ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
|
(Address of principal executive offices) |
Zip Code |
Title of each class |
Trading symbol(s) |
Name of each exchange on which registered |
Large accelerated filer ☐ |
||
Non-accelerated filer ☐ |
Smaller reporting company |
|
Emerging growth company |
PART I |
|
5 |
|
12 |
|
20 |
|
21 |
|
21 |
|
21 |
|
PART II |
|
22 |
|
24 |
|
25 |
|
42 |
|
43 |
|
43 |
|
43 |
|
44 |
|
PART III |
|
45 |
|
45 |
|
45 |
|
45 |
|
45 |
|
PART IV |
|
46 |
|
50 |
|
51 |
• | Grow our current product lines both with existing and potential new customers. We continue to develop and offer current and new sales programs to ensure that we are supporting our customers’ businesses. We remain dedicated to managing growth and continuing to focus on enhancements to our infrastructure and making investments in resources to support our customers. We have globally positioned manufacturing and distribution centers to support our continuous growth. |
• | Introduction of new product lines. We continue to strive to expand our business by exploring new product lines, including working with our customers to identify potential new product opportunities. |
• | Creating value for our customers. A core part of our strategy is ensuring that we add meaningful value for our customers. We consistently support and pilot our customers’ supply management initiatives in addition to providing demand analytics, inventory management services, online training guides, and market share and retail store layout information to our customers. |
• | Technological innovation. We continue to expand our research and development teams as we further develop in-house technologies and advanced testing methods. This elevated level of technology aims to deliver our customers high quality products and support services. |
• | We provide industry-leading test solutions and diagnostic equipment to both the original equipment and aftermarket. We are continuously upgrading our equipment to accommodate testing for the latest alternator and starter technology for both existing and new customers. These software and hardware upgrades are also available for existing products that the customer is using. In addition, we provide industry leading maintenance and service support for our test solutions and diagnostic equipment to provide a better end-user experience and value to our customers. |
• | Market and grow our new product lines on a global basis. We offer products and services that cater to automotive test solutions and diagnostic equipment for inverter and electric motors for both development and production. In addition, we provide power supply hardware and emulation software diagnostic products. Our strategy is to market these products on a global basis to OE manufacturers as well as suppliers to the OE manufacturers for development and production of electric vehicles and electric vehicle charging systems. We believe this is a rapidly emerging business, and see the opportunity for accelerating growth rates. In addition, we are well-positioned to supply test solutions and diagnostic equipment to the aerospace industry to support its shift to electric power driven control systems in airplanes. |
• | sorting the Used Cores returned by customers utilizing an innovative and efficient core-sorting process; |
• | reconditioning and re-utilizing durable components after passing rigorous testing processes; |
• | savings of raw materials due to a reduction in the required materials used in the remanufacturing production process, compared with new product processes; and |
• | recycling of water, cardboard, and metal. |
• | supply chain delays or stoppages due to shipping delays (cargo ship, train and truck shortages as well as staffing shortages) resulting in increased freight costs, closed supplier facilities or distribution centers, reduced workforces, scarcity of raw materials and scrutiny or embargoing of goods produced in infected areas; |
• | reduced and/or deferred consumer demand for our products as a result of the economic downturn, during the COVID-19 pandemic; |
• | change in demand for or availability of our products as a result of our customers modifying their restocking, fulfillment, or shipping practices; |
• | increased raw material, and other input costs resulting from market volatility; |
• | increased working capital needs and/or an increase in trade accounts receivable write-offs as a result of increased financial pressures on our suppliers or customers; and |
• | fluctuations in foreign currency exchange rates or interest rates resulting from market uncertainties. |
• | respond more quickly than we can to new or emerging technologies and changes in customer requirements by devoting greater resources than we can to the development, promotion and sale of automotive aftermarket products; |
• | engage in more extensive research and development; and |
• | spend more money and resources on marketing and promotion. |
• | significant delays in the delivery of cargo due to port security considerations; |
• | imposition of duties, taxes, tariffs or other charges on imports; |
• | financial or political instability in any of the countries in which our product is manufactured; |
• | potential recalls or cancellations of orders for any product that does not meet our quality standards; |
• | disruption of imports by labor disputes or strikes and local business practices; |
• | natural disasters, disease epidemics and health related concerns, which could result in closed factories, reduced workforces, scarcity of raw materials and scrutiny or embargoing of goods produced in infected areas; |
• | imposition of new legislation relating to import quotas or other restrictions that may limit the quantity of our product that may be imported into the U.S. from countries or regions where we do business; |
• | political or military conflict involving the U.S., which could cause a delay in the transportation of our products and an increase in transportation costs; |
• | heightened terrorism security concerns, which could subject imported goods to additional, more frequent or more thorough inspections, leading to delays in deliveries or impoundment of goods for extended periods; |
• | inability of our non-U.S. suppliers to obtain adequate credit or access liquidity to finance their operations; and |
• | our ability to enforce any agreements with our foreign suppliers. |
• | raw material shortages; |
• | problems with oceanic shipping, including shipping container shortages; |
• | increased customs inspections of import shipments or other factors causing delays in shipments; and |
• | increases in shipping rates, all of which we experienced. |
• | work stoppages; |
• | strikes and political unrest; |
• | economic crises; |
• | international disputes and wars; |
• | loss of “most favored nation” trading status by the U. S. in relations to a particular foreign country; |
• | import duties; and |
• | import quotas and other trade sanctions. |
• | exchange controls and currency restrictions; |
• | currency fluctuations and devaluations; |
• | changes in local economic conditions; |
• | repatriation restrictions (including the imposition or increase of withholding and other taxes on remittances and other payments by foreign subsidiaries); |
• | global sovereign uncertainty and hyperinflation in certain foreign countries; |
• | laws and regulations relating to export and import restrictions; |
• | exposure to government actions; |
• | increased required employment related costs; and |
• | exposure to local political or social unrest including resultant acts of war, terrorism or similar events. |
• | the difficulty in integrating newly-acquired businesses and operations in an efficient and effective manner; |
• | the challenges in achieving strategic objectives, cost savings and other benefits from acquisitions; |
• | the potential loss of key employees of the acquired businesses; |
• | the risk of diverting the attention of senior management from our operations; |
• | risks associated with integrating financial reporting and internal control systems; |
• | difficulties in expanding information technology systems and other business processes to accommodate the acquired businesses; and |
• | future impairments of any goodwill of an acquired business. |
Location |
Type of Facility |
Approx. Square Feet |
Leased or Owned |
Expiration |
||||
Torrance, CA |
Remanufacturing, Warehouse, Administrative, and Office |
231,000 |
Leased |
March 2032 |
||||
Tijuana, Mexico |
Remanufacturing, Warehouse, and Office |
312,000 |
Leased |
August 2033 |
||||
Tijuana, Mexico |
Distribution Center and Office |
410,000 |
Leased |
December 2032 |
||||
Tijuana, Mexico |
Remanufacturing, Warehouse, and Office |
199,000 |
Leased |
December 2032 |
||||
Tijuana, Mexico |
Core Induction, Warehouse, and Office |
173,000 |
Leased |
December 2032 |
||||
Ontario, Canada |
Remanufacturing, Warehouse, and Office |
157,000 |
Leased |
May 2023 |
||||
Ontario, Canada |
Manufacturing, Warehouse, and Office |
35,000 |
Leased |
December 2022 |
||||
Singapore & Malaysia |
Remanufacturing, Warehouse, and Office |
114,000 |
Leased |
Various through December 2022 |
||||
Shanghai, China |
Warehouse and Office |
27,000 |
Leased |
March 2023 |
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) |
||||||||||||
January 1 - January 31, 2021: |
||||||||||||||||
Open market and privately negotiated purchases |
- |
$ |
- |
- |
$ |
21,308,000 |
||||||||||
February 1 - February 28, 2021: |
||||||||||||||||
Open market and privately negotiated purchases |
54,960 |
$ |
20.72 |
54,960 |
20,169,000 |
|||||||||||
March 1 - March 31, 2021: |
||||||||||||||||
Open market and privately negotiated purchases |
- |
$ |
- |
- |
20,169,000 |
|||||||||||
Total |
54,960 |
54,960 |
$ |
20,169,000 |
(1) | As of March 31, 2021, $16,831,000 of the $37,000,000 was utilized and $20,169,000 remains available to repurchase shares under the authorized share repurchase program, subject to the limit in our Credit Facility. We retired the 730,521 shares repurchased under this program through March 31, 2021. 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. |
Plan Category |
Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) |
Weighted-average exercise price of outstanding options warrants and rights (b) |
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) |
|||||||||
Equity compensation plans approved by security holders |
2,099,369 |
(1) |
$ |
17.51 |
(2) |
1,344,548 |
(3) |
|||||
Equity compensation plans not approved by security holders |
N/A |
N/A |
N/A |
|||||||||
Total |
2,099,369 |
$ |
17.51 |
1,344,548 |
(1) | Consists of (i) stock options issued under the 2004 Non-Employee Director Stock Option Plan, (ii) restricted stock units and restricted stock (collectively “RSUs”) and stock options issued under the Fourth Amended and Restated 2010 Incentive Award Plan (the “2010 Plan”), and (iii) RSUs issued under our 2014 Non-Employee Director Incentive Award Plan (the “2014 Plan”). |
(2) | The weighted average exercise price does not reflect the shares that will be issued in connection with the settlement of RSUs, since RSUs have no exercise price. |
(3) | Consists of shares available for future issuance under our 2010 Plan and 2014 Plan. |
• | Net realizable value for finished goods by customer by product line are determined based on the agreed upon selling price with the customer for a product in the trailing 12 months. We compare the average selling price, including any discounts and allowances, to the finished goods cost of on-hand inventory less any reserve for excess and obsolete inventory. Any reduction of value is recorded as cost of goods sold in the period in which the revaluation is identified. |
• | Net realizable value for Used Cores are determined based on current core purchase prices from core brokers to the extent that core purchases in the trailing 12 months are significant. Remanufacturing consumes, on average, more than one Used Core for each remanufactured unit produced since not all Used Cores are reusable. The yield rates depend upon both the product and customer specifications. We purchase Used Cores from core brokers to supplement our yield rates and Used Cores not returned under the core exchange programs. We also consider the net selling price our customers have agreed to pay for Used Cores that are not returned under our core exchange programs to assess whether Used Core cost exceeds Used Core net realizable value on a by customer by product line basis. Any reduction of core cost is recorded as cost of goods sold in the period in which the revaluation is identified. |
• | We record an allowance for potentially excess and obsolete inventory based upon recent sales history, the quantity of inventory on-hand, and a forecast of potential use of the inventory. We periodically review inventory to identify excess quantities and part numbers that are experiencing a reduction in demand. Any part numbers with quantities identified during this process are reserved for at rates based upon our judgment, historical rates, and consideration of possible scrap and liquidation values which may be as high as 100% of cost if no liquidation market exists for the part. As a result of this process, we recorded reserves for excess and obsolete inventory of $13,246,000 and $13,208,000 at March 31, 2021 and 2020, respectively. |
Fiscal Years Ended March 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Cash flows provided by (used in) operations |
$ |
56,089,000 |
$ |
18,795,000 |
$ |
(40,328,000 |
) |
|||||
Finished goods turnover (1) |
4.1 |
4.1 |
4.9 |
(1) | Finished goods turnover is calculated by dividing the cost of goods sold for the year by the average between beginning and ending non-core finished goods inventory values, for each fiscal year. Fiscal 2020 and 2019 have been updated to conform to the current year presentation for non-core finished goods turnover. We believe that this provides a useful measure of our ability to turn our inventory into revenues. |
Fiscal Years Ended March 31, |
||||||||
2021 |
2020 |
|||||||
Net sales |
$ |
540,782,000 |
$ |
535,831,000 |
||||
Cost of goods sold |
431,321,000 |
417,431,000 |
||||||
Gross profit |
109,461,000 |
118,400,000 |
||||||
Gross profit percentage |
20.2 |
% |
22.1 |
% |
Fiscal Years Ended March 31, |
||||||||
2021 |
2020 |
|||||||
General and administrative |
$ |
53,847,000 |
$ |
53,224,000 |
||||
Sales and marketing |
18,024,000 |
21,037,000 |
||||||
Research and development |
8,563,000 |
9,200,000 |
||||||
Foreign exchange impact of lease liabilities and forward contracts |
(17,606,000 |
) |
18,201,000 |
|||||
Percent of net sales |
||||||||
General and administrative |
10.0 |
% |
9.9 |
% |
||||
Sales and marketing |
3.3 |
% |
3.9 |
% |
||||
Research and development |
1.6 |
% |
1.7 |
% |
||||
Foreign exchange impact of lease liabilities and forward contracts |
(3.3 |
)% |
3.4 |
% |
Fiscal Years Ended March 31, |
||||||||
2020 |
2019 |
|||||||
Net sales |
$ |
535,831,000 |
$ |
472,797,000 |
||||
Cost of goods sold |
417,431,000 |
383,623,000 |
||||||
Gross profit |
118,400,000 |
89,174,000 |
||||||
Gross profit percentage |
22.1 |
% |
18.9 |
% |
Fiscal Years Ended March 31, |
||||||||
2020 |
2019 |
|||||||
General and administrative |
$ |
53,224,000 |
$ |
45,000,000 |
||||
Sales and marketing |
21,037,000 |
19,542,000 |
||||||
Research and development |
9,200,000 |
8,014,000 |
||||||
Foreign exchange impact of lease liabilities and forward contracts |
18,201,000 |
972,000 |
||||||
Percent of net sales |
||||||||
General and administrative |
9.9 |
% |
9.5 |
% |
||||
Sales and marketing |
3.9 |
% |
4.1 |
% |
||||
Research and development |
1.7 |
% |
1.7 |
% |
||||
Foreign exchange impact of lease liabilities and forward contracts |
3.4 |
% |
0.2 |
% |
Fiscal Years Ended March 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Cash provided by (used in): |
||||||||||||
Operating activities |
$ |
56,089,000 |
$ |
18,795,000 |
$ |
(40,328,000 |
) |
|||||
Investing activities |
(14,214,000 |
) |
(11,594,000 |
) |
(22,610,000 |
) |
||||||
Financing activities |
(76,567,000 |
) |
32,153,000 |
59,936,000 |
||||||||
Effect of exchange rates on cash and cash equivalents |
599,000 |
351,000 |
(136,000 |
) |
||||||||
Net (decrease) increase in cash and cash equivalents |
$ |
(34,093,000 |
) |
$ |
39,705,000 |
$ |
(3,138,000 |
) |
||||
Additional selected cash flow data: |
||||||||||||
Depreciation and amortization |
$ |
11,144,000 |
$ |
9,561,000 |
$ |
7,329,000 |
||||||
Capital expenditures |
13,942,000 |
14,156,000 |
11,149,000 |
Financial covenants required per the Credit Facility |
Calculation as of March 31, 2021 |
|||||||
Maximum senior leverage ratio |
3.00 |
1.46 |
||||||
Minimum fixed charge coverage ratio |
1.10 |
1.26 |
Fiscal Years Ended March 31, |
||||||||
2021 |
2020 |
|||||||
Receivables discounted |
$ |
491,285,000 |
$ |
461,484,000 |
||||
Weighted average days |
334 |
346 |
||||||
Weighted average discount rate |
2.1 |
% |
3.3 |
% |
||||
Amount of discount as interest expense |
$ |
9,513,000 |
$ |
14,780,000 |
Less than |
1 to 3 |
3 to 5 |
More than 5 |
|||||||||||||||||
Contractual Obligations |
Total |
1 year |
years |
years |
years |
|||||||||||||||
Finance lease obligations (1) |
$ |
8,343,000 |
$ |
2,962,000 |
$ |
3,853,000 |
$ |
1,528,000 |
$ |
- |
||||||||||
Operating lease obligations (2) |
127,006,000 |
10,406,000 |
21,156,000 |
20,344,000 |
75,100,000 |
|||||||||||||||
Revolving loan (3) |
84,000,000 |
- |
- |
- |
84,000,000 |
|||||||||||||||
Term loan (4) |
22,109,000 |
4,282,000 |
8,152,000 |
7,791,000 |
1,884,000 |
|||||||||||||||
Accrued core payment (5) |
8,062,000 |
6,358,000 |
1,408,000 |
296,000 |
- |
|||||||||||||||
Core bank liability (6) |
20,184,000 |
2,018,000 |
4,036,000 |
4,036,000 |
10,094,000 |
|||||||||||||||
Finished goods liabilities (7) |
4,700,000 |
1,958,000 |
2,742,000 |
- |
- |
|||||||||||||||
Unrecognized tax benefits (8) |
- |
- |
- |
- |
- |
|||||||||||||||
Other long-term obligations (9) |
64,025,000 |
25,874,000 |
15,542,000 |
9,656,000 |
12,953,000 |
|||||||||||||||
Total |
$ |
338,429,000 |
$ |
53,858,000 |
$ |
56,889,000 |
$ |
43,651,000 |
$ |
184,031,000 |
(1) | Finance lease obligations represent amounts due under finance leases for various types of equipment. |
(2) | Operating lease obligations represent amounts due for rent under our leases for all our facilities, certain equipment, and our Company automobile. During the first quarter of fiscal 2022, we renewed the lease for our corporate headquarters in Torrance, California for an additional 10-year period. We have included the future minimum lease payments of this renewal as a contractual obligation although this lease was not included in the operating lease assets and operating lease liabilities as of March 31, 2021. |
(3) | Our revolving loan obligations are under our current Credit Facility that matures on June 5, 2023. On May 28, 2021, we entered into the Third Amendment, which among other things, extended the maturity date of the Credit Facility to May 28, 2026 from June 5, 2023. Accordingly, we have reflected the maturity date in the payments of contractual obligations above. This debt is classified as a short term liability on our balance sheet as we expect to use our working capital to repay the amounts outstanding under our revolving loan. |
(4) | Term loan obligations represent the amounts due for principal payments as well as interest payments to be made. Interest payments were calculated based upon the interest rate for our term loan using the LIBOR option at March 31, 2021, which was 2.62%. On May 28, 2021, we entered into the Third Amendment, which among other things, extended the maturity date of the Credit Facility to May 28, 2026 from June 5, 2023. Accordingly, we have reflected the payment of our term loan through this date. |
(5) | Accrued core payment represents the amounts due for principal of $7,757,000 and interest payments of $305,000 to be made in connection with the purchases of Remanufactured Cores from our customers, which are held by these customers and remain on their premises. |
(6) | The core bank liability represents the amounts due for principal of $18,488,000 and interest payments of $1,696,000 to be made in connection with the return of Used Cores from our customers. |
(7) | Finished goods liabilities represents the amounts due for principal of $4,561,000 and interest payments of $139,000 to be made in connection with the purchase of finished goods from our customers. |
(8) | We are unable to reliably estimate the timing of future payments related to uncertain tax position liabilities at March 31, 2021; therefore, future tax payment accruals related to uncertain tax positions in the amount of $1,104,000 have been excluded from the table above. |
(9) | Other long-term obligations represent commitments we have with certain customers to provide marketing allowances in consideration for multi-year customer agreements to provide products over a defined period. We are not obligated to provide these marketing allowances should our business relationships end with these customers. |
a. | Documents filed as part of this report: |
(1) | Index to Consolidated Financial Statements: |
Reports of Independent Registered Public Accounting Firm |
53 |
Consolidated Balance Sheets |
F-1 |
Consolidated Statements of Operations |
F-2 |
Consolidated Statements of Comprehensive Income (Loss) |
F-3 |
Consolidated Statements of Shareholders’ Equity |
F-4 |
Consolidated Statements of Cash Flows |
F-5 |
Notes to Consolidated Financial Statements |
F-6 |
Schedule II — Valuation and Qualifying Accounts |
S-1 |
(3) | 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 (the “1995 Registration Statement”). |
||
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 the Company |
|||
3.7 |
Certificate of Amendment of the Certificate of Incorporation of the Company |
|||
3.8 |
Amendment to the Amended and Restated By-Laws of the Company |
Number |
Description of Exhibit |
Method of Filing |
||
3.9 |
Amendment to the Amended and Restated By-Laws of the Company |
|||
4.1 |
2004 Non-Employee Director Stock Option Plan |
|||
4.2 |
2010 Incentive Award Plan |
|||
4.3 |
Amended and Restated 2010 Incentive Award Plan |
|||
4.4 |
Second Amended and Restated 2010 Incentive Award Plan |
|||
4.5 |
2014 Non-Employee Director Incentive Award Plan |
|||
4.6 |
Third Amended and Restated 2010 Incentive Award Plan |
|||
4.7 |
Fourth Amended and Restated 2010 Incentive Award Plan |
|||
10.1 |
Form of Indemnification Agreement for officers and directors |
|||
10.2 |
Amended and Restated Employment Agreement, dated as of December 31, 2008, by and between the Company and Selwyn Joffe |
|||
10.3 |
Employment Agreement, dated as of May 18, 2012, between Motorcar Parts of America, Inc., and Selwyn Joffe |
|||
10.4 |
Form of Stock Option Notice for use in connection with stock options granted to Selwyn Joffe pursuant to the Motorcar Parts of America, Inc. 2010 Incentive Award Plan |
|||
10.5 |
Form of Stock Option Agreement for use in connection with stock options granted to Selwyn Joffe pursuant to the Motorcar Parts of America, Inc. 2010 Incentive Award Plan |
Number |
Description of Exhibit |
Method of Filing |
||
