$

17,230,000

$

0.88

$

2,908,000

$

0.15

Items Impacting Net Income for the Six Months Ended Exhibit 2September 30, 2021 and 2020 Six Months Ended September 30, 2021 2020

$ Per Share $ Per Share

GAAP net income $ 4,544,000 $ 0.23 $ 12,172,000 $ 0.63

Items impacting netincomeCore and finished goodspremium amortization and $ 5,867,000 $ 0.30 $ 3,048,000 $ 0.16 new business returnaccrualsImpact of tariffs - - (2,847,000 ) (0.15 )

New product line start-up 3,067,000 0.16 8,014,000 0.42 costs and transitionexpenses (a)Revaluation - cores oncustomers' shelves, and (2,191,000 ) (0.11 ) (2,115,000 ) (0.11 )gain due to realignmentof inventory at customerdistribution centersIncreased expenses 11,322,000 0.58 4,343,000 0.23 related to COVID-19 (b)Share-based compensation 3,524,000 0.18 2,236,000 0.12 expenses and earn-outaccrualsForeign exchange impact 1,384,000 0.07 (8,802,000 ) (0.46 )of lease liabilities andforward contractsTax effect (c) (5,743,000 ) (0.29 ) (969,000 ) (0.05 )

Total items impacting net $ 17,230,000 $ 0.88 $ 2,908,000 $ 0.15 income(a)For the six-months ended September 30, 2021, consists of $2,744,000 included in cost of goods sold and $323,000 included in operating expenses. For the six-months ended September 30, 2020, consists of $7,355,000 included in cost of goods sold and $659,000 included in operating expenses.(b)For the six-months ended September 30, 2021, consists of higher expenses due to COVID-19 of $10,213,000 impacting gross profit (primarily related to increased freight costs) and $1,109,000 included in operating expenses. For the six-months ended September 30, 2020, consists of higher expenses due to COVID-19 of $3,373,000 impacting gross profit and $970,000 included in operating expenses.(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. For the six-months ended September 30, 2021, consists of $2,744,000 included in cost of goods sold and $323,000 included in operating(a) expenses. For the six-months ended September 30, 2020, consists of $7,355,000 included in cost of goods sold and $659,000 included in operating expenses. For the six-months ended September 30, 2021, consists of higher expenses due to COVID-19 of $10,213,000 impacting gross profit (primarily related(b) to increased freight costs) and $1,109,000 included in operating expenses. For the six-months ended September 30, 2020, consists of higher expenses due to COVID-19 of $3,373,000 impacting gross profit and $970,000 included in operating expenses. Tax effect is calculated by applying an income tax rate of 25.0% to items(c) listed above; this rate may differ from the period's actual income tax rate.Items Impacting Gross Profit for the Three Months Ended September 30, 2021 and 2020

Exhibit 3

Three Months Ended September 30,2021

2020

$

Gross Margin

$

Gross Margin

GAAP gross profit$

35,951,000

20.5

%

$

39,726,000

25.7

%

Items impacting gross profitCore and finished goods premium amortization and new business return accruals$

3,190,000

1.8

%

$

1,518,000

1.0

%

Impact of tariffs-

-

(2,847,000

)

-1.8

%

New product line start-up costs and transition expenses797,000

0.5

%

4,054,000

2.6

%

Revaluation - cores on customers' shelves, and gain due to realignment of inventory at customer distribution centers (a)(3,175,000

)

-0.3

%

(3,499,000

)

-0.2

%

Increased expenses related to COVID-195,452,000

3.1

%

1,533,000

1.0

%

Total items impacting gross profit$

6,264,000

5.1

%

$

759,000

2.5

%

Items Impacting Gross Profit for the Three Months Ended Exhibit 3September 30, 2021 and 2020

Three Months Ended September 30, 2021 2020

$ Gross $ Gross Margin Margin

GAAP gross profit $ 35,951,000 20.5 % $ 39,726,000 25.7 %

Items impacting gross profitCore and finished goods premium $ 3,190,000 1.8 % $ 1,518,000 1.0 %amortization and new businessreturn accrualsImpact of tariffs - - (2,847,000 ) -1.8 %

New product line start-up costs 797,000 0.5 % 4,054,000 2.6 %and transition expensesRevaluation - cores oncustomers' shelves, and gain (3,175,000 ) -0.3 % (3,499,000 ) -0.2 %due to realignment of inventoryat customer distributioncenters (a)Increased expenses related to 5,452,000 3.1 % 1,533,000 1.0 %COVID-19Total items impacting gross $ 6,264,000 5.1 % $ 759,000 2.5 %profit(a)

gross margin reflecting impact to net sales and cost of goods sold

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

Items Impacting Gross Profit for the Six Months Ended September 30, 2021 and 2020

Exhibit 4

Six Months Ended September 30,2021

2020

$

Gross Margin

$

Gross Margin

GAAP gross profit$

59,522,000

18.3

%

$

53,113,000

21.2

%

Items impacting gross profitCore and finished goods premium amortization and new business return accruals$

