Motorcar Parts of America (MPAA) delivered a resilient FY2024 despite industry softness in late Q3 and Q4, with solid cash generation and margin recovery supported by pricing actions and a ramp in brake-related product lines. For the full year, net sales rose 5.1% to $717.7 million, gross margin expanded to 18.5%, and EBITDA reached $58.6 million, while cash flow from operations totaled approximately $39.2 million and net debt was reduced to $114 million. The year was highlighted by a strategic shift toward higher-margin brake programs, ongoing working-capital initiatives, and the early-stage but meaningful contribution from non-discretionary testing and diagnostic solutions. Management signaled confidence in FY2025 through targeted sales growth of 3.9%–6.7% and EBITDA/profitability expansion driven by volume, price realisations and cost efficiencies, while also noting ongoing investments in manufacturing footprint, notably the Malaysia wheel-hub site, and a vendor-finance program to extend supplier terms.
In Q4 2024 alone, revenue declined modestly year-over-year to $189.5 million, with gross margin near 18.4% and quarterly EBITDA of $17.7 million. The quarterly net income was modest at $1.3 million due to a mix of higher interest expense from a broader accounts-receivable discount program and non-cash/tax-related items, yet the company still generated meaningful free cash flow headwinds and remains on track to realize margin accretion as price increases take hold and brake programs scale. MPAA also disclosed a clear path to improving cash flow through working-capital neutralization (targeting roughly $20 million in annualized working-capital relief) and a continued emphasis on higher-value parts introductions (800+ new part numbers annually).
Overall, the investment thesis rests on (1) visible margin uplift from price increases and brake-program efficiencies, (2) strengthening non-discretionary aftermarket demand across product lines (including Mexico and hard parts), and (3) a capital-allocation framework that prioritizes debt reduction and potential buybacks in the context of improving free cash flow and a strengthened balance sheet. Risks include elevated interest expense from supplier-discount programs, ongoing industry softness in select categories, and execution risk around new brake and testing platforms.