10.6* |
Revolving Credit, Term Loan and Security Agreement, dated as of June 3, 2015, among Motorcar Parts of America, Inc., each lender from time to time party thereto, and PNC Bank, National Association, as administrative agent |
|||
10.7 |
First Amendment to Revolving Credit, Term Loan and Security Agreement, dated as of November 5, 2015, among Motorcar Parts of America, Inc., each lender from time to time party thereto, and PNC Bank, National Association, as administrative agent |
|||
10.8 |
Consent and Second Amendment to Revolving Credit, Term Loan and Security Agreement, dated as of May 19, 2016, among Motorcar Parts of America, Inc., each lender from time to time party thereto, and PNC Bank, National Association, as administrative agent |
|||
10.9 |
Third Amendment to Revolving Credit, Term Loan and Security Agreement, dated as of March 24, 2017, among Motorcar Parts of America, Inc., each lender from time to time party thereto, and PNC Bank, National Association, as administrative agent |
|||
10.10 |
Fourth Amendment to Revolving Credit, Term Loan and Security Agreement, dated as of April 24, 2017, among Motorcar Parts of America, Inc., each lender from time to time party thereto and PNC Bank, National Association, as administrative agent |
|||
10.11 |
Fifth Amendment to Revolving Credit, Term Loan and Security Agreement, dated as of July 18, 2017, among Motorcar Parts of America, Inc., each lender from time to time party thereto and PNC Bank, National Association, as administrative agent |
|||
10.12* |
Amended and Restated Credit Facility, dated as of June 5, 2018, among Motorcar Parts of America, Inc., each lender from time to time party thereto and PNC Bank, National Association, as administrative agent |
Number |
Description of Exhibit |
Method of Filing |
||
10.13 |
First Amendment to Amended and Restated Loan Agreement, dated as of November 14, 2018, among Motorcar Parts of America, Inc., D & V Electronics Ltd., each lender from time to time party thereto, and PNC Bank, National Association, as administrative agent |
|||
10.14 |
Amendment No. 2 to Employment Agreement, dated as of February 5, 2019, between Motorcar Parts of America, Inc., and Selwyn Joffe |
|||
10.15 |
Second Amendment to Amended and Restated Loan Agreement, dated as of June 4, 2019, among Motorcar Parts of America, Inc., D&V Electronics Ltd., Dixie Electric Ltd., Dixie Electric Inc., each lender from time to time party thereto, and PNC Bank, National Association, as administrative agent |
|||
10.16 |
Amendment No. 3 to Employment Agreement, dated as of March 30, 2020, between Motorcar Parts of America, Inc., and Selwyn Joffe |
|||
10.17 |
Amendment No. 4 to Employment Agreement, dated as of May 21, 2020, between Motorcar Parts of America, Inc., and Selwyn Joffe |
|||
10.18 |
Third Amendment to Amended and Restated Loan Agreement, dated as of May 28, 2021, among Motorcar Parts of America, Inc., D&V Electronics Ltd., Dixie Electric Ltd., Dixie Electric Inc., each lender from time to time party thereto, and PNC Bank, National Association, as administrative agent |
|||
List of Subsidiaries |
Filed herewith. |
|||
Consent of Independent Registered Public Accounting Firm Ernst & Young LLP |
Filed herewith. |
Number |
Description of Exhibit |
Method of Filing |
||
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. |
|||
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 XBRL document) |
Filed herewith. |
||
101.SCM |
Inline XBRL Taxonomy Extension Schema Document |
Filed herewith. |
||
101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
Filed herewith. |
||
101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
Filed herewith. |
||
101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document |
Filed herewith. |
||
101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
Filed herewith. |
||
104 |
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
Filed herewith. |
MOTORCAR PARTS OF AMERICA, INC. |
||
Dated: June 14, 2021 |
By: |
/s/ David Lee |
David Lee |
||
Chief Financial Officer |
||
Dated: June 14, 2021 |
By: |
/s/ Kamlesh Shah |
Kamlesh Shah |
||
Chief Accounting Officer |
/s/ Selwyn Joffe |
Chief Executive Officer and Director |
June 14, 2021 |
|
Selwyn Joffe |
(Principal Executive Officer) |
||
/s/ David Lee |
Chief Financial Officer |
June 14, 2021 |
|
David Lee |
(Principal Financial Officer) |
||
/s/ Kamlesh Shah |
Chief Accounting Officer |
June 14, 2021 |
|
Kamlesh Shah |
(Principal Accounting Officer) |
||
/s/ Scott Adelson |
Director |
June 14, 2021 |
|
Scott Adelson |
|||
/s/ Rudolph Borneo |
Director |
June 14, 2021 |
|
Rudolph Borneo |
|||
/s/ Philip Gay |
Director |
June 14, 2021 |
|
Philip Gay |
|||
/s/ Duane Miller |
Director |
June 14, 2021 |
|
Duane Miller |
|||
/s/ Jeffrey Mirvis |
Director |
June 14, 2021 |
|
Jeffrey Mirvis |
|||
/s/ David Bryan |
Director |
June 14, 2021 |
|
David Bryan |
|||
/s/ Joseph Ferguson |
Director |
June 14, 2021 |
|
Joseph Ferguson |
|||
/s/ Barbara Whittaker |
Director |
June 14, 2021 |
|
Barbara Whittaker |
|||
/s/ Jamy Rankin |
Director |
June 14, 2021 |
|
Jamy Rankin |
Page |
|
53 |
|
F-1 |
|
F-2 |
|
F-3 |
|
F-4 |
|
F-5 |
|
F-6 |
|
S-1 |
/s/ Ernst & Young LLP |
Contractual Agreements with Core Exchange Programs |
|
Description of the Matter |
As more fully described in Note 2 to the consolidated financial statements, the Company enters into contractual arrangements with customers (core exchange programs) which represent the majority of the Company’s sales for products that contain remanufactured cores. At March 31, 2021, contract assets and contract liabilities related to core exchange programs recorded on the consolidated balance sheet were $297,153,000 and $166,295,000, respectively. Auditing contract assets and contract liabilities related to the core exchange programs involved complex auditor judgment due to the unique terms of each customer arrangement which impact the completeness, existence, valuation and classification of contract assets and liabilities. |
How We Addressed the Matter in Our Audit |
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over management’s review of contracts with customers, management’s assessment of the accounting for core exchange programs, including unique contractual terms, and management’s review of the related contract assets and liabilities including controls over the completeness and accuracy of data. Our audit procedures to test the contract assets and contract liabilities related to core exchange programs included, among others, (i) reviewing agreements and amendments for significant customers, (ii) testing the completeness of management’s identification of contractual terms, (iii) evaluating the consistency of the accounting treatment with the Company's policies; and (v) testing the completeness and accuracy of the underlying data used in management’s analyses. |
Marketing Allowances |
|
Description of the Matter |
As more fully described in Note 2 and Note 14 to the consolidated financial statements, revenue is recognized net of applicable marketing allowances. These marketing allowances vary by contract and can include (i) the issuance of a specified amount of credits against receivables, (ii) support for research or marketing efforts, (iii) discounts granted in connection with shipments of product, and (iv) other marketing, research, store expansion or product development support. At March 31, 2021, marketing allowances recorded on the Company’s consolidated balance sheet was $16,826,000, which is presented within contract liabilities. Auditing the completeness of marketing allowances was complex because marketing allowances vary by contract and could be impacted by unrecorded marketing allowances provided to customers. |
How We Addressed the Matter in Our Audit |
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the marketing allowances processes. For example, we tested controls over management’s review of contracts with customers containing marketing allowances, management’s review of the completeness and accuracy of data used in the marketing accrual analysis at period end and management’s review of credits issued to customers subsequent to the balance sheet date. Our audit procedures to test marketing allowances included, among others, reviewing significant contracts with customers, obtaining confirmations of contractual terms and conditions from a sample of the Company’s customers, and testing credits issued or payments made to customers throughout the year. We tested the completeness and accuracy of data used in the calculation of the marketing allowance by agreeing contractual terms to the underlying agreements. In addition, we evaluated the relationship between revenue and marketing allowances and assessed subsequent events to determine whether there was any new information that would require adjustments to the amounts recorded. |
/s/ Ernst & Young LLP |
March 31, 2021 |
March 31, 2020 |
|||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ |
$ |
||||||
Short-term investments |
||||||||
Accounts receivable — net |
||||||||
Inventory — net |
||||||||
Inventory unreturned |
||||||||
Contract assets |
||||||||
Income tax receivable |
||||||||
Prepaid expenses and other current assets |
||||||||
Total current assets |
||||||||
Plant and equipment — net |
||||||||
Operating lease assets |
||||||||
Deferred income taxes |
||||||||
Long-term contract assets |
||||||||
Goodwill |
||||||||
Intangible assets — net |
||||||||
Other assets |
||||||||
TOTAL ASSETS |
$ |
$ |
||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ |
$ |
||||||
Accrued liabilities |
||||||||
Customer finished goods returns accrual |
||||||||
Contract liabilities |
||||||||
Revolving loan |
||||||||
Other current liabilities |
||||||||
Operating lease liabilities |
||||||||
Current portion of term loan |
||||||||
Total current liabilities |
||||||||
Term loan, less current portion |
||||||||
Contract liabilities, less current portion |
||||||||
Deferred income taxes |
||||||||
Operating lease liabilities, less current portion |
||||||||
Other liabilities |
||||||||
Total liabilities |
||||||||
Commitments and contingencies |
||||||||
Shareholders’ equity: |
||||||||
Preferred stock; par value $ |
||||||||
Series A junior participating preferred stock; par value $ |
||||||||
Common stock; par value $ |
||||||||
Additional paid-in capital |
||||||||
Retained earnings |
||||||||
Accumulated other comprehensive loss |
( |
) |
( |
) |
||||
Total shareholders’ equity |
||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ |
$ |
Years Ended March 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Net sales |
$ |
$ |
$ |
|||||||||
Cost of goods sold |
||||||||||||
Gross profit |
||||||||||||
Operating expenses: |
||||||||||||
General and administrative |
||||||||||||
Sales and marketing |
||||||||||||
Research and development |
||||||||||||
Foreign exchange impact of lease liabilities and forward contracts |
( |
) |
||||||||||
Total operating expenses |
||||||||||||
Operating income |
||||||||||||
Interest expense, net |
||||||||||||
Income (loss) before income tax expense (benefit) |
( |
) |
( |
) |
||||||||
Income tax expense(benefit) |
( |
) |
||||||||||
Net income (loss) |
$ |
$ |
( |
) |
$ |
( |
) |
|||||
Basic net income (loss) per share |
$ |
$ |
( |
) |
$ |
( |
) |
|||||
Diluted net income (loss) per share |
$ |
$ |
( |
) |
$ |
( |
) |
|||||
Weighted average number of shares outstanding: |
||||||||||||
Basic |
||||||||||||
Diluted |
Years Ended March 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Net income (loss) |
$ |
$ |
( |
) |
$ |
( |
) |
|||||
Other comprehensive loss, net of tax: |
||||||||||||
Foreign currency translation loss |
( |
) |
( |
) |
( |
) |
||||||
Total other comprehensive loss, net of tax |
( |
) |
( |
) |
( |
) |
||||||
Comprehensive income (loss) |
$ |
$ |
( |
) |
$ |
( |
) |
Common Stock |
||||||||||||||||||||||||
Shares |
Amount |
Additional Paid-in Capital Common Stock |
Retained Earnings |
Accumulated Other Comprehensive Loss |
Total |
|||||||||||||||||||
Balance at March 31, 2018 |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||||||
Cumulative-effect adjustment for the adoption of ASU 2016-01 |
( |
) |
||||||||||||||||||||||
Balance at April 1, 2018 |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||||||
Compensation recognized under employee stock plans |
- |
|||||||||||||||||||||||
Exercise of stock options |
||||||||||||||||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes |
( |
) |
( |
) |
||||||||||||||||||||
Repurchase and cancellation of treasury stock, including fees |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||||||||||
Foreign currency translation |
- |
( |
) |
( |
) |
|||||||||||||||||||
Net loss |
- |
( |
) |
( |
) |
|||||||||||||||||||
Balance at March 31, 2019 |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||||||
Compensation recognized under employee stock plans |
- |
|||||||||||||||||||||||
Exercise of stock options |
||||||||||||||||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes |
( |
) |
( |
) |
||||||||||||||||||||
Foreign currency translation |
- |
( |
) |
( |
) |
|||||||||||||||||||
Net loss |
- |
( |
) |
( |
) |
|||||||||||||||||||
Balance at March 31, 2020 |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||||||
Compensation recognized under employee stock plans |
- |
|||||||||||||||||||||||
Exercise of stock options |
||||||||||||||||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes |
( |
) |
( |
) |
||||||||||||||||||||
Repurchase and cancellation of treasury stock, including fees |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||||||||||
Foreign currency translation |
- |
( |
) |
( |
) |
|||||||||||||||||||
Net income |
- |
|||||||||||||||||||||||
Balance at March 31, 2021 |
$ |
$ |
$ |
$ |
( |
) |
$ |
Years Ended March 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Cash flows from operating activities: |
||||||||||||
Net income (loss) |
$ |
$ |
( |
) |
$ |
( |
) |
|||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |
||||||||||||
Depreciation and amortization |
||||||||||||
Amortization of intangible assets |
||||||||||||
Amortization and write-off of debt issuance costs |
||||||||||||
Amortization of interest on contract liabilities, net |
||||||||||||
Amortization of core premiums paid to customers |
||||||||||||
Amortization of finished goods premiums paid to customers |
||||||||||||
Non-cash lease expense |
||||||||||||
Foreign exchange impact of lease liabilities and forward contracts |
( |
) |
||||||||||
Foreign currency remeasurement (gain) loss |
( |
) |
||||||||||
Loss (gain) due to the change in the fair value of the contingent consideration |
( |
) |
||||||||||
Gain on short-term investments |
( |
) |
( |
) |
( |
) |
||||||
Net provision for inventory reserves |
||||||||||||
Net provision for customer payment discrepancies |
||||||||||||
Net provision for doubtful accounts |
( |
) |
||||||||||
Deferred income taxes |
( |
) |
( |
) |
( |
) |
||||||
Share-based compensation expense |
||||||||||||
Loss on disposal of plant and equipment |
||||||||||||
Change in operating assets and liabilities, net of effects of acquisitions: |
||||||||||||
Accounts receivable |
( |
) |
||||||||||
Inventory |
( |
) |
( |
) |
( |
) |
||||||
Inventory unreturned |
( |
) |
( |
) |
( |
) |
||||||
Income tax receivable |
( |
) |
||||||||||
Prepaid expenses and other current assets |
( |
) |
( |
) |
||||||||
Other assets |
( |
) |
( |
) |
||||||||
Accounts payable and accrued liabilities |
( |
) |
||||||||||
Customer finished goods returns accrual |
||||||||||||
Contract assets, net |
( |
) |
( |
) |
( |
) |
||||||
Contract liabilities, net |
( |
) |
||||||||||
Operating lease liabilities |
( |
) |
( |
) |
||||||||
Other liabilities |
||||||||||||
Net cash provided by (used in) operating activities |
( |
) |
||||||||||
Cash flows from investing activities: |
||||||||||||
Purchase of plant and equipment |
( |
) |
( |
) |
( |
) |
||||||
Purchase of business, net of cash acquired |
( |
) |
||||||||||
Proceeds from sale of plant and equipment |
||||||||||||
(Payments for) redemptions of short term investments |
( |
) |
( |
) |
||||||||
Net cash used in investing activities |
( |
) |
( |
) |
( |
) |
||||||
Cash flows from financing activities: |
||||||||||||
Borrowings under revolving loan |
||||||||||||
Repayments under revolving loan |
( |
) |
( |
) |
( |
) |
||||||
Borrowings under term loan |
||||||||||||
Repayments of term loan |
( |
) |
( |
) |
( |
) |
||||||
Payments for debt issuance costs |
( |
) |
( |
) |
||||||||
Payments on finance lease obligations |
( |
) |
( |
) |
( |
) |
||||||
Payment of contingent consideration |
( |
) |
( |
) |
||||||||
Exercise of stock options |
||||||||||||
Cash used to net share settle equity awards |
( |
) |
( |
) |
( |
) |
||||||
Repurchase of common stock, including fees |
( |
) |
( |
) |
||||||||
Net cash (used in) provided by financing activities |
( |
) |
||||||||||
Effect of exchange rate changes on cash and cash equivalents |
( |
) |
||||||||||
Net (decrease) increase in cash and cash equivalents |
( |
) |
( |
) |
||||||||
Cash and cash equivalents — Beginning of year |
||||||||||||
Cash and cash equivalents — End of year |
$ |
$ |
$ |
|||||||||
Supplemental disclosures of cash flow information: |
||||||||||||
Cash paid for interest, net |
$ |
$ |
$ |
|||||||||
Cash paid for income taxes, net of refunds |
||||||||||||
Cash paid for operating leases |
||||||||||||
Cash paid for finance leases |
||||||||||||
Plant and equipment acquired under finance lease |
||||||||||||
Assets acquired under operating leases |
||||||||||||
Contingent consideration |
||||||||||||
Non-cash capital expenditures |
• | Net realizable value for finished goods by customer by product line are determined based on the agreed upon selling price with the customer for a product in the trailing 12 months. The Company compares the average selling price, including any discounts and allowances, to the finished goods cost of on-hand inventory less any reserve for excess and obsolete inventory. Any reduction of value is recorded as cost of goods sold in the period in which the revaluation is identified. |
• | Net realizable value for Used Cores are determined based on current core purchase prices from core brokers to the extent that core purchases in the trailing 12 months are significant. Remanufacturing consumes, on average, more than one Used Core for each remanufactured unit produced since not all Used Cores are reusable. The yield rates depend upon both the product and consumer specifications. The Company purchases Used Cores from core brokers to supplement its yield rates and Used Cores not returned under the core exchange programs. The Company also considers the net selling price its customers have agreed to pay for Used Cores that are not returned under its core exchange programs to assess whether Used Core cost exceeds Used Core net realizable value on a by customer by product line basis. Any reduction of core cost is recorded as cost of goods sold in the period in which the revaluation is identified. |
• | The Company records an allowance for potentially excess and obsolete inventory based upon recent sales history, the quantity of inventory on-hand, and a forecast of potential use of the inventory. The Company periodically reviews inventory to identify excess quantities and part numbers that are experiencing a reduction in demand. Any part numbers with quantities identified during this process are reserved for at rates based upon management’s judgment, historical rates, and consideration of possible scrap and liquidation values which may be as high as |
Years Ended March 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Net income (loss) |
$ |
$ |
( |
) |
$ |
( |
) |
|||||
Basic shares |
||||||||||||
Effect of dilutive stock options and warrants |
||||||||||||
Diluted shares |
||||||||||||
Net income (loss) per share: |
||||||||||||
Basic net income (loss) per share |
$ |
$ |
( |
) |
$ |
( |
) |
|||||
Diluted net income (loss) per share |
$ |
$ |
( |
) |
$ |
( |
) |
Years Ended March 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Weighted average risk free interest rate |
% |
% |
% |
|||||||||
Weighted average expected holding period (years) |
||||||||||||
Weighted average expected volatility |
% |
% |
% |
|||||||||
Weighted average expected dividend yield |
||||||||||||
Weighted average fair value of options granted |
$ |
$ |
$ |
Years Ended March 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Net gain recognized on equity securities |
$ |
$ |
$ |
|||||||||
Less: net gain recognized on equity securities sold |
||||||||||||
Unrealized gain (loss) recognized on equity securities still held |
$ |
$ |
( |
) |
$ |
March 31, 2021 |
March 31, 2020 |
|||||||||||||||||||
Weighted Average Amortization Period |
Gross Carrying Value |
Accumulated Amortization |
Gross Carrying Value |
Accumulated Amortization |
||||||||||||||||
Intangible assets subject to amortization |
0 |
|||||||||||||||||||
Trademarks |
$ |
$ |
$ |
$ |
||||||||||||||||
Customer relationships |
||||||||||||||||||||
Developed technology |
||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
Years Ended March 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Amortization expense |
$ |
$ |
$ |
Year Ending March 31, |
||||
2022 |
$ |
|||
2023 |
||||
2024 |
||||
2025 |
||||
2026 |
||||
Thereafter |
||||
Total |
$ |
March 31, 2021 |
March 31, 2020 |
|||||||
Accounts receivable — trade |
$ |
$ |
||||||
Allowance for credit losses |
( |
) |
( |
) |
||||
Customer payment discrepancies |
( |
) |
( |
) |
||||
Customer returns RGA issued |
( |
) |
( |
) |
||||
Less: total accounts receivable offset accounts |
( |
) |
( |
) |
||||
Total accounts receivable — net |
$ |
$ |
Year Ended March 31, 2021 |
||||
Balance at beginning of period |
$ |
|||
Provision for expected credit losses |
||||
Recoveries |
( |
) |
||
Amounts written off charged against the allowance |
( |
) |
||
Balance at end of period |
$ |
March 31, 2021 |
March 31, 2020 |
|||||||
Raw materials |
$ |
$ |
||||||
Work in process |
||||||||
Finished goods |
||||||||
Less allowance for excess and obsolete inventory |
( |
) |
( |
) |
||||
Total |
$ |
$ |
||||||
Inventory unreturned |
$ |
$ |
March 31, 2021 |
March 31, 2020 |
|||||||
Short-term contract assets |
||||||||
Cores expected to be returned by customers |
$ |
$ |
||||||
Upfront payments to customers |
||||||||
Finished goods premiums paid to customers |
||||||||
Core premiums paid to customers |
||||||||
Total short-term contract assets |
$ |
$ |
||||||
Remanufactured cores held at customers’ locations |
$ |
$ |
||||||
Upfront payments to customers |
||||||||
Finished goods premiums paid to customers |
||||||||
Core premiums paid to customers |
||||||||
Long-term core inventory deposits |
||||||||
Total long-term contract assets |
$ |
$ |
March 31, 2021 |
March 31, 2020 |
|||||||
Machinery and equipment |
$ |
$ |
||||||
Office equipment and fixtures |
||||||||
Leasehold improvements |
||||||||
Less accumulated depreciation |
( |
) |
( |
) |
||||
Total |
$ |
$ |
March 31, 2021 |
March 31, 2020 |
|||||||
Principal amount of Term Loans |
$ |
$ |
||||||
Unamortized financing fees |
( |
) |
( |
) |
||||
Net carrying amount of Term Loans |
||||||||