5,867,000

1.8

%

$

3,048,000

1.2

%

Impact of tariffs-

-

(2,847,000

)

-1.1

%

New product line start-up costs and transition expenses2,744,000

0.8

%

7,355,000

2.9

%

Revaluation - cores on customers' shelves, and gain due to realignment of inventory at customer distribution centers (a)(2,191,000

)

0.1

%

(2,115,000

)

0.2

%

Increased expenses related to COVID-1910,213,000

3.1

%

3,373,000

1.3

%

Total items impacting gross profit$

16,633,000

5.9

%

$

8,814,000

4.6

%

Items Impacting Gross Profit for the Six Months Ended Exhibit 4September 30, 2021 and 2020

Six Months Ended September 30, 2021 2020

$ Gross $ Gross Margin Margin

GAAP gross profit $ 59,522,000 18.3 % $ 53,113,000 21.2 %

Items impacting gross profitCore and finished goods premium $ 5,867,000 1.8 % $ 3,048,000 1.2 %amortization and new businessreturn accrualsImpact of tariffs - - (2,847,000 ) -1.1 %

New product line start-up costs 2,744,000 0.8 % 7,355,000 2.9 %and transition expensesRevaluation - cores oncustomers' shelves, and gain (2,191,000 ) 0.1 % (2,115,000 ) 0.2 %due to realignment of inventoryat customer distributioncenters (a)Increased expenses related to 10,213,000 3.1 % 3,373,000 1.3 %COVID-19Total items impacting gross $ 16,633,000 5.9 % $ 8,814,000 4.6 %profit(a)

gross margin reflecting impact to net sales and cost of goods sold

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

Items Impacting EBITDA for the Three and Six Months Ended September 30, 2021 and 2020

Exhibit 5

Three Months Ended September 30,Six Months Ended September 30,2021

2020

2021

2020

GAAP net income$

3,683,000

$

15,184,000

$

4,544,000

$

12,172,000

Interest expense, net3,620,000

3,614,000

7,561,000

8,023,000

Income tax expense2,251,000

6,097,000

3,198,000

5,075,000

Depreciation and amortization3,219,000

2,682,000

6,364,000

5,233,000

EBITDA$

12,773,000

$

27,577,000

$

21,667,000

$

30,503,000

Items impacting EBITDACore and finished goods premium amortization and new business return accruals$

3,190,000

$

1,518,000

$

5,867,000

$

3,048,000

Impact of tariffs-

(2,847,000

)

-

(2,847,000

)

New product line start-up costs and transition expenses (a)820,000

4,318,000

2,836,000

7,814,000

Revaluation - cores on customers' shelves, and gain due to realignment of inventory at customer distribution centers(3,175,000

)

(3,499,000

)

(2,191,000

)

(2,115,000

)

Increased expenses related to COVID-196,025,000

2,048,000

11,322,000

4,343,000

Share-based compensation expenses and earn-out accruals1,981,000

1,200,000

3,524,000

2,236,000

Foreign exchange impact of lease liabilities and forward contracts3,917,000

(3,985,000

)

1,384,000

(8,802,000

)

Total items impacting EBITDA$

12,758,000

$

(1,247,000

)

$

22,742,000

$

3,677,000

Items Impacting EBITDA for the Three and Six Exhibit 5Months Ended September 30, 2021 and 2020

Three Months Ended September Six Months Ended September 30, 30, 2021 2020 2021 2020

GAAP net income $ 3,683,000 $ 15,184,000 $ 4,544,000 $ 12,172,000

Interest 3,620,000 3,614,000 7,561,000 8,023,000 expense, netIncome tax 2,251,000 6,097,000 3,198,000 5,075,000 expenseDepreciation 3,219,000 2,682,000 6,364,000 5,233,000 andamortizationEBITDA $ 12,773,000 $ 27,577,000 $ 21,667,000 $ 30,503,000

Items impactingEBITDACore andfinished goodspremium $ 3,190,000 $ 1,518,000 $ 5,867,000 $ 3,048,000 amortizationand newbusiness returnaccrualsImpact of - (2,847,000 ) - (2,847,000 )tariffsNew productline start-up 820,000 4,318,000 2,836,000 7,814,000 costs andtransitionexpenses (a)Revaluation -cores oncustomers'shelves, andgain due to (3,175,000 ) (3,499,000 ) (2,191,000 ) (2,115,000 )realignment ofinventory atcustomerdistributioncentersIncreasedexpenses 6,025,000 2,048,000 11,322,000 4,343,000 related toCOVID-19Share-basedcompensation 1,981,000 1,200,000 3,524,000 2,236,000 expenses andearn-outaccrualsForeignexchange impactof lease 3,917,000 (3,985,000 ) 1,384,000 (8,802,000 )liabilities andforwardcontractsTotal items $ 12,758,000 $ (1,247,000 ) $ 22,742,000 $ 3,677,000 impactingEBITDA(a)

Excludes depreciationwhich is included in the depreciation and amortization line item.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211109005776/en/

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