Less current portion of Term Loans |
( |
) |
( |
) |
||||
Long-term portion of Term Loans |
$ |
$ |
Year Ending March 31, |
||||
2022 |
$ |
|||
2023 |
||||
2024 |
||||
Total payments |
$ |
March 31, 2021 |
March 31, 2020 |
|||||||
Short-term contract liabilities |
||||||||
Customer core returns accruals |
$ |
$ |
||||||
Customer allowances earned |
||||||||
Customer deposits |
||||||||
Finished goods liabilities |
||||||||
Core bank liability |
||||||||
Accrued core payment |
||||||||
Total short-term contract liabilities |
$ |
$ |
||||||
Long-term contract liabilities |
||||||||
Customer core returns accruals |
$ |
$ |
||||||
Customer allowances earned |
||||||||
Finished goods liabilities |
||||||||
Core bank liability |
||||||||
Accrued core payment |
||||||||
Total long-term contract liabilities |
$ |
$ |
March 31, 2021 |
March 31, 2020 |
||||||||
Leases |
Classification |
||||||||
Assets: |
|||||||||
Operating |
Operating lease assets |
$ |
$ |
||||||
Finance |
Plant and equipment |
||||||||
Total leased assets |
$ |
$ |
|||||||
Liabilities: |
|||||||||
Current |
|||||||||
Operating |
Operating lease liabilities |
$ |
$ |
||||||
Finance |
Other current liabilities |
||||||||
Long-term |
|||||||||
Operating |
Long-term operating lease liabilities |
||||||||
Finance |
Other liabilities |
||||||||
Total lease liabilities |
$ |
$ |
Years Ended March 31, |
||||||||
2021 |
2020 |
|||||||
Lease cost |
||||||||
Operating lease cost (1) |
$ |
$ |
||||||
Short-term lease cost |
||||||||
Variable lease cost |
||||||||
Finance lease cost: |
||||||||
Amortization of finance lease assets |
||||||||
Interest on finance lease liabilities |
||||||||
Total lease cost |
$ |
$ |
(1) |
Maturity of lease liabilities |
Operating Leases |
Finance Leases |
Total |
|||||||||
2022 |
$ |
$ |
$ |
|||||||||
2023 |
||||||||||||
2024 |
||||||||||||
2025 |
||||||||||||
2026 |
||||||||||||
Thereafter |
||||||||||||
Total lease payments |
||||||||||||
Less amount representing interest |
( |
) |
( |
) |
( |
) |
||||||
Present value of lease liabilities |
$ |
$ |
$ |
March 31, 2021 |
March 31, 2020 |
|||||||
Lease term and discount rate |
||||||||
Weighted-average remaining lease term (years): |
||||||||
Finance leases |
||||||||
Operating leases |
||||||||
Weighted-average discount rate: |
||||||||
Finance leases |
% |
% |
||||||
Operating leases |
% |
% |
Years Ended March 31, |
||||||||
2021 |
2020 |
|||||||
Receivables discounted |
$ |
$ |
||||||
Weighted average days |
||||||||
Weighted average discount rate |
% |
% |
||||||
Amount of discount as interest expense |
$ |
$ |
Gain (Loss) Recognized as Foreign Exchange Impact of Lease Liabilities and Forward Contracts |
||||||||||||
Derivatives Not Designated as |
Years Ended March 31, |
|||||||||||
Hedging Instruments |
2021 |
2020 |
2019 |
|||||||||
Forward foreign currency exchange contracts |
$ |
$ |
( |
) |
$ |
( |
) |
• | Level 1 — Valuation is based upon quoted prices (unadjusted) in active markets for identical assets or liabilities. |
• | Level 2 — Valuation is based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. |
• | Level 3 — Valuation is based upon unobservable inputs that are significant to the fair value measurement. |
March 31, 2021 |
March 31, 2020 |
|||||||||||||||||||||||||||||||
Fair Value Measurements Using Inputs Considered as |
Fair Value Measurements 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 |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||||||||
Prepaid expenses and other current assets |
||||||||||||||||||||||||||||||||
Forward foreign currency exchange contracts |
||||||||||||||||||||||||||||||||
Liabilities |
||||||||||||||||||||||||||||||||
Accrued liabilities |
||||||||||||||||||||||||||||||||
Short-term contingent consideration |
||||||||||||||||||||||||||||||||
Other current liabilities |
||||||||||||||||||||||||||||||||
Deferred compensation |
||||||||||||||||||||||||||||||||
Forward foreign currency exchange contracts |
||||||||||||||||||||||||||||||||
Other liabilities |
||||||||||||||||||||||||||||||||
Long-term contingent consideration |
March 31, 2021 |
March 31, 2020 |
|||||||
Risk free interest rate |
% |
% |
||||||
Counter party rate |
% |
% |
||||||
Expected volatility |
% |
% |
||||||
Weighted average cost of capital |
% |
% |
Years Ended March 31, |
||||||||
2021 |
2020 |
|||||||
Contingent Consideration |
Contingent Consideration |
|||||||
Beginning balance |
$ |
$ |
||||||
Newly issued |
||||||||
Changes in revaluation of contingent consideration included in earnings |
( |
) |
||||||
Exercises/settlements |
( |
) |
( |
) |
||||
Ending balance |
$ |
$ |
Years Ended March 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Balance at beginning of year |
$ |
$ |
$ |
|||||||||
Acquisition (1) |
||||||||||||
Charged to expense |
||||||||||||
Amounts processed |
( |
) |
( |
) |
( |
) |
||||||
Balance at end of year |
$ |
$ |
$ |
(1) |
Years Ended March 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Allowances incurred under long-term customer contracts |
$ |
$ |
$ |
|||||||||
Allowances related to a single exchange of product |
||||||||||||
Amortization of core premiums paid to customers |
||||||||||||
Total customer allowances recorded as a reduction of revenues |
$ |
$ |
$ |
Year Ending March 31, |
||||
2022 |
$ |
|||
2023 |
||||
2024 |
||||
2025 |
||||
2026 |
||||
Thereafter |
||||
Total marketing allowances |
$ |
Years Ended March 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Customer A |
% |
% |
% |
|||||||||
Customer B |
% |
% |
% |
|||||||||
Customer C |
% |
% |
% |
March 31, 2021 |
March 31, 2020 |
|||||||
Customer A |
% |
% |
||||||
Customer B |
% |
% |
||||||
Customer C |
% |
Years Ended March 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Rotating electrical products |
% |
% |
% |
|||||||||
Wheel hub products |
% |
% |
% |
|||||||||
Brake-related products |
% |
% |
% |
|||||||||
Other products |
% |
% |
% |
|||||||||
% |
% |
% |
Years Ended March 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Current tax expense |
||||||||||||
Federal |
$ |
$ |
$ |
|||||||||
State |
||||||||||||
Foreign |
||||||||||||
Total current tax expense |
||||||||||||
Deferred tax (benefit) expense |
||||||||||||
Federal |
( |
) |
( |
) |
( |
) |
||||||
State |
( |
) |
( |
) |
||||||||
Foreign |
( |
) |
( |
) |
||||||||
Total deferred tax benefit |
( |
) |
( |
) |
( |
) |
||||||
Total income tax expense (benefit) |
$ |
$ |
( |
) |
$ |
March 31, 2021 |
March 31, 2020 |
|||||||
Assets |
||||||||
Allowance for bad debts |
$ |
$ |
||||||
Customer allowances earned |
||||||||
Allowance for stock adjustment returns |
||||||||
Inventory adjustments |
||||||||
Stock options |
||||||||
Operating lease liabilities |
||||||||
Estimate for returns |
||||||||
Accrued compensation |
||||||||
Net operating losses |
||||||||
Tax credits |
||||||||
Other |
||||||||
Total deferred tax assets |
$ |
$ |
||||||
Liabilities |
||||||||
Plant and equipment, net |
( |
) |
( |
) |
||||
Intangibles, net |
( |
) |
( |
) |
||||
Operating lease |
( |
) |
( |
) |
||||
Other |
( |
) |
( |
) |
||||
Total deferred tax liabilities |
$ |
( |
) |
$ |
( |
) |
||
Less valuation allowance |
$ |
( |
) |
$ |
( |
) |
||
Total |
$ |
$ |
Years Ended March 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Statutory federal income tax rate |
% |
% |
% |
|||||||||
State income tax rate, net of federal benefit |
% |
( |
)% |
( |
)% |
|||||||
Excess tax benefit from stock compensation |
% |
( |
)% |
% |
||||||||
Foreign income taxed at different rates |
% |
% |
- |
% |
||||||||
Return to provision adjustments |
% |
( |
)% |
- |
% |
|||||||
Non-deductible executive compensation |
% |
( |
)% |
( |
)% |
|||||||
Change in valuation allowance |
% |
( |
)% |
( |
)% |
|||||||
Net operating loss carryback |
- |
% |
% |
- |
% |
|||||||
Uncertain tax positions |
% |
% |
% |
|||||||||
Research and development credit |
( |
)% |
% |
% |
||||||||
Non-deductible transaction costs |
- |
% |
- |
% |
( |
)% |
||||||
Other income tax |
% |
( |
)% |
% |
||||||||
% |
% |
( |
)% |
Years Ended March 31, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Balance at beginning of period |
$ |
$ |
$ |
|||||||||
Additions based on tax positions related to the current year |
||||||||||||
Additions for tax positions of prior year |
||||||||||||
Reductions for tax positions of prior year |
( |
) |
( |
) |
( |
) |
||||||
Balance at end of period |
$ |
$ |
$ |
Number of Shares |
Weighted Average Exercise Price |
|||||||
Outstanding at March 31, 2020 |
$ |
|||||||
Granted |
$ |
|||||||
Exercised |
( |
) |
$ |
|||||
Forfeited |
( |
) |
$ |
|||||
Outstanding at March 31, 2021 |
$ |
Options Outstanding |
Options Exercisable |
|||||||||||||||||||||||||||
Range of Exercise price |
Shares |
Weighted Average Exercise Price |
Weighted Average Remaining Life In Years |
Aggregate Intrinsic Value |
Shares |
Weighted Average Exercise Price |
Weighted Average Remaining Life In Years |
Aggregate Intrinsic Value |
||||||||||||||||||||
$ |
$ |
$ |
||||||||||||||||||||||||||
$ |
||||||||||||||||||||||||||||
$ |
||||||||||||||||||||||||||||
$ |
||||||||||||||||||||||||||||
$ |
||||||||||||||||||||||||||||
$ |
$ |
$ |
$ |
Number of Shares |
Weighted Average Grant Date Fair Value |
|||||||
Non-vested at March 31, 2020 |
$ |
|||||||
Granted |
$ |
|||||||
Vested |
( |
) |
$ |
|||||
Forfeited |
( |
) |
$ |
|||||
Non-vested at March 31, 2021 |
$ |
First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||||||||||
Net sales |
$ |
$ |
$ |
$ |
||||||||||||
Cost of goods sold |
||||||||||||||||
Gross profit |
||||||||||||||||
Operating expenses: |
||||||||||||||||
General and administrative |
||||||||||||||||
Sales and marketing |
||||||||||||||||
Research and development |
||||||||||||||||
Foreign exchange impact of lease liabilities and forward contracts |
( |
) |
( |
) |
( |
) |
||||||||||
Total operating expenses |
||||||||||||||||
Operating income |
||||||||||||||||
Other expense: |
||||||||||||||||
Interest expense, net |
||||||||||||||||
Income (loss) before income tax expense (benefit) |
( |
) |
||||||||||||||
Income tax expense (benefit) |
( |
) |
||||||||||||||
Net income (loss) |
$ |
( |
) |
$ |
$ |
$ |
||||||||||
Basic net income (loss) per share |
$ |
( |
) |
$ |
$ |
$ |
||||||||||
Diluted net income (loss) per share |
$ |
( |
) |
$ |
$ |
$ |
First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||||||||||
Net sales |
$ |
$ |
$ |
$ |
||||||||||||
Cost of goods sold |
||||||||||||||||
Gross profit |
||||||||||||||||
Operating expenses: |
||||||||||||||||
General and administrative |
||||||||||||||||
Sales and marketing |
||||||||||||||||
Research and development |
||||||||||||||||
Foreign exchange impact of lease liabilities and forward contracts |
( |
) |
( |
) |
||||||||||||
Total operating expenses |
||||||||||||||||
Operating income |
( |
) |
( |
) |
||||||||||||
Other expense: |
||||||||||||||||
Interest expense, net |
||||||||||||||||
Income (loss) before income tax expense (benefit) |
( |
) |
( |
) |
||||||||||||
Income tax expense (benefit) |
( |
) |
( |
) |
||||||||||||
Net income (loss) |
$ |
( |
) |
$ |
$ |
$ |
( |
) |
||||||||
Basic net income (loss) per share |
$ |
( |
) |
$ |
$ |
$ |
( |
) |
||||||||
Diluted net income (loss) per share |
$ |
( |
) |
$ |
$ |
$ |
( |
) |
Years Ended March 31, |
Description |
Balance at beginning of year |
Charge to (recovery of) bad debts expense |
Acquisition |
Amounts written off |
Balance at end of year |
|||||||||||||||
2021 |
Allowance for credit losses |
$ |
$ |
( |
) |
$ |
$ |
$ |
|||||||||||||
2020 |
Allowance for credit losses |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
2019 |
Allowance for credit losses |
$ |
$ |
$ |
(1) |
$ |
$ |
(1) |
Years Ended March 31, |
Description |
Balance at beginning of year |
Charge to discrepancies expense |
Acquisition |
Amounts Processed |
Balance at end of year |
|||||||||||||||
2021 |
Allowance for customer-payment discrepancies |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
2020 |
Allowance for customer-payment discrepancies |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
2019 |
Allowance for customer-payment discrepancies |
$ |
$ |
$ |
$ |
$ |
Years Ended March 31, |
Description |
Balance at beginning of year |
Provision for excess and obsolete inventory |
Acquisition |
Amounts written off |
Balance at end of year |
|||||||||||||||
2021 |
0Allowance for excess and obsolete inventory |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
2020 |
Allowance for excess and obsolete inventory |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
2019 |
Allowance for excess and obsolete inventory |
$ |
$ |
$ |
$ |
$ |
(1) |
Registration Statement (Form S-8 No. 333-144883) pertaining to the 2004 Non-Employee Director Stock Option Plan,
|
(2) |
Registration Statement (Form S-8 No. 333-185691) pertaining to the 2010 Incentive Award Plan,
|
(3) |
Registration Statement (Form S-3 No. 333-195585) of Motorcar Parts of America, Inc.,
|
(4) |
Registration Statement (Form S-8 No. 333-205910) pertaining to the 2014 Non-Employee Director Incentive Award Plan and Second Amended and Restated 2010 Incentive Award Plan,
|
(5) |
Registration Statement (Form S-8 No. 333-223685) pertaining to the 2014 Non-Employee Director Incentive Award Plan and Third Amended and Restated 2010 Incentive Award Plan,
and
|
(6) |
Registration Statement (Form S-8 No. 333-248577) pertaining to the Fourth Amended and Restated 2010 Incentive Award Plan.
|
Date: June 14, 2021
|
/s/ Selwyn Joffe
|
Selwyn Joffe
|
|
Chief Executive Officer
|
Date: June 14, 2021
|
/s/ David Lee
|
David Lee
|
|
Chief Financial Officer
|
Date: June 14, 2021
|
/s/ Kamlesh Shah
|
Kamlesh Shah
|
|
Chief Accounting Officer
|
/s/ Selwyn Joffe
|
|
Selwyn Joffe
|
|
Chief Executive Officer
|
|
June 14, 2021
|
/s/ David Lee
|
|
David Lee
|
|
Chief Financial Officer
|
|
June 14, 2021
|
/s/ Kamlesh Shah
|
|
Kamlesh Shah
|
|
Chief Accounting Officer
|
|
June 14, 2021
|
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Consolidated Balance Sheets (Parenthetical) - $ / shares |
Mar. 31, 2021 |
Mar. 31, 2020 |
---|---|---|
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) | 19,045,386 | 18,969,380 |
Common stock, outstanding (in shares) | 19,045,386 | 18,969,380 |
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 |
Consolidated Statements of Operations - USD ($) |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 |
Dec. 31, 2020 |
Sep. 30, 2020 |
Jun. 30, 2020 |
Mar. 31, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2021 |
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Consolidated Statements of Operations [Abstract] | |||||||||||
Net sales | $ 168,128,000 | $ 122,568,000 | $ 154,730,000 | $ 95,356,000 | $ 150,735,000 | $ 125,574,000 | $ 150,374,000 | $ 109,148,000 | $ 540,782,000 | $ 535,831,000 | $ 472,797,000 |
Cost of goods sold | 136,021,000 | 98,327,000 | 115,004,000 | 81,969,000 | 114,152,000 | 97,913,000 | 113,801,000 | 91,565,000 | 431,321,000 | 417,431,000 | 383,623,000 |
Gross profit | 32,107,000 | 24,241,000 | 39,726,000 | 13,387,000 | 36,583,000 | 27,661,000 | 36,573,000 | 17,583,000 | 109,461,000 | 118,400,000 | 89,174,000 |
Operating expenses: | |||||||||||
General and administrative | 15,637,000 | 14,005,000 | 12,518,000 | 11,687,000 | 13,814,000 | 14,390,000 | 12,483,000 | 12,537,000 | 53,847,000 | 53,224,000 | 45,000,000 |
Sales and marketing | 4,800,000 | 4,698,000 | 4,326,000 | 4,200,000 | 5,047,000 | 5,623,000 | 5,448,000 | 4,919,000 | 18,024,000 | 21,037,000 | 19,542,000 |
Research and development | 2,549,000 | 2,100,000 | 1,972,000 | 1,942,000 | 2,506,000 | 2,174,000 | 2,148,000 | 2,372,000 | 8,563,000 | 9,200,000 | 8,014,000 |
Foreign exchange impact of lease liabilities and forward contracts | 3,651,000 | (12,455,000) | (3,985,000) | (4,817,000) | 20,708,000 | (3,772,000) | 1,802,000 | (537,000) | (17,606,000) | 18,201,000 | 972,000 |
Total operating expenses | 26,637,000 | 8,348,000 | 14,831,000 | 13,012,000 | 42,075,000 | 18,415,000 | 21,881,000 | 19,291,000 | 62,828,000 | 101,662,000 | 73,528,000 |
Operating income | 5,470,000 | 15,893,000 | 24,895,000 | 375,000 | (5,492,000) | 9,246,000 | 14,692,000 | (1,708,000) | 46,633,000 | 16,738,000 | 15,646,000 |
Interest expense, net | 3,696,000 | 4,051,000 | 3,614,000 | 4,409,000 | 5,464,000 | 6,879,000 | 6,523,000 | 6,173,000 | 15,770,000 | 25,039,000 | 23,227,000 |
Income (loss) before income tax expense (benefit) | 1,774,000 | 11,842,000 | 21,281,000 | (4,034,000) | (10,956,000) | 2,367,000 | 8,169,000 | (7,881,000) | 30,863,000 | (8,301,000) | (7,581,000) |
Income tax expense (benefit) | 939,000 | 3,373,000 | 6,097,000 | (1,022,000) | (2,763,000) | 1,502,000 | 1,980,000 | (1,730,000) | 9,387,000 | (1,011,000) | 268,000 |
Net income (loss) | $ 835,000 | $ 8,469,000 | $ 15,184,000 | $ (3,012,000) | $ (8,193,000) | $ 865,000 | $ 6,189,000 | $ (6,151,000) | $ 21,476,000 | $ (7,290,000) | $ (7,849,000) |
Basic net income (loss) per share (in dollars per share) | $ 0.04 | $ 0.44 | $ 0.80 | $ (0.16) | $ (0.43) | $ 0.05 | $ 0.33 | $ (0.33) | $ 1.13 | $ (0.39) | $ (0.42) |
Diluted net income (loss) per share (in dollars per share) | $ 0.04 | $ 0.44 | $ 0.78 | $ (0.16) | $ (0.43) | $ 0.04 | $ 0.32 | $ (0.33) | $ 1.11 | $ (0.39) | $ (0.42) |
Weighted average number of shares outstanding: | |||||||||||
Basic (in shares) | 19,023,145 | 18,913,788 | 18,849,909 | ||||||||
Diluted (in shares) | 19,387,555 | 18,913,788 | 18,849,909 |
Consolidated Statements of Comprehensive Income (Loss) - USD ($) |
12 Months Ended | ||
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Mar. 31, 2021 |
Mar. 31, 2020 |
Mar. 31, 2019 |
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Consolidated Statements of Comprehensive Income (Loss) [Abstract] | |||
Net income (loss) | $ 21,476,000 | $ (7,290,000) | $ (7,849,000) |
Other comprehensive loss, net of tax: | |||
Foreign currency translation loss | (328,000) | (481,000) | (713,000) |
Total other comprehensive loss, net of tax | (328,000) | (481,000) | (713,000) |
Comprehensive income (loss) | $ 21,148,000 | $ (7,771,000) | $ (8,562,000) |
Consolidated Statements of Shareholders' Equity - USD ($) |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Retained Earnings [Member] |
Accumulated Other Comprehensive Loss [Member] |
Total |
Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Common Stock [Member]
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Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Additional Paid-in Capital [Member]
|
Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Retained Earnings [Member]
|
Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Accumulated Other Comprehensive Loss [Member]
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Cumulative Effect, Period of Adoption, Adjusted Balance [Member] |
Cumulative Effect, Period of Adoption, Adjustment [Member]
Common Stock [Member]
|
Cumulative Effect, Period of Adoption, Adjustment [Member]
Additional Paid-in Capital [Member]
|
Cumulative Effect, Period of Adoption, Adjustment [Member]
Retained Earnings [Member]
|
Cumulative Effect, Period of Adoption, Adjustment [Member]
Accumulated Other Comprehensive Loss [Member]
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Cumulative Effect, Period of Adoption, Adjustment [Member] |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Beginning balance at Mar. 31, 2018 | $ 189,000 | $ 213,609,000 | $ 78,510,000 | $ (5,428,000) | $ 286,880,000 | $ 189,000 | $ 213,609,000 | $ 79,256,000 | $ (6,174,000) | $ 286,880,000 | |||||
Beginning balance (ASU 2016-01 [Member]) at Mar. 31, 2018 | $ 0 | $ 0 | $ 746,000 | $ (746,000) | $ 0 | ||||||||||
Beginning balance (in shares) at Mar. 31, 2018 | 18,893,102 | 18,893,102 | |||||||||||||
Beginning balance (in shares) (ASU 2016-01 [Member]) at Mar. 31, 2018 | 0 | ||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Compensation recognized under employee stock plans | $ 0 | 5,564,000 | 0 | 0 | 5,564,000 | ||||||||||
Exercise of stock options | $ 1,000 | 256,000 | 0 | 0 | 257,000 | ||||||||||
Exercise of stock options (in shares) | 42,032 | ||||||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes | $ 0 | (322,000) | 0 | 0 | (322,000) | ||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes (in shares) | 46,081 | ||||||||||||||
Repurchase and cancellation of treasury stock, including fees | $ (2,000) | (4,060,000) | 0 | 0 | (4,062,000) | ||||||||||
Repurchase and cancellation of treasury stock, including fees (in shares) | (163,815) | ||||||||||||||
Foreign currency translation | $ 0 | 0 | 0 | (713,000) | (713,000) | ||||||||||
Net income (loss) | 0 | 0 | (7,849,000) | 0 | (7,849,000) | ||||||||||
Ending balance at Mar. 31, 2019 | $ 188,000 | 215,047,000 | 71,407,000 | (6,887,000) | 279,755,000 | ||||||||||
Ending balance (in shares) at Mar. 31, 2019 | 18,817,400 | ||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Compensation recognized under employee stock plans | $ 0 | 4,141,000 | 0 | 0 | 4,141,000 | ||||||||||
Exercise of stock options | $ 1,000 | 456,000 | 0 | 0 | 457,000 | ||||||||||
Exercise of stock options (in shares) | 59,600 | ||||||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes | $ 1,000 | (1,063,000) | 0 | 0 | (1,062,000) | ||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes (in shares) | 92,380 | ||||||||||||||
Foreign currency translation | $ 0 | 0 | 0 | (481,000) | (481,000) | ||||||||||
Net income (loss) | 0 | 0 | (7,290,000) | 0 | (7,290,000) | ||||||||||
Ending balance at Mar. 31, 2020 | $ 190,000 | 218,581,000 | 64,117,000 | (7,368,000) | $ 275,520,000 | ||||||||||
Ending balance (in shares) at Mar. 31, 2020 | 18,969,380 | 18,969,380 | |||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Compensation recognized under employee stock plans | $ 0 | 5,247,000 | 0 | 0 | $ 5,247,000 | ||||||||||
Exercise of stock options | $ 0 | 719,000 | 0 | 0 | 719,000 | ||||||||||
Exercise of stock options (in shares) | 58,848 | ||||||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes | $ 1,000 | (351,000) | 0 | 0 | (350,000) | ||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes (in shares) | 72,118 | ||||||||||||||
Repurchase and cancellation of treasury stock, including fees | $ (1,000) | (1,138,000) | 0 | 0 | (1,139,000) | ||||||||||
Repurchase and cancellation of treasury stock, including fees (in shares) | (54,960) | ||||||||||||||
Foreign currency translation | $ 0 | 0 | 0 | (328,000) | (328,000) | ||||||||||
Net income (loss) | 0 | 0 | 21,476,000 | 0 | 21,476,000 | ||||||||||
Ending balance at Mar. 31, 2021 | $ 190,000 | $ 223,058,000 | $ 85,593,000 | $ (7,696,000) | $ 301,145,000 | ||||||||||
Ending balance (in shares) at Mar. 31, 2021 | 19,045,386 | 19,045,386 |
Company Background and Organization |
12 Months Ended |
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Mar. 31, 2021 | |
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) 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, and brake master cylinders, and (iv) test solutions and diagnostic equipment used for electric vehicle powertrain development and manufacturing including electric motor test systems, e-axle test systems, advanced power emulators, charging unit test systems, test systems for alternators, starters, belt starter generators and bench-top testers used by the automotive retail segment and turbochargers.
The Company primarily ships its products from its facilities and various third-party warehouse distribution centers in North America, including the Company’s 410,000 square foot distribution center in Tijuana, Mexico.
Impact of the Novel Coronavirus (“COVID-19”)
The outbreak of the COVID-19 pandemic adversely impacted the U.S. and global economies and created uncertainty regarding the potential effects on the Company’s employees, supply chain, operations, and customer demand. The COVID-19 pandemic could impact the Company’s operations and the operations of its customers, suppliers, and vendors because of quarantines, facility closures, travel, and logistics restrictions. The extent to which the COVID-19 pandemic impacts the Company will depend on numerous factors and future developments, which are highly uncertain and cannot be predicted, including, but not limited to: (i) the severity of the virus, (ii) the occurrence and duration of additional spikes, (iii) the effects of the pandemic on customers, suppliers, and vendors, (iv) the remedial actions and stimulus measures adopted by local, state and federal governments, (v) the availability and acceptance of vaccines, and (vi) the extent to which normal economic and operating conditions can resume. Even after the COVID-19 pandemic has subsided, the Company may continue to experience adverse impacts to its business because of an economic recession or depression that has occurred or may occur in the future.
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Summary of Significant Accounting Policies |
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Summary of Significant Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies |
2. Summary of Significant Accounting Policies
Recently Adopted Accounting Pronouncements
Measurement of Credit Losses on Financial Instruments
In June 2016, the FASB issued an accounting pronouncement related to the measurement of credit losses on financial instruments. This pronouncement, along with a subsequent Accounting Standards Updates (“ASU”) issued to clarify certain provisions of the new guidance, changed the impairment model for most financial assets and requires the use of an “expected loss” model for instruments measured at amortized cost. Under this model, entities are required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. The adoption of this guidance on April 1, 2020 increased the Company’s disclosures for its expected credit losses but did not have a material effect on its consolidated financial statements.
Prior to April 1, 2020, accounts receivable were recorded at cost less an allowance for doubtful accounts. The net amount of accounts receivable and corresponding allowance for doubtful accounts were presented in the consolidated balance sheets. The Company maintained an allowance for uncollectible accounts receivable for estimated losses resulting from the failure or inability of its customers to make required payments. Furthermore, receivable balances were assessed quarterly for impairment and an allowance was recorded if the receivable was considered impaired. Subsequent to April 1, 2020, accounts receivable are recorded at amortized cost less an allowance for credit losses that are not expected to be recovered. The net amount of accounts receivable and corresponding allowance for credit losses are presented in the consolidated balance sheets. The Company maintains allowances for credit losses resulting from the expected failure or inability of its customers to make required payments. The Company recognizes the allowance for credit losses at inception and reassess quarterly based on the asset’s expected collectability. The allowance is based on multiple factors including historical experience with bad debts, the credit quality of the customer base, the aging of such receivables and current macroeconomic conditions, such as COVID-19, as well as expectations of conditions in the future, if applicable. The Company’s allowance for credit losses is based on the assessment of the collectability of assets pooled together with similar risk characteristics.
The Company records a provision for expected credit losses using a loss-rate method based on the ratio of its historical write-offs to its average trade accounts receivable. At each reporting period, the Company assesses whether financial assets in a pool continue to display similar risk characteristics. If particular receivables no longer display risk characteristics that are similar to those of the receivables in the pool, the Company may determine that it needs to move those receivables to a different pool or perform an individual assessment of expected credit losses for those specific receivables.
Fair Value Measurements
In August 2018, the FASB issued guidance which changed the disclosure requirements for fair value measurements by removing, adding and modifying certain disclosures, including the range and weighted-average of significant unobservable inputs used to develop Level 3 fair value measurements. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 measurements, and the narrative description of measurement uncertainty are applied prospectively only for the most recent interim or annual period presented in the initial year of adoption. All other amendments should be applied retrospectively applied to all periods presented upon their effective date. The adoption of this guidance on April 1, 2020 modified certain of the Company’s disclosures for its Level 3 fair value measurements but did not have an impact on its consolidated financial statements.
Reference Rate Reform
In March 2020, the FASB issued guidance that, for a limited time, eases the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference the London Interbank Offered Rate or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The Company will apply these amendments prospectively. The adoption of this guidance on April 1, 2020 did not have an impact on the Company’s consolidated financial statements for the year ended March 31, 2021.
Accounting Pronouncements Not Yet Adopted
Income Taxes
In December 2019, the FASB issued guidance that simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistent application. This guidance is effective for annual and interim periods in fiscal years beginning after December 15, 2020. Early adoption is permitted. The adoption of this guidance on April 1, 2021 is not expected to have any material impact on the Company’s consolidated financial statements.
Reclassifications
Certain reclassifications have been made to the presentation of the prior year consolidated financial statements to conform to the current year presentation.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Motorcar Parts of America, Inc. and its wholly owned subsidiaries. All significant inter-company accounts and transactions have been eliminated.
Segment Reporting
Pursuant to the guidance provided under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) for segment reporting, the Company has identified its chief operating decision maker (“CODM”), reviewed the documents used by the CODM, and understands how such documents are used by the CODM to make financial and operating decisions. The Company has determined through this review process that its business comprises three separate operating segments. Two of the operating segments meet all the aggregation criteria, and are aggregated. The remaining operating segment does not meet the quantitative thresholds for individual disclosure and the Company has combined its operating segments into one reportable segment.
Cash and Cash Equivalents
Cash primarily consists of cash on hand and bank deposits. Cash equivalents consist of money market funds. The Company considers all highly liquid investments purchased with an original or remaining maturity of less than three months at the date of purchase to be cash equivalents. Cash and cash equivalents are maintained with various financial institutions.
Accounts Receivable
The Company’s accounts receivable are recorded at amortized cost less an allowance for credit losses that are not expected to be recovered. The net amount of accounts receivable and corresponding allowance for credit losses are presented in the consolidated balance sheets. The Company maintains allowances for credit losses resulting from the expected failure or inability of its customers to make required payments. The Company does not require collateral for accounts receivable. The Company believes its credit risk with respect to trade accounts receivable is limited due to its credit evaluation process and the long-term nature of its relationships with its largest customers. The Company utilizes a historical loss rate method, adjusted for any changes in economic conditions or risk characteristics, to estimate its expected credit losses each period. When developing an estimate of expected credit losses, the Company considers all available relevant information regarding the collectability of cash flows, including historical information, current conditions, and reasonable and supportable forecasts of future economic conditions over the contractual life of the receivable. The historical loss rate method considers past write-offs of trade accounts receivable over a period commensurate with the initial term of the Company’s contracts with its customers. The Company recognizes the allowance for credit losses at inception and reassesses quarterly based on management’s expectation of the asset’s collectability. The Company’s accounts receivable are short-term in nature and written off only when all collection attempts have failed.
The Company has receivable discount programs that have been established with certain major customers and their respective banks. Under these programs, the Company has the option to sell those customers’ receivables to those banks at a discount to be agreed upon at the time the receivables are sold. Once the customer chooses which outstanding invoices are going to be made available for discounting, the Company can accept or decline the bundle of invoices provided. The receivable discount programs are non-recourse, and funds cannot be reclaimed by the customer or its bank after the related invoices have been discounted.
Inventory
Inventory is comprised of: (i) Used Core and component raw materials, (ii) work-in-process, (iii) remanufactured finished goods and purchased finished goods.
Used Core, component raw materials, and purchased finished goods are stated at the lower of average cost or net realizable value.
Work-in-process is in various stages of production and is valued at the average cost of Used Cores and component raw materials issued to work orders still open, including allocations of labor and overhead costs. Historically, work-in-process inventory has not been material compared to the total inventory balance.
Remanufactured finished goods include: (i) the Used Core cost and (ii) the cost of component raw materials, and allocations of labor and variable and fixed overhead costs (the “Unit Cost”). The allocations of labor and variable and fixed overhead costs are based on the actual use of the production facilities over the prior 12 months which approximates normal capacity. This method prevents the distortion in allocated labor and overhead costs that would occur during short periods of abnormally low or high production. In addition, the Company excludes certain unallocated overhead such as severance costs, duplicative facility overhead costs, start-up costs, training, and spoilage from the calculation and expenses these unallocated overhead as period costs. Purchased finished goods also include an allocation of fixed overhead costs.
The estimate of net realizable value is subjective and based on management’s judgment and knowledge of current industry demand and management’s projections of industry demand. The estimates may, therefore, be revised if there are changes in the overall market for the Company’s products or market changes that in management’s judgment, impact its ability to sell or liquidate potentially excess or obsolete inventory. Net realizable value is determined at least quarterly as follows:
The Company records vendor discounts as a reduction of inventories and are recognized as a reduction to cost of sales as the inventories are sold.
Inventory Unreturned
Inventory unreturned represents the Company’s estimate, based on historical data and prospective information provided directly by the customer, of finished goods shipped to customers that the Company expects to be returned under its general right of return policy, after the balance sheet date. Inventory unreturned includes only the Unit Cost of a finished good. The return rate is calculated based on expected returns within the normal operating cycle, which is generally one year. As such, the related amounts are classified in current assets. Inventory unreturned is valued in the same manner as the Company’s finished goods inventory.
Contract Assets
Contract assets consists of: (i) the core portion of the finished goods shipped to customers, (ii) upfront payments to customers in connection with customer contracts, (iii) core premiums paid to customers, (iv) finished goods premiums paid to customers, and (v) long-term core inventory deposits.
Remanufactured Cores held at customers’ locations as a part of the finished goods sold to the customer are classified as long-term contract assets. These assets are valued at the lower of cost or net realizable value of Used Cores on hand (See Inventory above). For these Remanufactured Cores, the Company expects the finished good containing the Remanufactured Core to be returned under the Company’s general right of return policy or a similar Used Core to be returned to the Company by the customer, under the Company’s core exchange programs in each case, for credit. The Remanufactured Cores and Used Cores returned by consumers to the Company’s customers but not yet returned to the Company are classified as “Cores expected to be returned by customers”, which are included in short-term contract assets until the Company physically receives them during its normal operating cycle, which is generally one year.
Upfront payments to customers represent the marketing allowances, such as sign-on bonuses, slotting fees, and promotional allowances provided by the Company to its customers. These allowances are recognized as an asset and amortized over the appropriate period of time as a reduction of revenue if the Company expects to generate future revenues associated with the upfront payment. If the Company does not expect to generate additional revenue, then the upfront payment is recognized in the consolidated statements of operations when payment occurs as a reduction of revenue. Upfront payments expected to be amortized during the Company’s normal operating cycle, which is generally one year, are classified as short-term contract assets.
Core premiums paid to customers represent the difference between the Remanufactured Core acquisition price paid to customers generally in connection with new business, and the related Used Core cost, which is treated as an asset and recognized as a reduction of revenue through the later of the date at which related revenue is recognized or the date at which the sales incentive is offered. The Company considers, among other things, the length of its largest ongoing customer relationships, duration of customer contracts, and the average life of vehicles on the road in determining the appropriate period of time over which to amortize these premiums. These core premiums are amortized over a period typically ranging from
to eight years, adjusted for specific circumstances associated with the arrangement. Core premiums are recorded as long-term contract assets. Core premiums expected to be amortized within the Company’s normal operating cycle, which is generally one year, are classified as short-term contract assets.Finished goods premiums paid to customers represent the difference between the finished good acquisition price paid to customers, generally in connection with new business, and the related finished good cost, which is treated as an asset and recognized as a reduction of revenue through the later of the date at which related revenue is recognized or the date at which the sales incentive is offered. The Company considers, among other things, the length of its largest ongoing customer relationships, duration of customer contracts, and the average life of vehicles on the road in determining the appropriate period of time over which to amortize these premiums. Finished goods premiums are amortized over a period typically ranging from to eight years, adjusted for specific circumstances associated with the arrangement. Finished goods premiums are recorded as long-term contract assets. Finished goods premiums expected to be amortized within our normal operating cycle, which is generally one year, are classified as short-term contract assets.
Long-term core inventory deposits represent the cost of Remanufactured Cores the Company has purchased from customers, which are held by the customers and remain on the customers’ premises. The costs of these Remanufactured Cores were established at the time of the transaction based on the then current cost. The selling value of these Remanufactured Cores was established based on agreed upon amounts with these customers. The Company expects to realize the selling value and the related cost of these Remanufactured Cores should its relationship with a customer end, a possibility that the Company considers remote based on existing long-term customer agreements and historical experience.
Customer Finished Goods Returns Accrual
The customer finished goods returns accrual represents the Company’s estimate of its exposure to customer returns, including warranty returns, under its general right of return policy to allow customers to return items that their end user customers have returned to them and from time to time, stock adjustment returns when the customers’ inventory of certain product lines exceeds the anticipated sales to end-user customers. The customer finished goods returns accrual represents the Unit Value of the estimated returns and is classified as a current liability due to the expectation that these returns will occur within the normal operating cycle of one year.
Income Taxes
The Company accounts for income taxes using the liability method, which measures deferred income taxes by applying enacted statutory rates in effect at the balance sheet date to the differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. The resulting asset or liability is adjusted to reflect changes in the tax laws as they occur. A valuation allowance is provided to reduce deferred tax assets when it is more likely than not that a portion of the deferred tax asset will not be realized.
The primary components of the Company’s income tax expense were (i) federal income taxes, (ii) state income taxes, (iii) foreign income taxed at rates that are different from the federal statutory rate, (iv) change in realizable deferred tax items, (v) impact of the non-deductible executive compensation under Internal Revenue Code Section 162(m), (vi) income taxes associated with uncertain tax positions, and (vii) the impact of net operating loss carry-backs in connection with the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), which was signed into law on March 27, 2020.
Realization of deferred tax assets is dependent upon the Company’s ability to generate sufficient future taxable income. Significant judgment is required in determining the Company’s provision for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against the Company’s net deferred tax assets. The Company makes these estimates and judgments about its future taxable income that are based on assumptions that are consistent with the Company’s future plans. A valuation allowance is established when the Company believes it is not more likely than not all or some of a deferred tax assets will be realized. In evaluating the Company’s ability to recover deferred tax assets within the jurisdiction in which they arise, the Company considers all available positive and negative evidence. Deferred tax assets arising primarily as a result of net operating loss carry-forwards and research and development credits in connection with the Company’s Canadian operations have been offset completely by a valuation allowance due to the uncertainty of their utilization in future periods. Should the actual amount differ from the Company’s estimates, the amount of the valuation allowance could be impacted.
The Company has made an accounting policy election to recognize the U.S. tax effects of global intangible low-taxed income as a component of income tax expense in the period the tax arises.
Plant and Equipment
Plant and equipment are stated at cost, less accumulated depreciation. The cost of additions and improvements are capitalized, while maintenance and repairs are charged to expense when incurred. Depreciation is provided on a straight-line basis in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives. Machinery and equipment are depreciated over a range from to ten years. Office equipment and fixtures are depreciated over a range from to ten years. Leasehold improvements are depreciated over the lives of the respective leases or the service lives of the leasehold improvements, whichever is shorter. Depreciation of assets recorded under finance leases is included in depreciation expense. The Company evaluates plant and equipment, including leasehold improvements, equipment, construction in progress, and right-of-use assets for impairment whenever events or circumstances indicate that the carrying value of an asset or asset group may not be recoverable. There were no indicators of impairment at March 31, 2021.
Leases
The Company determines if an arrangement contains a lease at inception. Lease assets and lease liabilities are recorded based on the present value of lease payments over the lease term, which includes the minimum unconditional term of the lease. Certain of the Company’s leases include options to extend the leases for up to five years. When the Company has the option to extend the lease term, terminate the lease before the contractual expiration date, or purchase the leased asset, and it is reasonably certain that it will exercise the option, the option is considered in determining the classification and measurement of the lease. The lease assets are recorded net of any lease incentives received. The Company exempts leases with an initial term of 12 months or less from balance sheet recognition and, for all classes of assets, combines non-lease components with lease components. Lease assets are tested for impairment in the same manner as long-lived assets used in operations.
The Company uses its incremental borrowing rate for each of its leases in determining the present value of its expected lease payments based on the information available at the lease commencement date as the rate implicit for each of its leases is not readily detainable. The Company’s incremental borrowing rate is determined by analyzing and combining (i) an applicable risk-free rate, (ii) a financial spread adjustment, and (iii) any lease specific adjustment. Certain leases contain provisions for property-related costs that are variable in nature for which the Company is responsible, including common area maintenance and other property operating services, which are expensed as incurred and not included in the determination of lease assets and lease liabilities. These costs are calculated based on a variety of factors including property values, tax and utility rates, property services fees, and other factors. The Company records rent expense for operating leases, some of which have escalating rent payments, on a straight-line basis over the lease term.
The Company has material non-functional currency leases. As required for other monetary liabilities, lessees shall remeasure a foreign currency-denominated lease liability using the exchange rate at each reporting date, but the lease assets are nonmonetary assets measured at historical rates, which are not affected by subsequent changes in the exchange rates. The Company recorded a gain of $9,893,000 and a loss of $11,710,000 during the years ended March 31, 2021 and 2020, respectively, which are included in “foreign exchange impact of lease liabilities and forward contracts” in the consolidated statements of operations. See Note 10 for additional information regarding the Company’s leases.
Goodwill
The Company evaluates goodwill for impairment at least annually during the fourth quarter of each fiscal year or more frequently when an event occurs or circumstances change that indicate the carrying value may not be recoverable. The goodwill impairment test is performed at the reporting unit level, which represents the Company’s operating segments. In testing for goodwill impairment, the Company may elect to utilize a qualitative assessment to evaluate whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If the Company’s qualitative assessment indicates that goodwill impairment is more likely than not, it will proceed with performing the quantitative assessment. If the fair value of the reporting unit exceeds its carrying value, goodwill is not considered impaired. If the carrying value of the reporting unit exceeds its fair value an impairment loss will be recognized for the amount by which the carrying value exceeds the reporting unit’s fair value. The Company completed the required annual testing of goodwill impairment for each of the reporting units during the fourth quarter of the year ended March 31, 2021, and determined through the qualitative assessment that its goodwill of $3,205,000 was not impaired.
Intangible Assets
The Company’s intangible assets other than goodwill are finite–lived and amortized on a straight-line basis over their respective useful lives. The Company analyzes its finite-lived intangible assets for impairment when and if indicators of impairment exist. At March 31, 2021, the Company’s intangible assets were $5,329,000, and there were no indicators of impairment.
Debt Issuance Costs
Debt issuance costs include fees and costs incurred to obtain financing. Debt issuance costs related to the Company’s term loans are presented in the balance sheet as a direct deduction from the carrying amount of the term loans. Debt issuance costs related to the Company’s revolving loan are presented in prepaid expenses and other current assets in the accompanying consolidated balance sheets, regardless of whether or not there are any outstanding borrowings under the revolving loan. These fees and costs are amortized using the straight-line method, which approximates the effective interest rate method, over the terms of the related loans and are included in interest expense in the Company’s consolidated statements of operations.
Foreign Currency Translation
For financial reporting purposes, the functional currency of the foreign subsidiaries is the local currency. The assets and liabilities of foreign operations for which the local currency is the functional currency are translated into the U.S. dollar at the exchange rate in effect at the balance sheet date, while revenues and expenses are translated at average exchange rates during the year. The accumulated foreign currency translation adjustment is presented as a component of comprehensive income or loss in the consolidated statements of shareholders’ equity. During the years ended March 31, 2021 and 2020, aggregate foreign currency transaction gains of $1,144,000 and losses of $789,000, respectively, were recorded in general and administrative expenses.
Revenue Recognition
Revenue is recognized when performance obligations under the terms of a contract with its customers are satisfied; generally, this occurs with the transfer of control of its products. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services. Revenue is recognized net of all anticipated returns, marketing allowances, volume discounts, and other forms of variable consideration.
Revenue is recognized either when products are shipped or when delivered, depending on the applicable contract terms. Bill and hold shipments are shipped out to the customer as ex-works; in which the customer makes arrangements and is responsible for their shipping cost. No freight or shipping costs are accrued for revenue under the terms of shipments made as ex-works.
The price of a finished remanufactured product sold to customers is generally comprised of separately invoiced amounts for the Remanufactured Core included in the product (“Remanufactured Core value”) and the unit portion included in the product (“Unit Value”), for which revenue is recorded based on our then current price list, net of applicable discounts and allowances. The Remanufactured Core value is recorded as a net revenue based upon the estimate of Used Cores that will not be returned by the customer for credit. These estimates are subjective and based on management’s judgment and knowledge of historical, current, and projected return rates. As reconciliations are completed with the customers the actual rates at which Used Cores are not being returned may differ from the current estimates. This may result in periodic adjustments of the estimated contract asset and liability amounts recorded and may impact the projected revenue recognition rates used to record the estimated future revenue. These estimates may also be revised if there are changes in contractual arrangements with customers, or changes in business practices. A significant portion of the remanufactured automotive parts sold to customers are replaced by similar Used Cores sent back for credit by customers under the core exchange programs (as described in further detail below). The number of Used Cores sent back under the core exchange programs is generally limited to the number of similar Remanufactured Cores previously shipped to each customer.
Revenue Recognition — Core Exchange Programs
Full price Remanufactured Cores: When remanufactured products are shipped, certain customers are invoiced for the Remanufactured Core value of the product at the full Remanufactured Core sales price. For these Remanufactured Cores, revenue is only recognized based upon an estimate of the rate at which these customers will pay cash for Remanufactured Cores in lieu of sending back similar Used Cores for credits under the core exchange programs. The remainder of the full price Remanufactured Core value invoiced to these customers is established as a long-term contract liability rather than being recognized as revenue in the period the products are shipped as the Company expects these Remanufactured Cores to be returned for credit under its core exchange programs.
Nominal price Remanufactured Cores: Certain other customers are invoiced for the Remanufactured Core value of the product shipped at a nominal (generally $0.01 or less) Remanufactured Core price. For these nominal Remanufactured Cores, revenue is only recognized based upon an estimate of the rate at which these customers will pay cash for Remanufactured Cores in lieu of sending back similar Used Cores for credits under the core exchange programs. Revenue amounts are calculated based on contractually agreed upon pricing for these Remanufactured Cores for which the customers are not returning similar Used Cores. The remainder of the nominal price Remanufactured Core value invoiced to these customers is established as a long-term contract liability rather than being recognized as revenue in the period the products are shipped as the Company expects these Remanufactured Cores to be returned for credit under its core exchange programs.
Revenue Recognition; General Right of Return
Customers are allowed to return goods that their end-user customers have returned to them, whether or not the returned item is defective (warranty returns). In addition, under the terms of certain agreements and industry practice, customers from time to time are allowed stock adjustments when their inventory of certain product lines exceeds the anticipated sales to end-user customers (stock adjustment returns). Customers have various contractual rights for stock adjustment returns, which are typically less than 5% of units sold. In some instances, a higher level of returns is allowed in connection with significant restocking orders. The aggregate returns are generally limited to less than 20% of unit sales.
The allowance for warranty returns is established based on a historical analysis of the level of this type of return as a percentage of total unit sales. The allowance for stock adjustment returns is based on specific customer inventory levels, inventory movements, and information on the estimated timing of stock adjustment returns provided by customers. Stock adjustment returns do not occur at any specific time during the year. The return rate for stock adjustments is calculated based on expected returns within the normal operating cycle, which is generally one year.
The Unit Value of the warranty and stock adjustment returns are treated as reductions of revenue based on the estimations made at the time of the sale. The Remanufactured Core value of warranty and stock adjustment returns are provided for as indicated in the paragraph “Revenue Recognition – Core Exchange Programs”.
As is standard in the industry, the Company only accepts returns from on-going customers. If a customer ceases doing business with the Company, it has no further obligation to accept additional product returns from that customer. Similarly, the Company accepts product returns and grants appropriate credits to new customers from the time the new customer relationship is established.
Shipping Costs
The Company includes shipping and handling charges in the gross invoice price to customers and classifies the total amount as revenue. All shipping and handling costs are expensed as cost of sales as inventory is sold.
Contract Liability
Contract liability consists of: (i) customer allowances earned, (ii) accrued core payments, (iii) customer core returns accruals, (iv) core bank liability, (v) finished goods liabilities, and (vi) customer deposits.
Customer allowances earned includes all marketing allowances provided to customers. Such allowances include sales incentives and concessions. Voluntary marketing allowances related to a single exchange of product are recorded as a reduction of revenues at the time the related revenues are recorded or when such incentives are offered. Other marketing allowances, which may only be applied against future purchases, are recorded as a reduction to revenues in accordance with a schedule set forth in the relevant contract. Sales incentive amounts are recorded based on the value of the incentive provided. See Note 14 for a description of all marketing allowances. Customer allowances to be provided to customers within the Company’s normal operating cycle, which is generally one year, are considered short-term contract liabilities and the remainder are recorded as long-term contract liabilities.
Accrued core payments represent the sales price of Remanufactured Cores purchased from customers, generally in connection with new business, which are held by these customers and remain on their premises. The sales price of these Remanufactured Cores will be realized when the Company’s relationship with a customer ends, a possibility that the Company considers remote based on existing long-term customer agreements and historical experience. The payments to be made to customers for purchases of Remanufactured Cores within the Company’s normal operating cycle, which is generally one year, are considered short-term contract liabilities and the remainder are recorded as long-term contract liabilities.
Customer core returns accruals represent the full and nominally priced Remanufactured Cores shipped to the Company’s customers. When the Company ships the product, it recognizes an obligation to accept a similar Used Core sent back under the core exchange programs based upon the Remanufactured Core price agreed upon by the Company and its customer. The Contract liability related to Used Cores returned by consumers to the Company’s customers but not yet returned to the Company are classified as short-term contract liabilities until the Company physically receives these Used Cores as they are expected to be returned during the Company’s normal operating cycle, which is generally one year and the remainder are recorded as long-term contract liabilities.
The core bank liability represents the full Remanufactured Core sales price paid for cores returned under the core exchange programs. The payment for these cores are made over a contractual repayment period pursuant to the Company’s agreement with this customer. Payments to be made within the Company’s normal operating cycle, which is generally one year, are considered short-term contract liabilities and the remainder are recorded as long-term contract liabilities.
Finished goods liabilities represents the agreed upon price of finished goods purchased from customers, generally in connection with new business. The payment for these finished goods are made over a contractual repayment period pursuant to the Company’s agreement with the customer. Payments to be made within the Company’s normal operating cycle, which is generally one year, are considered short-term contract liabilities and the remainder are recorded as long-term contract liabilities.
Customer deposits represent the receipt of prepayments from customers for the obligation to transfer goods or services in the future. The Company classifies these customer deposits as short-term contract liabilities as the Company expects to satisfy these obligations within its normal operating cycle, which is generally one year.
Advertising Costs
The Company expenses all advertising costs as incurred. Advertising expenses for the years ended March 31, 2021, 2020 and 2019 were $507,000, $773,000 and $819,000, respectively.
Net Income (Loss) Per Share
Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per share includes the effect, if any, from the potential exercise or conversion of securities, such as stock options and warrants, 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 income (loss) per share.
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 income (loss) per share. For the years ended March 31, 2021, 2020 and 2019, there were 1,279,251, 1,738,106, and 1,580,299, respectively, of potential common shares not included in the calculation of diluted net income (loss) per share because their effect was anti-dilutive.
Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. On an on-going basis, the Company evaluates its estimates, including allowances for credit losses, valuation of inventory, valuation of long-lived assets, goodwill and intangible assets, depreciation and amortization of long-lived assets, litigation matters, valuation of deferred tax assets, share-based compensation, sales returns and other customer marketing allowances, and the incremental borrowing rate used in determining the present value of lease liabilities. Although the Company does not believe that there is a reasonable likelihood that there will be a material change in the future estimate or in the assumptions used in calculating the estimate, unforeseen changes in the industry, or business could materially impact the estimate and may have a material adverse effect on its business, financial condition and results of operations.
Financial Instruments
The carrying amounts of cash, short-term investments, 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, term loan and other long-term liabilities approximate their fair value based on current rates for instruments with similar characteristics.
Share-Based Payments
The Black-Scholes option-pricing model requires the input of subjective assumptions including the expected volatility of the underlying stock and the expected holding period of the option. 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.
The following summarizes the Black-Scholes option-pricing model assumptions used to derive the weighted average fair value of the stock options granted during the periods noted.
Credit Risk
The Company regularly reviews its accounts receivable and allowance for credit losses by considering factors such as historical experience, credit quality and age of the accounts receivable, and the current economic conditions that may affect a customer’s ability to pay. The majority of the Company’s sales are to leading automotive aftermarket parts suppliers. Management believes the credit risk with respect to trade accounts receivable is limited due to the Company’s credit evaluation process, the nature of its customers, and its accounts receivable discount programs. However, should the Company’s customers experience significant cash flow problems, its financial position and results of operations could be materially and adversely affected, and the maximum amount of loss that would be incurred would be the outstanding receivable balance, Used Cores expected to be returned by customers, and the value of the Remanufactured Cores held at customers’ locations. The Company maintains an allowance for credit losses that, in its opinion, provides for an adequate reserve to cover losses that may be incurred.
Deferred Compensation Plan
The Company has a deferred compensation plan for certain members of management. The plan allows participants to defer salary and bonuses. The assets of the plan, which are held in a trust and are subject to the claims of the Company’s general creditors under federal and state laws in the event of insolvency, are recorded as short-term investments in the consolidated balance sheets. Consequently, the trust qualifies as a Rabbi trust for income tax purposes. The plan’s assets consist primarily of mutual funds and are recorded at market value with any unrealized gain or loss recorded as general and administrative expense. The carrying value of plan assets was $1,652,000 and $850,000, and the deferred compensation liability, which is included in other current liabilities in the accompanying consolidated balance sheets, was $1,652,000 and $850,000 at March 31, 2021 and 2020, respectively. During the years ended March 31, 2021, 2020, and 2019, the Company made contributions of $96,000, $79,000 and $113,000, respectively.
During the years ended March 31, 2021 and 2020, the Company redeemed $46,000 and $2,802,000, respectively, of its short-term investments for the payment of deferred compensation liabilities.
The following summarizes the gain (loss) on the Company’s equity investments:
Comprehensive Income or Loss
Comprehensive income or loss is defined as the change in equity during a period resulting from transactions and other events and circumstances from non-owner sources. The Company’s total comprehensive income or loss consists of net unrealized income or loss from foreign currency translation adjustments.
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Goodwill and Intangible Assets |
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Goodwill and Intangible Assets |
3. Goodwill and Intangible Assets
Goodwill
The Company had goodwill of $3,205,000 at March 31, 2021 and 2020.
Intangible Assets
The following is a summary of acquired intangible assets subject to amortization:
During the years ended March 31, 2021 and 2020, the Company retired $291,000 and $470,000, respectively, of fully amortized intangible assets.
Amortization expense for acquired intangible assets is as follows:
The estimated future amortization expense for acquired intangible assets subject to amortization is as follows:
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Accounts Receivable - Net |
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Accounts Receivable - Net |
4. 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 customer payment discrepancies, returned goods authorizations (“RGAs”) issued for in-transit unit returns, and allowances for credit losses.
Accounts receivable — net is comprised of the following:
The following table provides a roll-forward of the allowance for credit losses that is deducted from accounts receivable to present the net amount expected to be collected. During the year ended March 31, 2021, the Company wrote off amounts previously fully reserved for in connection the bankruptcy filing of one of its customers.
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Inventory |
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Inventory |
5. Inventory
Inventory is comprised of the following:
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Contract Assets |
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Contract Assets |
6. Contract Assets
During the year ended March 31, 2021, the Company reduced the carrying value of Remanufactured Cores held at customers’ locations by $4,600,000.
Contract assets are comprised of the following:
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Plant and Equipment |
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Plant and Equipment |
7. Plant and Equipment
Plant and equipment is comprised of the following:
Plant and equipment located in the foreign countries where the Company has facilities, net of accumulated depreciation, totaled $45,831,000 and $35,410,000, of which $42,215,000 and $31,845,000 is located in Mexico, at March 31, 2021 and 2020, respectively.
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Debt |
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Debt |
8. Debt
The Company is party to a $268,620,000 senior secured financing, (as amended from time to time, the “Credit Facility”) with a syndicate of lenders, and PNC Bank, National Association, as administrative agent, consisting of (i) a $238,620,000 revolving loan facility, subject to borrowing base restrictions, a $24,000,000 sublimit for borrowings by Canadian borrowers, and a $20,000,000 sublimit for letters of credit (the “Revolving Facility”) and (ii) a $30,000,000 term loan facility (the “Term Loans”). The loans under the Credit Facility mature on June 5, 2023. The Credit Facility currently permits the payment of up to $30,000,000 of dividends and share repurchases for fiscal year 2021, subject to pro forma compliance with financial covenants. In connection with the Credit Facility, the lenders have a security interest in substantially all of the assets of the Company.
The Term Loans require quarterly principal payments of $937,500. The Credit Facility bears interest at rates equal to either LIBOR plus a margin of 2.25%, 2.50% or 2.75% or a reference rate plus a margin of 1.25%, 1.50% or 1.75%, in each case depending on the senior leverage ratio as of the applicable measurement date. There is also a facility fee of 0.375% to 0.50%, depending on the senior leverage ratio as of the applicable measurement date. The interest rate on the Company’s Term Loans and Revolving Facility was 2.62% at March 31, 2021, and 4.34% and 3.64%, respectively, at March 31, 2020.
The Credit Facility, among other things, requires the Company to maintain certain financial covenants including a maximum senior leverage ratio and a minimum fixed charge coverage ratio. The Company was in compliance with all financial covenants at March 31, 2021.
On May 28, 2021, the Company entered into a third amendment to the Amended Credit Facility (the “Third Amendment”). The Third Amendment, among other things, (i) extends the maturity date to May 28, 2026 from June 5, 2023, (ii) modifies the fixed charge coverage ratio financial covenant, and (iii) modifies the definition of “Consolidated EBITDA”. The modifications to the financial covenants were effective as of March 31, 2021.
The Company had cash of $15,523,000 at March 31, 2021 and paid down its outstanding debt by $71,750,000 during the year ended March 31, 2021. In addition to other covenants, the Credit Facility places limits on the Company’s ability to incur liens, incur additional indebtedness, make loans and investments, engage in mergers and acquisitions, engage in asset sales, redeem or repurchase capital stock, alter the business conducted by the Company and its subsidiaries, transact with affiliates, prepay, redeem or purchase subordinated debt, and amend or otherwise alter debt agreements.
The Company’s Term Loans are comprised of the following:
Future repayments of the Company’s Term Loans are as follows:
The Company had $84,000,000 and $152,000,000 outstanding under the Revolving Facility at March 31, 2021 and 2020, respectively. In addition, $6,193,000 was reserved for letters of credit at March 31, 2021. At March 31, 2021, after certain adjustments, $125,296,000 was available under the Revolving Facility.
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Contract Liabilities |
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Contract Liabilities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract Liabilities |
9. Contract Liabilities
Contract liabilities are comprised of the following:
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases |
10. Leases
The Company leases various facilities in North America and Asia under operating leases expiring through August 2033. During the year ended March 31, 2021, the following material operating leases commenced: (i) the lease of the Company’s 173,000 square foot core induction, warehouse, and office facility in Mexico, which resulted in an increase in the operating lease liability of $12,724,000 and (ii) the renewal of the Company’s 157,000 square foot remanufacturing, warehouse, and office facility in Canada, which resulted in an increase in the operating lease liability of $2,715,000. During the first quarter of fiscal 2022, the Company renewed the lease for its corporate headquarters in Torrance, California, for an additional 10-year period, and accordingly it is not included in the operating lease assets and operating lease liabilities as of March 31, 2021. Total commitments for this agreement, which expires in
, are $20,789,000. The Company also has finance leases for certain office and manufacturing equipment, which generally range from to five years.The Company has material non-functional currency leases, which resulted in a remeasurement gain of $9,893,000 compared with a loss of $11,710,000 during the years ended March 31, 2021 and 2020, respectively. These remeasurement gains and losses are included in “foreign exchange impact of lease liabilities and forward contracts” in the consolidated statements of operations.
Balance sheet information for leases is comprised of the following:
Lease cost recognized in the consolidated statement of operations is comprised of the following:
Maturities of lease commitments at March 31, 2021 were as follows:
Other information about leases is as follows:
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Accounts Receivable Discount Programs |
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Accounts Receivable Discount Programs [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable Discount Programs |
11. Accounts Receivable Discount Programs
The Company uses receivable discount programs with 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 the Company’s accounts receivable discount programs:
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Financial Risk Management and Derivatives |
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Financial Risk Management and Derivatives [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Risk Management and Derivatives |
12. 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 facilities overseas, 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 forward foreign currency exchange contracts are designated 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 $41,819,000 and $42,052,000 at March 31, 2021 and 2020, respectively. These contracts generally have a term of one year or less, at rates agreed at the inception of the contracts. The counterparty to this derivative transaction 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 consolidated statements of operations.
The following shows the effect of the Company’s derivative instruments on its consolidated statements of operations:
The fair value of the forward foreign currency exchange contracts of $1,429,000 is included in prepaid and other current assets in the consolidated balance sheet at March 31, 2021. The fair value of the forward foreign currency exchange contracts of $6,284,000 is included other current liabilities in the accompanying consolidated balance sheet at March 31, 2020. 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 consolidated statements of cash flows for the years ended March 31, 2021, 2020, and 2019.
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Fair Value Measurements |
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Fair Value Measurements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements |
13. Fair Value Measurements
The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company uses a three-tier valuation hierarchy based upon observable and unobservable inputs:
The fair value hierarchy requires the use of observable market data when available. In instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability.
The following sets forth by level within the fair value hierarchy, the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis according to the valuation techniques the Company used to determine their fair values at:
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 12).
Contingent Consideration
In December 2018, the Company completed the acquisition of certain assets and assumption of certain liabilities from Mechanical Power Conversion, LLC (“E&M”). In connection with this acquisition, the Company is contingently obligated to make additional payments to the former owners of E&M up to an aggregate of $5,200,000 over a three-year period.
E&M Research and Development (“R&D”) Event Milestone
In connection with the Company’s E&M acquisition in December 2018, it had a two-year R&D event milestone based on technology development and transfer. The milestone was achieved and, as a result, the Company paid $1,250,000 to the former owners of E&M during the year ended March 31, 2021. The fair value of the two-year R&D event milestone was $1,130,000 at March 31, 2020, determined using a probability weighted method with commensurate with the term of the contingent consideration.
E&M Gross Profit Earn-out Consideration
The fair value of the three-year gross profit earn-out consideration was $910,000 and $1,230,000 at March 31, 2021 and 2020, respectively, determined using a Monte Carlo Simulation Model. Any subsequent changes in the fair value of the contingent consideration liability will be recorded in current period earnings as a general and administrative expense. The second year milestone was achieved and, as a result, the Company paid $723,000 to the former owners of E&M during the year ended March 31, 2021.
The assumptions used to determine the fair value is as follows:
Dixie Revenue Earn-out Consideration
In January 2019, the Company completed the acquisition of all the equity interests of Dixie. In connection with this acquisition, the Company was contingently obligated to make additional payments to the former owners of Dixie up to $1,130,000 over a two-year period. The fair value of the two-year revenue earn-out consideration was $0 and $293,000 at March 31, 2021 and 2020, determined using a Monte Carlo Simulation Model.
The following table summarizes the activity for financial assets and liabilities utilizing Level 3 fair value measurements:
During the years ended March 31, 2021 and 2020, 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, term 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.
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Commitments and Contingencies |
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Commitments and Contingencies |
14. 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 total 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 return accrual:
Commitments to Provide Marketing Allowances under Long-Term Customer Contracts
The Company has or is renegotiating long-term agreements with many of its major customers. Under these agreements, which in most cases have initial terms of at least four years, the Company is designated as the exclusive or primary supplier for specified categories of the Company’s products. Because of the very competitive nature of the market and the limited number of customers for these products, the Company’s customers have sought and obtained price concessions, significant marketing allowances, and more favorable delivery and payment terms in consideration for the Company’s designation as a customer’s exclusive or primary supplier. These incentives differ from contract to contract and can include (i) the issuance of a specified amount of credits against receivables in accordance with a schedule set forth in the relevant contract, (ii) support for a particular customer’s research or marketing efforts provided on a scheduled basis, (iii) discounts granted in connection with each individual shipment of product, and (iv) other marketing, research, store expansion or product development support. These contracts typically require that the Company meet ongoing performance standards. The Company’s contracts with its customers expire at various dates through December 2024. While these longer-term agreements strengthen the Company’s customer relationships, the increased demand for the Company’s products often requires that the Company increase its inventories and personnel. Customer demands that the Company purchase their Remanufactured Core inventory also require the use of the Company’s working capital.
The marketing and other allowances the Company typically grants its customers in connection with its new or expanded customer relationships adversely impact the near-term revenues, profitability, and associated cash flows from these arrangements. Such allowances include sales incentives and concessions and typically consist of: (i) allowances which may only be applied against future purchases and are recorded as a reduction to revenues in accordance with a schedule set forth in the long-term contract, (ii) allowances related to a single exchange of product that are recorded as a reduction of revenues at the time the related revenues are recorded or when such incentives are offered, and (iii) amortization of core premiums paid to customers generally in connection with new business.
The following summarizes the breakout of allowances discussed above, recorded as a reduction to revenues:
The following presents the Company’s commitments to incur allowances, excluding allowances related to a single exchange of product, which will be recognized as a reduction to revenue when the related revenue is recognized:
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. Following an audit in fiscal 2019, the U.S. Customs and Border Protection stated that it believed that the Company owed additional duties of approximately $17 million from 2011 through mid-2018 relating to products that it imported from Mexico. The Company does not believe that this amount is correct and believes that it has numerous defenses and is disputing this amount vigorously. The Company cannot assure that the U.S. Customs and Border Protection will agree or that it will not need to accrue or pay additional amounts in the future.
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Significant Customer and Other Information |
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Significant Customer and Other Information |
15. Significant Customer and Other Information
Significant Customer Concentrations
The Company’s largest customers accounted for the following total percentage of net sales:
The Company’s largest customers accounted for the following total percentage of accounts receivable — trade:
Geographic and Product Information
The Company’s products are predominantly sold in the U.S. and accounted for the following total percentage of net sales:
Significant Supplier Concentrations
No suppliers accounted for more than 10% of the Company’s inventory purchases for the years ended March 31, 2021, 2020, and 2019.
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Income Taxes |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Income Taxes [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes |
16. Income Taxes
The income tax expense (benefit) is as follows:
Deferred income taxes consist of the following:
As of March 31, 2021, the Company had federal net operating loss carryforwards of $828,000 related to its January 2019 acquisition, state net operating loss carryforwards of $1,130,000 and foreign net operating loss carryforwards of $14,931,000. The federal net operating loss carryforwards expire beginning fiscal year
, the state net operating loss carryforwards expire beginning fiscal year , and the foreign net operating loss carryforwards expire beginning fiscal year . As of March 31, 2021, the Company also had non-US tax credit carryforwards of $1,828,000, which will expire beginning fiscal year . A full valuation allowance was established on the federal and foreign net operating loss and tax credits carryforward as the Company believes it is more likely than not these tax attributes would not be realizable in the future. The net increase in the valuation allowance was $670,000 during the year ended March 31, 2021.Realization of deferred tax assets is dependent upon the Company’s ability to generate sufficient future taxable income. Significant judgment is required in determining the Company’s provision for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against the Company’s net deferred tax assets. The Company makes these estimates and judgments about its future taxable income that are based on assumptions that are consistent with the Company’s future plans. A valuation allowance is established when the Company believes it is not more likely than not all or some of a deferred tax assets will be realized. In evaluating the Company’s ability to recover deferred tax assets within the jurisdiction in which they arise, the Company considers all available positive and negative evidence. Deferred tax assets arising primarily as a result of non-US net operating loss carry-forwards and non-US research and development credits in connection with the Company’s Canadian operations have been offset completely by a valuation allowance due to the uncertainty of their utilization in future periods. Should the actual amount differ from the Company’s estimates, the amount of the valuation allowance could be impacted.
For the years ended March 31, 2021, 2020, and 2019, the primary components of the Company’s income tax expense were (i) federal income taxes, (ii) state income taxes, (iii) foreign income taxed at rates that are different from the federal statutory rate, (iv) change in realizable deferred tax items, (v) impact of the non-deductible executive compensation under Internal Revenue Code Section 162(m), (vi) income taxes associated with uncertain tax positions, and (vii) the impact of net operating loss carry-backs in connection with the CARES Act.
The difference between the income tax expense at the federal statutory rate and the Company’s effective tax rate is as follows:
The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions with varying statutes of limitations. At March 31, 2021, the Company is not under examination in any jurisdiction and the years ended March 31, 2017 through 2020 remain subject to examination. The Company believes no significant changes in the unrecognized tax benefits will occur within the next 12 months.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
At March 31, 2021, 2020 and 2019, there are $923,000, $823,000 and $938,000 of unrecognized tax benefits that if recognized would affect the annual effective tax rate.
The Company recognizes interest and penalties accrued related to unrecognized tax benefits as part of income tax expense. During the years ended March 31, 2021, 2020, and 2019, the Company recognized approximately $(16,000), $(50,000), and $(23,000) in interest and penalties, respectively. The Company had approximately $58,000 and $74,000 for the payment of interest and penalties accrued at March 31, 2021 and 2020, respectively.
The Company intends to indefinitely reinvest its undistributed earnings from foreign subsidiaries in foreign operations and no incremental U.S. tax or withholding taxes have been provided for these earnings.
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Defined Contribution Plans |
12 Months Ended |
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Mar. 31, 2021 | |
Defined Contribution Plans [Abstract] | |
Defined Contribution Plans |
17. Defined Contribution Plans
The Company has a 401(k) plan covering all employees who are 21 years of age with at least six months of service. The plan permits eligible employees to make contributions up to certain limitations, with the Company matching 50% of each participating employee’s contribution up to the first 6% of employee compensation. Employees are immediately vested in their voluntary employee contributions and vest in the Company’s matching contributions ratably over five years. The Company’s matching contribution to the 401(k) plan was $507,000, $496,000, and $445,000 for the years ended March 31, 2021, 2020, and 2019, respectively.
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Share-based Payments |
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Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payments |
18. Share-based Payments
At March 31, 2021, there were 342,000 shares of the Company’s common stock reserved for grants to the Company’s non-employee directors under the 2014 Non-Employee Director Incentive Award Plan (the “2014 Plan”). Under the 2014 Plan, (i) 69,732 and 53,784 of restricted stock units were outstanding and (ii) 76,746 and 143,909 shares of common stock were available for grant under this plan at March 31, 2021 and 2020, respectively.
At March 31, 2021, there were 5,150,000 shares of common stock reserved for grant to all employees of the Company under the 2010 Incentive Award Plan (the “2010 Plan”). Under the 2010 Plan, (i) 184,752 and 148,199 shares of restricted stock units were outstanding, (ii) options to purchase 1,714,885 and 1,485,123 shares of common stock were outstanding, (iii) 100,000 and no restricted shares were outstanding, and (iv) 1,267,802 and 629,823 shares of common stock were available for grant at March 31, 2021 and 2020, respectively.
In addition, at March 31, 2021 and 2020, options to purchase 30,000 and 51,000 shares of common stock, respectively, were outstanding under the 2004 Non-Employee Director Stock Option Plan. No options remain available for grant under this plan.
The shares of common stock issued upon exercise of a previously granted stock option are considered new issuances from shares reserved for issuance upon adoption of the various plans.
Stock Options
The following is a summary of stock option transactions:
At March 31, 2021, options to purchase 603,256 shares of common stock were unvested at the weighted average exercise price of $17.10.
Based on the market value of the Company’s common stock at March 31, 2021, 2020, and 2019, the pre-tax intrinsic value of options exercised was $546,000, $508,000, and $788,000, respectively. The total fair value of stock options vested during the years ended March 31, 2021, 2020, and 2019 was $2,184,000, $2,189,000, and $1,973,000, respectively.
The following summarizes information about the options outstanding at March 31, 2021:
The aggregate intrinsic values in the above table represent the pre-tax value of all in-the-money options if all such options had been exercised on March 31, 2021 based on the Company’s closing stock price of $22.50 as of that date.
At March 31, 2021, there was $2,745,000 of total unrecognized compensation expense from stock-based compensation granted under the plans, which is related to non-vested shares. The compensation expense is expected to be recognized over a weighted average vesting period of 1.8 years.
Restricted Stock Units and Restricted Stock (collectively “RSUs”)
During the years ended March 31, 2021 and 2020 the Company granted 251,801 and 113,483 shares of RSUs, respectively, with an estimated grant date fair value of $4,150,000 and $2,112,000, respectively, which was based on the closing market price on the date of grant. The fair value related to these awards is recognized as compensation expense over the vesting period. These awards generally vest in three equal installments beginning each anniversary from the grant date, subject to continued employment. Upon vesting, these awards may be net share settled to cover the required withholding tax with the remaining amount converted into an equivalent number of shares of common stock. Total shares withheld during the years ended March 31, 2021 and 2020 were 22,202 and 58,802, respectively, based on the value of these awards as determined by the Company’s closing stock price on the vesting date.
The following is a summary of non-vested RSUs:
As of March 31, 2021, there was $3,637,000 of unrecognized compensation expense related to these awards, which will be recognized over the remaining vesting period of approximately 1.6 years.
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Share Repurchase Program |
12 Months Ended |
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Mar. 31, 2021 | |
Share Repurchase Program [Abstract] | |
Share Repurchase Program |
19. Share Repurchase Program
The Company’s board of directors approved a stock repurchase program of up to $37,000,000 of its common stock. During the years ended March 31, 2021 and 2019, the Company repurchased 54,960 and 163,815 shares of its common stock, respectively, for $1,139,000 and $4,062,000, respectively. During the year ended March 31, 2020 the Company did not repurchase any shares of its common stock. As of March 31, 2021, $16,831,000 was utilized and $20,169,000 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 730,521 shares repurchased under this program through March 31, 2021. 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.
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Subsequent Event |
12 Months Ended |
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Mar. 31, 2021 | |
Subsequent Event [Abstract] | |
Subsequent Event |
20. Subsequent Event
Credit Facility
On May 28, 2021, the Company entered into a third amendment to the Amended Credit Facility (the “Third Amendment”). The Third Amendment, among other things, (i) extends the maturity date to May 28, 2026 from June 5, 2023, (ii) modifies the fixed charge coverage ratio financial covenant, and (iii) modifies the definition of “Consolidated EBITDA”. The modifications to the financial covenants were effective as of March 31, 2021.
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Unaudited Quarterly Financial Data |
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Unaudited Quarterly Financial Data [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unaudited Quarterly Financial Data |
21. Unaudited Quarterly Financial Data
The following summarizes selected quarterly financial data for the year ended March 31, 2021:
The following summarizes selected quarterly financial data for the year ended March 31, 2020:
Quarterly and year-to-date computations of per share amounts are made independently. Therefore, the sum of per share amounts for the quarters may not agree with per share amounts for the year shown elsewhere in the Annual Report on Form 10-K.
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Schedule II - Valuation and Qualifying Accounts |
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Schedule II - Valuation and Qualifying Accounts [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule II - Valuation and Qualifying Accounts |
Schedule II — Valuation and Qualifying Accounts
Accounts Receivable — Allowance for credit losses
Accounts Receivable — Allowance for customer-payment discrepancies
Inventory — Allowance for excess and obsolete inventory
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Summary of Significant Accounting Policies (Policies) |
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Summary of Significant Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Pronouncements Recently Adopted and Not Yet Adopted |
Recently Adopted Accounting Pronouncements
Measurement of Credit Losses on Financial Instruments
In June 2016, the FASB issued an accounting pronouncement related to the measurement of credit losses on financial instruments. This pronouncement, along with a subsequent Accounting Standards Updates (“ASU”) issued to clarify certain provisions of the new guidance, changed the impairment model for most financial assets and requires the use of an “expected loss” model for instruments measured at amortized cost. Under this model, entities are required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. The adoption of this guidance on April 1, 2020 increased the Company’s disclosures for its expected credit losses but did not have a material effect on its consolidated financial statements.
Prior to April 1, 2020, accounts receivable were recorded at cost less an allowance for doubtful accounts. The net amount of accounts receivable and corresponding allowance for doubtful accounts were presented in the consolidated balance sheets. The Company maintained an allowance for uncollectible accounts receivable for estimated losses resulting from the failure or inability of its customers to make required payments. Furthermore, receivable balances were assessed quarterly for impairment and an allowance was recorded if the receivable was considered impaired. Subsequent to April 1, 2020, accounts receivable are recorded at amortized cost less an allowance for credit losses that are not expected to be recovered. The net amount of accounts receivable and corresponding allowance for credit losses are presented in the consolidated balance sheets. The Company maintains allowances for credit losses resulting from the expected failure or inability of its customers to make required payments. The Company recognizes the allowance for credit losses at inception and reassess quarterly based on the asset’s expected collectability. The allowance is based on multiple factors including historical experience with bad debts, the credit quality of the customer base, the aging of such receivables and current macroeconomic conditions, such as COVID-19, as well as expectations of conditions in the future, if applicable. The Company’s allowance for credit losses is based on the assessment of the collectability of assets pooled together with similar risk characteristics.
The Company records a provision for expected credit losses using a loss-rate method based on the ratio of its historical write-offs to its average trade accounts receivable. At each reporting period, the Company assesses whether financial assets in a pool continue to display similar risk characteristics. If particular receivables no longer display risk characteristics that are similar to those of the receivables in the pool, the Company may determine that it needs to move those receivables to a different pool or perform an individual assessment of expected credit losses for those specific receivables.
Fair Value Measurements
In August 2018, the FASB issued guidance which changed the disclosure requirements for fair value measurements by removing, adding and modifying certain disclosures, including the range and weighted-average of significant unobservable inputs used to develop Level 3 fair value measurements. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 measurements, and the narrative description of measurement uncertainty are applied prospectively only for the most recent interim or annual period presented in the initial year of adoption. All other amendments should be applied retrospectively applied to all periods presented upon their effective date. The adoption of this guidance on April 1, 2020 modified certain of the Company’s disclosures for its Level 3 fair value measurements but did not have an impact on its consolidated financial statements.
Reference Rate Reform
In March 2020, the FASB issued guidance that, for a limited time, eases the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference the London Interbank Offered Rate or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The Company will apply these amendments prospectively. The adoption of this guidance on April 1, 2020 did not have an impact on the Company’s consolidated financial statements for the year ended March 31, 2021.
Accounting Pronouncements Not Yet Adopted
Income Taxes
In December 2019, the FASB issued guidance that simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistent application. This guidance is effective for annual and interim periods in fiscal years beginning after December 15, 2020. Early adoption is permitted. The adoption of this guidance on April 1, 2021 is not expected to have any material impact on the Company’s consolidated financial statements.
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Reclassifications |
Reclassifications
Certain reclassifications have been made to the presentation of the prior year consolidated financial statements to conform to the current year presentation.
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Principles of Consolidation |
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Motorcar Parts of America, Inc. and its wholly owned subsidiaries. All significant inter-company accounts and transactions have been eliminated.
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Segment Reporting |
Segment Reporting
Pursuant to the guidance provided under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) for segment reporting, the Company has identified its chief operating decision maker (“CODM”), reviewed the documents used by the CODM, and understands how such documents are used by the CODM to make financial and operating decisions. The Company has determined through this review process that its business comprises three separate operating segments. Two of the operating segments meet all the aggregation criteria, and are aggregated. The remaining operating segment does not meet the quantitative thresholds for individual disclosure and the Company has combined its operating segments into one reportable segment.
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Cash and Cash Equivalents |
Cash and Cash Equivalents
Cash primarily consists of cash on hand and bank deposits. Cash equivalents consist of money market funds. The Company considers all highly liquid investments purchased with an original or remaining maturity of less than three months at the date of purchase to be cash equivalents. Cash and cash equivalents are maintained with various financial institutions.
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Accounts Receivable |
Accounts Receivable
The Company’s accounts receivable are recorded at amortized cost less an allowance for credit losses that are not expected to be recovered. The net amount of accounts receivable and corresponding allowance for credit losses are presented in the consolidated balance sheets. The Company maintains allowances for credit losses resulting from the expected failure or inability of its customers to make required payments. The Company does not require collateral for accounts receivable. The Company believes its credit risk with respect to trade accounts receivable is limited due to its credit evaluation process and the long-term nature of its relationships with its largest customers. The Company utilizes a historical loss rate method, adjusted for any changes in economic conditions or risk characteristics, to estimate its expected credit losses each period. When developing an estimate of expected credit losses, the Company considers all available relevant information regarding the collectability of cash flows, including historical information, current conditions, and reasonable and supportable forecasts of future economic conditions over the contractual life of the receivable. The historical loss rate method considers past write-offs of trade accounts receivable over a period commensurate with the initial term of the Company’s contracts with its customers. The Company recognizes the allowance for credit losses at inception and reassesses quarterly based on management’s expectation of the asset’s collectability. The Company’s accounts receivable are short-term in nature and written off only when all collection attempts have failed.
The Company has receivable discount programs that have been established with certain major customers and their respective banks. Under these programs, the Company has the option to sell those customers’ receivables to those banks at a discount to be agreed upon at the time the receivables are sold. Once the customer chooses which outstanding invoices are going to be made available for discounting, the Company can accept or decline the bundle of invoices provided. The receivable discount programs are non-recourse, and funds cannot be reclaimed by the customer or its bank after the related invoices have been discounted.
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Inventory |
Inventory
Inventory is comprised of: (i) Used Core and component raw materials, (ii) work-in-process, (iii) remanufactured finished goods and purchased finished goods.
Used Core, component raw materials, and purchased finished goods are stated at the lower of average cost or net realizable value.
Work-in-process is in various stages of production and is valued at the average cost of Used Cores and component raw materials issued to work orders still open, including allocations of labor and overhead costs. Historically, work-in-process inventory has not been material compared to the total inventory balance.
Remanufactured finished goods include: (i) the Used Core cost and (ii) the cost of component raw materials, and allocations of labor and variable and fixed overhead costs (the “Unit Cost”). The allocations of labor and variable and fixed overhead costs are based on the actual use of the production facilities over the prior 12 months which approximates normal capacity. This method prevents the distortion in allocated labor and overhead costs that would occur during short periods of abnormally low or high production. In addition, the Company excludes certain unallocated overhead such as severance costs, duplicative facility overhead costs, start-up costs, training, and spoilage from the calculation and expenses these unallocated overhead as period costs. Purchased finished goods also include an allocation of fixed overhead costs.
The estimate of net realizable value is subjective and based on management’s judgment and knowledge of current industry demand and management’s projections of industry demand. The estimates may, therefore, be revised if there are changes in the overall market for the Company’s products or market changes that in management’s judgment, impact its ability to sell or liquidate potentially excess or obsolete inventory. Net realizable value is determined at least quarterly as follows:
The Company records vendor discounts as a reduction of inventories and are recognized as a reduction to cost of sales as the inventories are sold.
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Inventory Unreturned |
Inventory Unreturned
Inventory unreturned represents the Company’s estimate, based on historical data and prospective information provided directly by the customer, of finished goods shipped to customers that the Company expects to be returned under its general right of return policy, after the balance sheet date. Inventory unreturned includes only the Unit Cost of a finished good. The return rate is calculated based on expected returns within the normal operating cycle, which is generally one year. As such, the related amounts are classified in current assets. Inventory unreturned is valued in the same manner as the Company’s finished goods inventory.
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Contract Assets |
Contract Assets
Contract assets consists of: (i) the core portion of the finished goods shipped to customers, (ii) upfront payments to customers in connection with customer contracts, (iii) core premiums paid to customers, (iv) finished goods premiums paid to customers, and (v) long-term core inventory deposits.
Remanufactured Cores held at customers’ locations as a part of the finished goods sold to the customer are classified as long-term contract assets. These assets are valued at the lower of cost or net realizable value of Used Cores on hand (See Inventory above). For these Remanufactured Cores, the Company expects the finished good containing the Remanufactured Core to be returned under the Company’s general right of return policy or a similar Used Core to be returned to the Company by the customer, under the Company’s core exchange programs in each case, for credit. The Remanufactured Cores and Used Cores returned by consumers to the Company’s customers but not yet returned to the Company are classified as “Cores expected to be returned by customers”, which are included in short-term contract assets until the Company physically receives them during its normal operating cycle, which is generally one year.
Upfront payments to customers represent the marketing allowances, such as sign-on bonuses, slotting fees, and promotional allowances provided by the Company to its customers. These allowances are recognized as an asset and amortized over the appropriate period of time as a reduction of revenue if the Company expects to generate future revenues associated with the upfront payment. If the Company does not expect to generate additional revenue, then the upfront payment is recognized in the consolidated statements of operations when payment occurs as a reduction of revenue. Upfront payments expected to be amortized during the Company’s normal operating cycle, which is generally one year, are classified as short-term contract assets.
Core premiums paid to customers represent the difference between the Remanufactured Core acquisition price paid to customers generally in connection with new business, and the related Used Core cost, which is treated as an asset and recognized as a reduction of revenue through the later of the date at which related revenue is recognized or the date at which the sales incentive is offered. The Company considers, among other things, the length of its largest ongoing customer relationships, duration of customer contracts, and the average life of vehicles on the road in determining the appropriate period of time over which to amortize these premiums. These core premiums are amortized over a period typically ranging from
to eight years, adjusted for specific circumstances associated with the arrangement. Core premiums are recorded as long-term contract assets. Core premiums expected to be amortized within the Company’s normal operating cycle, which is generally one year, are classified as short-term contract assets.Finished goods premiums paid to customers represent the difference between the finished good acquisition price paid to customers, generally in connection with new business, and the related finished good cost, which is treated as an asset and recognized as a reduction of revenue through the later of the date at which related revenue is recognized or the date at which the sales incentive is offered. The Company considers, among other things, the length of its largest ongoing customer relationships, duration of customer contracts, and the average life of vehicles on the road in determining the appropriate period of time over which to amortize these premiums. Finished goods premiums are amortized over a period typically ranging from to eight years, adjusted for specific circumstances associated with the arrangement. Finished goods premiums are recorded as long-term contract assets. Finished goods premiums expected to be amortized within our normal operating cycle, which is generally one year, are classified as short-term contract assets.
Long-term core inventory deposits represent the cost of Remanufactured Cores the Company has purchased from customers, which are held by the customers and remain on the customers’ premises. The costs of these Remanufactured Cores were established at the time of the transaction based on the then current cost. The selling value of these Remanufactured Cores was established based on agreed upon amounts with these customers. The Company expects to realize the selling value and the related cost of these Remanufactured Cores should its relationship with a customer end, a possibility that the Company considers remote based on existing long-term customer agreements and historical experience.
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Customer Finished Goods Returns Accrual |
Customer Finished Goods Returns Accrual
The customer finished goods returns accrual represents the Company’s estimate of its exposure to customer returns, including warranty returns, under its general right of return policy to allow customers to return items that their end user customers have returned to them and from time to time, stock adjustment returns when the customers’ inventory of certain product lines exceeds the anticipated sales to end-user customers. The customer finished goods returns accrual represents the Unit Value of the estimated returns and is classified as a current liability due to the expectation that these returns will occur within the normal operating cycle of one year.
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Income Taxes |
Income Taxes
The Company accounts for income taxes using the liability method, which measures deferred income taxes by applying enacted statutory rates in effect at the balance sheet date to the differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. The resulting asset or liability is adjusted to reflect changes in the tax laws as they occur. A valuation allowance is provided to reduce deferred tax assets when it is more likely than not that a portion of the deferred tax asset will not be realized.
The primary components of the Company’s income tax expense were (i) federal income taxes, (ii) state income taxes, (iii) foreign income taxed at rates that are different from the federal statutory rate, (iv) change in realizable deferred tax items, (v) impact of the non-deductible executive compensation under Internal Revenue Code Section 162(m), (vi) income taxes associated with uncertain tax positions, and (vii) the impact of net operating loss carry-backs in connection with the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), which was signed into law on March 27, 2020.
Realization of deferred tax assets is dependent upon the Company’s ability to generate sufficient future taxable income. Significant judgment is required in determining the Company’s provision for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against the Company’s net deferred tax assets. The Company makes these estimates and judgments about its future taxable income that are based on assumptions that are consistent with the Company’s future plans. A valuation allowance is established when the Company believes it is not more likely than not all or some of a deferred tax assets will be realized. In evaluating the Company’s ability to recover deferred tax assets within the jurisdiction in which they arise, the Company considers all available positive and negative evidence. Deferred tax assets arising primarily as a result of net operating loss carry-forwards and research and development credits in connection with the Company’s Canadian operations have been offset completely by a valuation allowance due to the uncertainty of their utilization in future periods. Should the actual amount differ from the Company’s estimates, the amount of the valuation allowance could be impacted.
The Company has made an accounting policy election to recognize the U.S. tax effects of global intangible low-taxed income as a component of income tax expense in the period the tax arises.
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Plant and Equipment |
Plant and Equipment
Plant and equipment are stated at cost, less accumulated depreciation. The cost of additions and improvements are capitalized, while maintenance and repairs are charged to expense when incurred. Depreciation is provided on a straight-line basis in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives. Machinery and equipment are depreciated over a range from to ten years. Office equipment and fixtures are depreciated over a range from to ten years. Leasehold improvements are depreciated over the lives of the respective leases or the service lives of the leasehold improvements, whichever is shorter. Depreciation of assets recorded under finance leases is included in depreciation expense. The Company evaluates plant and equipment, including leasehold improvements, equipment, construction in progress, and right-of-use assets for impairment whenever events or circumstances indicate that the carrying value of an asset or asset group may not be recoverable. There were no indicators of impairment at March 31, 2021.
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Leases |
Leases
The Company determines if an arrangement contains a lease at inception. Lease assets and lease liabilities are recorded based on the present value of lease payments over the lease term, which includes the minimum unconditional term of the lease. Certain of the Company’s leases include options to extend the leases for up to five years. When the Company has the option to extend the lease term, terminate the lease before the contractual expiration date, or purchase the leased asset, and it is reasonably certain that it will exercise the option, the option is considered in determining the classification and measurement of the lease. The lease assets are recorded net of any lease incentives received. The Company exempts leases with an initial term of 12 months or less from balance sheet recognition and, for all classes of assets, combines non-lease components with lease components. Lease assets are tested for impairment in the same manner as long-lived assets used in operations.
The Company uses its incremental borrowing rate for each of its leases in determining the present value of its expected lease payments based on the information available at the lease commencement date as the rate implicit for each of its leases is not readily detainable. The Company’s incremental borrowing rate is determined by analyzing and combining (i) an applicable risk-free rate, (ii) a financial spread adjustment, and (iii) any lease specific adjustment. Certain leases contain provisions for property-related costs that are variable in nature for which the Company is responsible, including common area maintenance and other property operating services, which are expensed as incurred and not included in the determination of lease assets and lease liabilities. These costs are calculated based on a variety of factors including property values, tax and utility rates, property services fees, and other factors. The Company records rent expense for operating leases, some of which have escalating rent payments, on a straight-line basis over the lease term.
The Company has material non-functional currency leases. As required for other monetary liabilities, lessees shall remeasure a foreign currency-denominated lease liability using the exchange rate at each reporting date, but the lease assets are nonmonetary assets measured at historical rates, which are not affected by subsequent changes in the exchange rates. The Company recorded a gain of $9,893,000 and a loss of $11,710,000 during the years ended March 31, 2021 and 2020, respectively, which are included in “foreign exchange impact of lease liabilities and forward contracts” in the consolidated statements of operations. See Note 10 for additional information regarding the Company’s leases.
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Goodwill |
Goodwill
The Company evaluates goodwill for impairment at least annually during the fourth quarter of each fiscal year or more frequently when an event occurs or circumstances change that indicate the carrying value may not be recoverable. The goodwill impairment test is performed at the reporting unit level, which represents the Company’s operating segments. In testing for goodwill impairment, the Company may elect to utilize a qualitative assessment to evaluate whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If the Company’s qualitative assessment indicates that goodwill impairment is more likely than not, it will proceed with performing the quantitative assessment. If the fair value of the reporting unit exceeds its carrying value, goodwill is not considered impaired. If the carrying value of the reporting unit exceeds its fair value an impairment loss will be recognized for the amount by which the carrying value exceeds the reporting unit’s fair value. The Company completed the required annual testing of goodwill impairment for each of the reporting units during the fourth quarter of the year ended March 31, 2021, and determined through the qualitative assessment that its goodwill of $3,205,000 was not impaired.
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Intangible Assets |
Intangible Assets
The Company’s intangible assets other than goodwill are finite–lived and amortized on a straight-line basis over their respective useful lives. The Company analyzes its finite-lived intangible assets for impairment when and if indicators of impairment exist. At March 31, 2021, the Company’s intangible assets were $5,329,000, and there were no indicators of impairment.
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Debt Issuance Costs |
Debt Issuance Costs
Debt issuance costs include fees and costs incurred to obtain financing. Debt issuance costs related to the Company’s term loans are presented in the balance sheet as a direct deduction from the carrying amount of the term loans. Debt issuance costs related to the Company’s revolving loan are presented in prepaid expenses and other current assets in the accompanying consolidated balance sheets, regardless of whether or not there are any outstanding borrowings under the revolving loan. These fees and costs are amortized using the straight-line method, which approximates the effective interest rate method, over the terms of the related loans and are included in interest expense in the Company’s consolidated statements of operations.
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Foreign Currency Translation |
Foreign Currency Translation
For financial reporting purposes, the functional currency of the foreign subsidiaries is the local currency. The assets and liabilities of foreign operations for which the local currency is the functional currency are translated into the U.S. dollar at the exchange rate in effect at the balance sheet date, while revenues and expenses are translated at average exchange rates during the year. The accumulated foreign currency translation adjustment is presented as a component of comprehensive income or loss in the consolidated statements of shareholders’ equity. During the years ended March 31, 2021 and 2020, aggregate foreign currency transaction gains of $1,144,000 and losses of $789,000, respectively, were recorded in general and administrative expenses.
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Revenue Recognition |
Revenue Recognition
Revenue is recognized when performance obligations under the terms of a contract with its customers are satisfied; generally, this occurs with the transfer of control of its products. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services. Revenue is recognized net of all anticipated returns, marketing allowances, volume discounts, and other forms of variable consideration.
Revenue is recognized either when products are shipped or when delivered, depending on the applicable contract terms. Bill and hold shipments are shipped out to the customer as ex-works; in which the customer makes arrangements and is responsible for their shipping cost. No freight or shipping costs are accrued for revenue under the terms of shipments made as ex-works.
The price of a finished remanufactured product sold to customers is generally comprised of separately invoiced amounts for the Remanufactured Core included in the product (“Remanufactured Core value”) and the unit portion included in the product (“Unit Value”), for which revenue is recorded based on our then current price list, net of applicable discounts and allowances. The Remanufactured Core value is recorded as a net revenue based upon the estimate of Used Cores that will not be returned by the customer for credit. These estimates are subjective and based on management’s judgment and knowledge of historical, current, and projected return rates. As reconciliations are completed with the customers the actual rates at which Used Cores are not being returned may differ from the current estimates. This may result in periodic adjustments of the estimated contract asset and liability amounts recorded and may impact the projected revenue recognition rates used to record the estimated future revenue. These estimates may also be revised if there are changes in contractual arrangements with customers, or changes in business practices. A significant portion of the remanufactured automotive parts sold to customers are replaced by similar Used Cores sent back for credit by customers under the core exchange programs (as described in further detail below). The number of Used Cores sent back under the core exchange programs is generally limited to the number of similar Remanufactured Cores previously shipped to each customer.
Revenue Recognition — Core Exchange Programs
Full price Remanufactured Cores: When remanufactured products are shipped, certain customers are invoiced for the Remanufactured Core value of the product at the full Remanufactured Core sales price. For these Remanufactured Cores, revenue is only recognized based upon an estimate of the rate at which these customers will pay cash for Remanufactured Cores in lieu of sending back similar Used Cores for credits under the core exchange programs. The remainder of the full price Remanufactured Core value invoiced to these customers is established as a long-term contract liability rather than being recognized as revenue in the period the products are shipped as the Company expects these Remanufactured Cores to be returned for credit under its core exchange programs.
Nominal price Remanufactured Cores: Certain other customers are invoiced for the Remanufactured Core value of the product shipped at a nominal (generally $0.01 or less) Remanufactured Core price. For these nominal Remanufactured Cores, revenue is only recognized based upon an estimate of the rate at which these customers will pay cash for Remanufactured Cores in lieu of sending back similar Used Cores for credits under the core exchange programs. Revenue amounts are calculated based on contractually agreed upon pricing for these Remanufactured Cores for which the customers are not returning similar Used Cores. The remainder of the nominal price Remanufactured Core value invoiced to these customers is established as a long-term contract liability rather than being recognized as revenue in the period the products are shipped as the Company expects these Remanufactured Cores to be returned for credit under its core exchange programs.
Revenue Recognition; General Right of Return
Customers are allowed to return goods that their end-user customers have returned to them, whether or not the returned item is defective (warranty returns). In addition, under the terms of certain agreements and industry practice, customers from time to time are allowed stock adjustments when their inventory of certain product lines exceeds the anticipated sales to end-user customers (stock adjustment returns). Customers have various contractual rights for stock adjustment returns, which are typically less than 5% of units sold. In some instances, a higher level of returns is allowed in connection with significant restocking orders. The aggregate returns are generally limited to less than 20% of unit sales.
The allowance for warranty returns is established based on a historical analysis of the level of this type of return as a percentage of total unit sales. The allowance for stock adjustment returns is based on specific customer inventory levels, inventory movements, and information on the estimated timing of stock adjustment returns provided by customers. Stock adjustment returns do not occur at any specific time during the year. The return rate for stock adjustments is calculated based on expected returns within the normal operating cycle, which is generally one year.
The Unit Value of the warranty and stock adjustment returns are treated as reductions of revenue based on the estimations made at the time of the sale. The Remanufactured Core value of warranty and stock adjustment returns are provided for as indicated in the paragraph “Revenue Recognition – Core Exchange Programs”.
As is standard in the industry, the Company only accepts returns from on-going customers. If a customer ceases doing business with the Company, it has no further obligation to accept additional product returns from that customer. Similarly, the Company accepts product returns and grants appropriate credits to new customers from the time the new customer relationship is established.
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Shipping Costs |
Shipping Costs
The Company includes shipping and handling charges in the gross invoice price to customers and classifies the total amount as revenue. All shipping and handling costs are expensed as cost of sales as inventory is sold.
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Contract Liability |
Contract Liability
Contract liability consists of: (i) customer allowances earned, (ii) accrued core payments, (iii) customer core returns accruals, (iv) core bank liability, (v) finished goods liabilities, and (vi) customer deposits.
Customer allowances earned includes all marketing allowances provided to customers. Such allowances include sales incentives and concessions. Voluntary marketing allowances related to a single exchange of product are recorded as a reduction of revenues at the time the related revenues are recorded or when such incentives are offered. Other marketing allowances, which may only be applied against future purchases, are recorded as a reduction to revenues in accordance with a schedule set forth in the relevant contract. Sales incentive amounts are recorded based on the value of the incentive provided. See Note 14 for a description of all marketing allowances. Customer allowances to be provided to customers within the Company’s normal operating cycle, which is generally one year, are considered short-term contract liabilities and the remainder are recorded as long-term contract liabilities.
Accrued core payments represent the sales price of Remanufactured Cores purchased from customers, generally in connection with new business, which are held by these customers and remain on their premises. The sales price of these Remanufactured Cores will be realized when the Company’s relationship with a customer ends, a possibility that the Company considers remote based on existing long-term customer agreements and historical experience. The payments to be made to customers for purchases of Remanufactured Cores within the Company’s normal operating cycle, which is generally one year, are considered short-term contract liabilities and the remainder are recorded as long-term contract liabilities.
Customer core returns accruals represent the full and nominally priced Remanufactured Cores shipped to the Company’s customers. When the Company ships the product, it recognizes an obligation to accept a similar Used Core sent back under the core exchange programs based upon the Remanufactured Core price agreed upon by the Company and its customer. The Contract liability related to Used Cores returned by consumers to the Company’s customers but not yet returned to the Company are classified as short-term contract liabilities until the Company physically receives these Used Cores as they are expected to be returned during the Company’s normal operating cycle, which is generally one year and the remainder are recorded as long-term contract liabilities.
The core bank liability represents the full Remanufactured Core sales price paid for cores returned under the core exchange programs. The payment for these cores are made over a contractual repayment period pursuant to the Company’s agreement with this customer. Payments to be made within the Company’s normal operating cycle, which is generally one year, are considered short-term contract liabilities and the remainder are recorded as long-term contract liabilities.
Finished goods liabilities represents the agreed upon price of finished goods purchased from customers, generally in connection with new business. The payment for these finished goods are made over a contractual repayment period pursuant to the Company’s agreement with the customer. Payments to be made within the Company’s normal operating cycle, which is generally one year, are considered short-term contract liabilities and the remainder are recorded as long-term contract liabilities.
Customer deposits represent the receipt of prepayments from customers for the obligation to transfer goods or services in the future. The Company classifies these customer deposits as short-term contract liabilities as the Company expects to satisfy these obligations within its normal operating cycle, which is generally one year.
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Advertising Costs |
Advertising Costs
The Company expenses all advertising costs as incurred. Advertising expenses for the years ended March 31, 2021, 2020 and 2019 were $507,000, $773,000 and $819,000, respectively.
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Net Income (Loss) Per Share |
Net Income (Loss) Per Share
Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per share includes the effect, if any, from the potential exercise or conversion of securities, such as stock options and warrants, 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 income (loss) per share.
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 income (loss) per share. For the years ended March 31, 2021, 2020 and 2019, there were 1,279,251, 1,738,106, and 1,580,299, respectively, of potential common shares not included in the calculation of diluted net income (loss) per share because their effect was anti-dilutive.
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Use of Estimates |
Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. On an on-going basis, the Company evaluates its estimates, including allowances for credit losses, valuation of inventory, valuation of long-lived assets, goodwill and intangible assets, depreciation and amortization of long-lived assets, litigation matters, valuation of deferred tax assets, share-based compensation, sales returns and other customer marketing allowances, and the incremental borrowing rate used in determining the present value of lease liabilities. Although the Company does not believe that there is a reasonable likelihood that there will be a material change in the future estimate or in the assumptions used in calculating the estimate, unforeseen changes in the industry, or business could materially impact the estimate and may have a material adverse effect on its business, financial condition and results of operations.
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Financial Instruments |
Financial Instruments
The carrying amounts of cash, short-term investments, 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, term loan and other long-term liabilities approximate their fair value based on current rates for instruments with similar characteristics.
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Share-Based Payments |
Share-Based Payments
The Black-Scholes option-pricing model requires the input of subjective assumptions including the expected volatility of the underlying stock and the expected holding period of the option. 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.
The following summarizes the Black-Scholes option-pricing model assumptions used to derive the weighted average fair value of the stock options granted during the periods noted.
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Credit Risk |
Credit Risk
The Company regularly reviews its accounts receivable and allowance for credit losses by considering factors such as historical experience, credit quality and age of the accounts receivable, and the current economic conditions that may affect a customer’s ability to pay. The majority of the Company’s sales are to leading automotive aftermarket parts suppliers. Management believes the credit risk with respect to trade accounts receivable is limited due to the Company’s credit evaluation process, the nature of its customers, and its accounts receivable discount programs. However, should the Company’s customers experience significant cash flow problems, its financial position and results of operations could be materially and adversely affected, and the maximum amount of loss that would be incurred would be the outstanding receivable balance, Used Cores expected to be returned by customers, and the value of the Remanufactured Cores held at customers’ locations. The Company maintains an allowance for credit losses that, in its opinion, provides for an adequate reserve to cover losses that may be incurred.
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Deferred Compensation Plan |
Deferred Compensation Plan
The Company has a deferred compensation plan for certain members of management. The plan allows participants to defer salary and bonuses. The assets of the plan, which are held in a trust and are subject to the claims of the Company’s general creditors under federal and state laws in the event of insolvency, are recorded as short-term investments in the consolidated balance sheets. Consequently, the trust qualifies as a Rabbi trust for income tax purposes. The plan’s assets consist primarily of mutual funds and are recorded at market value with any unrealized gain or loss recorded as general and administrative expense. The carrying value of plan assets was $1,652,000 and $850,000, and the deferred compensation liability, which is included in other current liabilities in the accompanying consolidated balance sheets, was $1,652,000 and $850,000 at March 31, 2021 and 2020, respectively. During the years ended March 31, 2021, 2020, and 2019, the Company made contributions of $96,000, $79,000 and $113,000, respectively.
During the years ended March 31, 2021 and 2020, the Company redeemed $46,000 and $2,802,000, respectively, of its short-term investments for the payment of deferred compensation liabilities.
The following summarizes the gain (loss) on the Company’s equity investments:
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Comprehensive Income or Loss |
Comprehensive Income or Loss
Comprehensive income or loss is defined as the change in equity during a period resulting from transactions and other events and circumstances from non-owner sources. The Company’s total comprehensive income or loss consists of net unrealized income or loss from foreign currency translation adjustments.
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Summary of Significant Accounting Policies (Tables) |
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Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Basic and Diluted Net Income (Loss) Per Share |
The following presents a reconciliation of basic and diluted net income (loss) per share.
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Black-Scholes Option Pricing Model Assumptions Used to Derive Weighted Average Fair Value of Stock Options Granted |
The following summarizes the Black-Scholes option-pricing model assumptions used to derive the weighted average fair value of the stock options granted during the periods noted.
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Gain (Loss) on Equity Investments |
The following summarizes the gain (loss) on the Company’s equity investments:
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Goodwill and Intangible Assets (Tables) |
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Goodwill and Intangible Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets Subject to Amortization |
The following is a summary of acquired intangible assets subject to amortization:
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Amortization Expense for Acquired Intangible Assets |
Amortization expense for acquired intangible assets is as follows:
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Estimated Future Amortization Expense for Intangible Assets |
The estimated future amortization expense for acquired intangible assets subject to amortization is as follows:
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Accounts Receivable - Net (Tables) |
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable - Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable |
Accounts receivable — net is comprised of the following:
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Allowance for Credit Losses |
The following table provides a roll-forward of the allowance for credit losses that is deducted from accounts receivable to present the net amount expected to be collected. During the year ended March 31, 2021, the Company wrote off amounts previously fully reserved for in connection the bankruptcy filing of one of its customers.
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Inventory (Tables) |
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Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Net |
Inventory is comprised of the following:
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Contract Assets (Tables) |
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Contract Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract Assets |
Contract assets are comprised of the following:
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Plant and Equipment (Tables) |
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Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Plant and Equipment, at Cost |
Plant and equipment is comprised of the following:
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Debt (Tables) |
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Debt [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Information About the Term Loan |
The Company’s Term Loans are comprised of the following:
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Future Repayments of the Term Loan, by Fiscal Year |
Future repayments of the Company’s Term Loans are as follows:
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Contract Liabilities (Tables) |
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Contract Liabilities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract Liabilities |
Contract liabilities are comprised of the following:
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Leases (Tables) |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Information for Leases |
Balance sheet information for leases is comprised of the following:
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Lease Cost Recognized in Consolidated Statements of Income |
Lease cost recognized in the consolidated statement of operations is comprised of the following:
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Maturity of Lease Commitments |
Maturities of lease commitments at March 31, 2021 were as follows:
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Other Information about Leases |
Other information about leases is as follows:
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Accounts Receivable Discount Programs (Tables) |
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Accounts Receivable Discount Programs [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable Discount Programs |
The following is a summary of the Company’s accounts receivable discount programs:
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Financial Risk Management and Derivatives (Tables) |
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Derivative Instruments on Consolidated Statements of Operations |
The following shows the effect of the Company’s derivative instruments on its consolidated statements of operations:
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Fair Value Measurements (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Assets and Liabilities Measured at Fair Value Recurring Basis |
The following sets forth by level within the fair value hierarchy, the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis according to the valuation techniques the Company used to determine their fair values at:
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|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assumptions Used to Determine Fair Value of Contingent Consideration |
The assumptions used to determine the fair value is as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in Warrant Liability Measured at Fair Value Recurring Basis Using Significant Unobservable Inputs (Level 3) |
The following table summarizes the activity for financial assets and liabilities utilizing Level 3 fair value measurements:
|
Commitments and Contingencies (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Warranty Return Accrual |
The following summarizes the changes in the warranty return accrual:
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|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Breakout of Allowances |
The following summarizes the breakout of allowances discussed above, recorded as a reduction to revenues:
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Commitments to Incur Allowances, Excluding Allowances Related to Single Exchange of Product |
The following presents the Company’s commitments to incur allowances, excluding allowances related to a single exchange of product, which will be recognized as a reduction to revenue when the related revenue is recognized:
|
Significant Customer and Other Information (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Customer and Other Information [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Concentrations of Risk |
Significant Customer Concentrations
The Company’s largest customers accounted for the following total percentage of net sales:
The Company’s largest customers accounted for the following total percentage of accounts receivable — trade:
Geographic and Product Information
The Company’s products are predominantly sold in the U.S. and accounted for the following total percentage of net sales:
|
Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Expense (Benefit) |
The income tax expense (benefit) is as follows:
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Deferred Income Taxes |
Deferred income taxes consist of the following:
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Difference Between Income Tax Expense at the Federal Statutory Rate and Effective Tax Rate |
The difference between the income tax expense at the federal statutory rate and the Company’s effective tax rate is as follows:
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Unrecognized Tax Benefits |
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|
Share-based Payments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Option Activity |
The following is a summary of stock option transactions:
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Summary of Options Outstanding |
The following summarizes information about the options outstanding at March 31, 2021:
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Summary of Changes in the Status of Non-vested Restricted Stock Units |
The following is a summary of non-vested RSUs:
|
Unaudited Quarterly Financial Data (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unaudited Quarterly Financial Data [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Data |
The following summarizes selected quarterly financial data for the year ended March 31, 2021:
The following summarizes selected quarterly financial data for the year ended March 31, 2020:
|
Company Background and Organization (Details) |
Mar. 31, 2021
ft²
|
---|---|
Company Background and Organization [Abstract] | |
Area of distribution center in Tijuana, Mexico | 410,000 |
Summary of Significant Accounting Policies, Segment Reporting (Details) |
12 Months Ended |
---|---|
Mar. 31, 2021
Segment
| |
Segment Reporting [Abstract] | |
Number of operating segments | 3 |
Number of reportable segments | 1 |
Summary of Significant Accounting Policies, Inventory, Inventory Unreturned and Contract Assets (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Inventory [Abstract] | ||
Prior period over which allocations of labor and variable and fixed overhead costs are determined based on average actual use of production facilities | 12 months | |
Reserve for excess and obsolete inventory | $ 13,246,000 | $ 13,208,000 |
Inventory Unreturned [Abstract] | ||
Period of normal operating cycle | 1 year | |
Minimum [Member] | ||
Contract Assets [Abstract] | ||
Amortization period for core premiums | 6 years | |
Amortization period for finished goods premiums | 6 years | |
Maximum [Member] | ||
Inventory [Abstract] | ||
Percentage of inventory reserve to cost if no liquidation market exists for part | 100.00% | |
Contract Assets [Abstract] | ||
Amortization period for core premiums | 8 years | |
Amortization period for finished goods premiums | 8 years |
Summary of Significant Accounting Policies, Plant and Equipment (Details) |
12 Months Ended |
---|---|
Mar. 31, 2021 | |
Machinery and Equipment [Member] | Minimum [Member] | |
Plant and Equipment [Abstract] | |
Estimated service life | 5 years |
Machinery and Equipment [Member] | Maximum [Member] | |
Plant and Equipment [Abstract] | |
Estimated service life | 10 years |
Office Equipment and Fixtures [Member] | Minimum [Member] | |
Plant and Equipment [Abstract] | |
Estimated service life | 3 years |
Office Equipment and Fixtures [Member] | Maximum [Member] | |
Plant and Equipment [Abstract] | |
Estimated service life | 10 years |
Summary of Significant Accounting Policies, Leases (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Leases [Abstract] | ||
Gain (loss) in foreign currency-denominated lease liabilities | $ 9,893,000 | $ (11,710,000) |
Maximum [Member] | ||
Leases [Abstract] | ||
Lease renewal term | 5 years |
Summary of Significant Accounting Policies, Goodwill and Intangible Assets (Details) - USD ($) |
Mar. 31, 2021 |
Mar. 31, 2020 |
---|---|---|
Goodwill and Intangible Assets [Abstract] | ||
Amount of goodwill | $ 3,205,000 | $ 3,205,000 |
Intangible assets | $ 5,329,000 | $ 6,393,000 |
Summary of Significant Accounting Policies, Foreign Currency Translation (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
General and Administrative Expenses [Member] | ||
Foreign Currency Translation [Abstract] | ||
Foreign currency transaction gains (losses) | $ 1,144,000 | $ (789,000) |
Summary of Significant Accounting Policies, Revenue Recognition (Details) - Maximum [Member] |
12 Months Ended |
---|---|
Mar. 31, 2021 | |
Revenue Recognition [Abstract] | |
Remanufactured cores nominal price (in dollars per core) | 0.01 |
Percentage of stock adjustment returns | 5.00% |
Percentage of aggregate returns | 20.00% |
Summary of Significant Accounting Policies, Advertising Costs (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Advertising Costs [Abstract] | |||
Advertising expenses | $ 507,000 | $ 773,000 | $ 819,000 |
Summary of Significant Accounting Policies, Net Income (Loss) Per Share (Details) - USD ($) |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 |
Dec. 31, 2020 |
Sep. 30, 2020 |
Jun. 30, 2020 |
Mar. 31, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2021 |
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Reconciliation of basic and diluted net income (loss) per share [Abstract] | |||||||||||
Net income (loss) | $ 835,000 | $ 8,469,000 | $ 15,184,000 | $ (3,012,000) | $ (8,193,000) | $ 865,000 | $ 6,189,000 | $ (6,151,000) | $ 21,476,000 | $ (7,290,000) | $ (7,849,000) |
Basic shares (in shares) | 19,023,145 | 18,913,788 | 18,849,909 | ||||||||
Effect of dilutive stock options and warrants (in shares) | 364,410 | 0 | 0 | ||||||||
Diluted shares (in shares) | 19,387,555 | 18,913,788 | 18,849,909 | ||||||||
Net income (loss) per share [Abstract] | |||||||||||
Basic net income (loss) per share (in dollars per share) | $ 0.04 | $ 0.44 | $ 0.80 | $ (0.16) | $ (0.43) | $ 0.05 | $ 0.33 | $ (0.33) | $ 1.13 | $ (0.39) | $ (0.42) |
Diluted net income (loss) per share (in dollars per share) | $ 0.04 | $ 0.44 | $ 0.78 | $ (0.16) | $ (0.43) | $ 0.04 | $ 0.32 | $ (0.33) | $ 1.11 | $ (0.39) | $ (0.42) |
Options [Member] | |||||||||||
Antidilutive Securities [Abstract] | |||||||||||
Antidilutive securities excluded from effect of dilutive options and warrants (in shares) | 1,279,251 | 1,738,106 | 1,580,299 |
Summary of Significant Accounting Policies, Share-Based Payments (Details) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Black-Scholes option pricing model assumptions used to derive the weighted average fair value of the stock options granted [Abstract] | |||
Weighted average risk free interest rate | 0.44% | 1.76% | 2.83% |
Weighted average expected holding period | 5 years 11 months 15 days | 5 years 8 months 12 days | 5 years 11 months 8 days |
Weighted average expected volatility | 44.90% | 42.50% | 43.91% |
Weighted average expected dividend yield | 0.00% | 0.00% | 0.00% |
Weighted average fair value of options granted (in dollars per share) | $ 6.43 | $ 8.27 | $ 8.75 |
Summary of Significant Accounting Policies, Deferred Compensation Plan (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Deferred Compensation Plan [Abstract] | |||
Carrying value of plan assets | $ 1,652,000 | $ 850,000 | |
Deferred compensation obligation | 1,652,000 | 850,000 | |
Expense related to the deferred compensation plan | 96,000 | 79,000 | $ 113,000 |
Short-term investments redeemed for the payment of deferred compensation liabilities | 46,000 | 2,802,000 | |
Gain (Loss) on Equity Investments [Abstract] | |||
Net gain recognized on equity securities | 521,000 | 96,000 | 89,000 |
Less: net gain recognized on equity securities sold | 10,000 | 193,000 | 0 |
Unrealized gain (loss) recognized on equity securities still held | $ 511,000 | $ (97,000) | $ 89,000 |
Goodwill and Intangible Assets, Goodwill (Details) - USD ($) |
Mar. 31, 2021 |
Mar. 31, 2020 |
---|---|---|
Goodwill and Intangible Assets [Abstract] | ||
Goodwill | $ 3,205,000 | $ 3,205,000 |
Goodwill and Intangible Assets, Amortization Expense (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Amortization expense for acquired intangible assets [Abstract] | |||
Amortization expense | $ 1,571,000 | $ 1,770,000 | $ 1,194,000 |
Estimated future amortization expense for intangible assets subject to amortization [Abstract] | |||
2022 | 1,548,000 | ||
2023 | 1,514,000 | ||
2024 | 1,128,000 | ||
2025 | 512,000 | ||
2026 | 367,000 | ||
Thereafter | 260,000 | ||
Total | $ 5,329,000 |
Accounts Receivable - Net (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Accounts Receivable, Net [Abstract] | ||
Accounts receivable - trade | $ 81,549,000 | $ 109,164,000 |
Allowance for credit losses | (348,000) | (4,252,000) |
Customer payment discrepancies | (752,000) | (1,040,000) |
Customer returns RGA issued | (17,327,000) | (12,124,000) |
Less: total accounts receivable offset accounts | (18,427,000) | (17,416,000) |
Total accounts receivable - net | 63,122,000 | $ 91,748,000 |
Allowance for Credit Losses [Roll Forward] | ||
Balance at beginning of period | 4,252,000 | |
Provision for expected credit losses | 99,000 | |
Recoveries | (100,000) | |
Amounts written off charged against the allowance | (3,903,000) | |
Balance at end of period | $ 348,000 |
Inventory (Details) - USD ($) |
Mar. 31, 2021 |
Mar. 31, 2020 |
---|---|---|
Inventory [Abstract] | ||
Raw materials | $ 128,190,000 | $ 99,360,000 |
Work-in-process | 5,233,000 | 3,906,000 |
Finished goods | 168,184,000 | 135,601,000 |
Inventory, gross | 301,607,000 | 238,867,000 |
Less allowance for excess and obsolete inventory | (13,246,000) | (13,208,000) |
Inventory - net | 288,361,000 | 225,659,000 |
Inventory unreturned | $ 14,552,000 | $ 9,021,000 |
Contract Assets (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Contract Assets [Abstract] | ||
Long-term contract assets, write-down | $ 4,600,000 | |
Short-term contract assets [Abstract] | ||
Cores expected to be returned by customers | 17,657,000 | $ 12,579,000 |
Upfront payments to customers | 684,000 | 2,865,000 |
Finished goods premiums paid to customers | 405,000 | 0 |
Core premiums paid to customers | 8,194,000 | 4,888,000 |
Total short-term contract assets | 26,940,000 | 20,332,000 |
Long-term contract assets [Abstract] | ||
Remanufactured cores held at customers' locations | 229,918,000 | 217,616,000 |
Upfront payments to customers | 486,000 | 589,000 |
Finished goods premiums paid to customers | 2,731,000 | 0 |
Core premiums paid to customers | 31,509,000 | 15,766,000 |
Long-term core inventory deposits | 5,569,000 | 5,569,000 |
Total long-term contract assets | $ 270,213,000 | $ 239,540,000 |
Plant and Equipment (Details) - USD ($) |
Mar. 31, 2021 |
Mar. 31, 2020 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 99,867,000 | $ 84,484,000 |
Less accumulated depreciation | (46,013,000) | (39,527,000) |
Total | 53,854,000 | 44,957,000 |
Foreign Countries [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | 45,831,000 | 35,410,000 |
Mexico [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total | 42,215,000 | 31,845,000 |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 58,957,000 | 48,424,000 |
Office Equipment and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 28,758,000 | 25,541,000 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 12,152,000 | $ 10,519,000 |
Contract Liabilities (Details) - USD ($) |
Mar. 31, 2021 |
Mar. 31, 2020 |
---|---|---|
Short-term contract liabilities [Abstract] | ||
Customer core returns accruals | $ 12,710,000 | $ 4,126,000 |
Customer allowances earned | 16,513,000 | 13,844,000 |
Customer deposits | 2,234,000 | 1,365,000 |
Finished goods liabilities | 1,883,000 | 0 |
Core bank liability | 1,585,000 | 528,000 |
Accrued core payment | 6,147,000 | 8,048,000 |
Total short-term contract liabilities | 41,072,000 | 27,911,000 |
Long-term contract liabilities [Abstract] | ||
Customer core returns accruals | 103,719,000 | 77,927,000 |
Customer allowances earned | 313,000 | 542,000 |
Finished goods liabilities | 2,678,000 | 0 |
Core bank liability | 16,903,000 | 7,556,000 |
Accrued core payment | 1,610,000 | 6,076,000 |
Total long-term contract liabilities | $ 125,223,000 | $ 92,101,000 |
Leases, Balance Sheet Information (Details) - USD ($) |
Mar. 31, 2021 |
Mar. 31, 2020 |
---|---|---|
Assets [Abstract] | ||
Operating, Operating lease assets | $ 71,513,000 | $ 53,029,000 |
Finance, Plant and equipment | 8,852,000 | 6,922,000 |
Total leased assets | 80,365,000 | 59,951,000 |
Current [Abstract] | ||
Operating, Operating lease liabilities | 6,439,000 | 5,104,000 |
Finance, Other current liabilities | 2,640,000 | 2,059,000 |
Long-term [Abstract] | ||
Operating, Long-term operating lease liabilities | 70,551,000 | 61,425,000 |
Finance, Other liabilities | 4,995,000 | 3,905,000 |
Total lease liabilities | $ 84,625,000 | $ 72,493,000 |
Leases, Cost Recogized in Consolidated Statement of Operations (Details) - USD ($) |
12 Months Ended | ||||
---|---|---|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
Mar. 31, 2019 |
|||
Lease cost [Abstract] | |||||
Operating lease cost | [1] | $ 11,527,000 | $ 8,733,000 | $ 6,188,000 | |
Short-term lease cost | 1,383,000 | 1,263,000 | |||
Variable lease cost | 825,000 | 600,000 | |||
Finance lease cost [Abstract] | |||||
Amortization of finance lease assets | 1,762,000 | 1,616,000 | |||
Interest on finance lease liabilities | 379,000 | 281,000 | |||
Total lease cost | $ 15,876,000 | $ 12,493,000 | |||
|
Leases, Maturities of Lease Commitments, Operating and Finance Leases (Details) - USD ($) |
Mar. 31, 2021 |
Mar. 31, 2020 |
---|---|---|
Operating Leases [Abstract] | ||
2022 | $ 10,753,000 | |
2023 | 9,666,000 | |
2024 | 8,250,000 | |
2025 | 8,161,000 | |
2026 | 8,228,000 | |
Thereafter | 61,159,000 | |
Total lease payments | 106,217,000 | |
Less amount representing interest | (29,227,000) | |
Present value of lease liabilities | 76,990,000 | |
Finance Leases [Abstract] | ||
2022 | 2,962,000 | |
2023 | 2,324,000 | |
2024 | 1,529,000 | |
2025 | 1,098,000 | |
2026 | 430,000 | |
Thereafter | 0 | |
Total lease payments | 8,343,000 | |
Less amount representing interest | (708,000) | |
Present value of lease liabilities | 7,635,000 | |
Total [Abstract] | ||
2022 | 13,715,000 | |
2023 | 11,990,000 | |
2024 | 9,779,000 | |
2025 | 9,259,000 | |
2026 | 8,658,000 | |
Thereafter | 61,159,000 | |
Total lease payments | 114,560,000 | |
Less amount representing interest | (29,935,000) | |
Present value of lease liabilities | $ 84,625,000 | $ 72,493,000 |
Leases, Other Information (Details) |
Mar. 31, 2021 |
Mar. 31, 2020 |
---|---|---|
Weighted-average remaining lease term (years): [Abstract] | ||
Finance leases | 3 years 4 months 24 days | 3 years 2 months 12 days |
Operating leases | 11 years 1 month 6 days | 12 years |
Weighted-average discount rate: [Abstract] | ||
Finance leases | 5.30% | 4.70% |
Operating leases | 5.90% | 5.60% |
Accounts Receivable Discount Programs (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Accounts Receivable Discount Programs [Abstract] | ||
Receivables discounted | $ 491,285,000 | $ 461,484,000 |
Weighted average days | 334 days | 346 days |
Weighted average discount rate | 2.10% | 3.30% |
Amount of discount recognized as interest expense | $ 9,513,000 | $ 14,780,000 |
Financial Risk Management and Derivatives (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Foreign Currency Exchange Contracts [Abstract] | |||
Forward foreign currency exchange contracts included in prepaid and other current assets | $ 1,429,000 | ||
Forward foreign currency exchange contracts included in included other current liabilities | 6,284,000 | ||
Forward Foreign Currency Exchange Contracts [Member] | |||
Foreign Currency Exchange Contracts [Abstract] | |||
Notional amount of foreign currency derivatives | 41,819,000 | $ 42,052,000 | |
Forward Foreign Currency Exchange Contracts [Member] | Foreign Exchange Impact of Lease Liabilities and Forward Contracts [Member] | |||
Foreign Currency Exchange Contracts [Abstract] | |||
Forward foreign currency exchange contracts | $ 7,713,000 | $ (6,491,000) | $ (972,000) |
Forward Foreign Currency Exchange Contracts [Member] | Maximum [Member] | |||
Foreign Currency Exchange Contracts [Abstract] | |||
Derivative, term of contract | 1 year |
Significant Customer and Other Information (Details) |
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Net Sales [Member] | Customer Concentration Risk [Member] | Customer A [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 42.00% | 38.00% | 38.00% |
Net Sales [Member] | Customer Concentration Risk [Member] | Customer B [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 22.00% | 20.00% | 22.00% |
Net Sales [Member] | Customer Concentration Risk [Member] | Customer C [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 23.00% | 26.00% | 23.00% |
Net Sales [Member] | Product Concentration Risk [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 100.00% | 100.00% | 100.00% |
Net Sales [Member] | Product Concentration Risk [Member] | Rotating Electrical Products [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 73.00% | 73.00% | 79.00% |
Net Sales [Member] | Product Concentration Risk [Member] | Wheel Hub Products [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 15.00% | 15.00% | 15.00% |
Net Sales [Member] | Product Concentration Risk [Member] | Brake-Related Products [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 10.00% | 9.00% | 3.00% |
Net Sales [Member] | Product Concentration Risk [Member] | Other Products [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 2.00% | 3.00% | 3.00% |
Accounts Receivable - Trade [Member] | Customer Concentration Risk [Member] | Customer A [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 50.00% | 28.00% | |
Accounts Receivable - Trade [Member] | Customer Concentration Risk [Member] | Customer B [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 23.00% | 14.00% | |
Accounts Receivable - Trade [Member] | Customer Concentration Risk [Member] | Customer C [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 0.00% | 33.00% |
Income Taxes (Details) - USD ($) |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 |
Dec. 31, 2020 |
Sep. 30, 2020 |
Jun. 30, 2020 |
Mar. 31, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2021 |
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Current tax expense [Abstract] | |||||||||||
Federal | $ 5,734,000 | $ 5,313,000 | $ 680,000 | ||||||||
State | 722,000 | 1,454,000 | 647,000 | ||||||||
Foreign | 3,364,000 | 1,566,000 | 1,723,000 | ||||||||
Total current tax expense | 9,820,000 | 8,333,000 | 3,050,000 | ||||||||
Deferred tax (benefit) expense [Abstract] | |||||||||||
Federal | (1,909,000) | (4,516,000) | (2,087,000) | ||||||||
State | 118,000 | (1,567,000) | (295,000) | ||||||||
Foreign | 1,358,000 | (3,261,000) | (400,000) | ||||||||
Total deferred tax benefit | (433,000) | (9,344,000) | (2,782,000) | ||||||||
Total income tax expense (benefit) | $ 939,000 | $ 3,373,000 | $ 6,097,000 | $ (1,022,000) | $ (2,763,000) | $ 1,502,000 | $ 1,980,000 | $ (1,730,000) | $ 9,387,000 | $ (1,011,000) | $ 268,000 |
Income Taxes, Components of Deferred Income Taxes (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Assets [Abstract] | ||
Allowance for bad debts | $ 85,000 | $ 1,037,000 |
Customer allowances earned | 4,135,000 | 3,549,000 |
Allowance for stock adjustment returns | 3,086,000 | 1,743,000 |
Inventory adjustments | 4,323,000 | 5,567,000 |
Stock options | 2,562,000 | 2,427,000 |
Operating lease liabilities | 21,595,000 | 19,396,000 |
Estimate for returns | 16,479,000 | 10,839,000 |
Accrued compensation | 2,362,000 | 1,964,000 |
Net operating losses | 4,210,000 | 4,091,000 |
Tax credits | 1,828,000 | 1,343,000 |
Other | 3,003,000 | 1,620,000 |
Total deferred tax assets | 63,668,000 | 53,576,000 |
Liabilities [Abstract] | ||
Plant and equipment, net | (2,083,000) | (5,175,000) |
Intangibles, net | (9,840,000) | (4,700,000) |
Operating lease | (20,950,000) | (15,371,000) |
Other | (5,324,000) | (3,966,000) |
Total deferred tax liabilities | (38,197,000) | (29,212,000) |
Less valuation allowance | (6,163,000) | (5,493,000) |
Total | 19,308,000 | $ 18,871,000 |
Operating Loss Carryforwards and Tax Credit Carryforward [Abstract] | ||
Tax credits carryforward | $ 1,828,000 | |
Tax credits carryforward, expiration date | Mar. 31, 2034 | |
Net increase in valuation allowance | $ 670,000 | |
Federal [Member] | ||
Operating Loss Carryforwards and Tax Credit Carryforward [Abstract] | ||
Operating loss carryforwards | $ 828,000 | |
Operating loss carryforwards, expiration date | Mar. 31, 2033 | |
State [Member] | ||
Operating Loss Carryforwards and Tax Credit Carryforward [Abstract] | ||
Operating loss carryforwards | $ 1,130,000 | |
Operating loss carryforwards, expiration date | Mar. 31, 2033 | |
Foreign [Member] | ||
Operating Loss Carryforwards and Tax Credit Carryforward [Abstract] | ||
Operating loss carryforwards | $ 14,931,000 | |
Operating loss carryforwards, expiration date | Mar. 31, 2038 |
Income Taxes, Statutory Rate and Effective Tax Rate Reconcilation (Details) |
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Difference between income tax expense at the federal statutory rate and effective tax rate [Abstract] | |||
Statutory federal income tax rate | 21.00% | 21.00% | 21.00% |
State income tax rate, net of federal benefit | 2.20% | (3.70%) | (3.70%) |
Excess tax benefit from stock compensation | 0.50% | (1.30%) | 0.70% |
Foreign income taxed at different rates | 1.90% | 13.80% | 0.00% |
Return to provision adjustments | 0.40% | (1.50%) | 0.00% |
Non-deductible executive compensation | 1.90% | (4.00%) | (7.30%) |
Change in valuation allowance | 2.20% | (18.70%) | (15.30%) |
Net operating loss carryback | 0.00% | 4.80% | 0.00% |
Uncertain tax positions | 0.30% | 2.10% | 1.80% |
Research and development credit | (0.30%) | 1.10% | 1.30% |
Non-deductible transaction costs | 0.00% | 0.00% | (2.10%) |
Other income tax | 0.30% | (1.40%) | 0.10% |
Effective tax rate | 30.40% | 12.20% | (3.50%) |
Income Taxes, Unrecognized Tax Benefits (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Unrecognized tax benefits [Roll Forward] | |||
Balance at beginning of period | $ 1,011,000 | $ 1,083,000 | $ 1,219,000 |
Additions based on tax positions related to the current year | 249,000 | 362,000 | 91,000 |
Additions for tax positions of prior year | 67,000 | 0 | 0 |
Reductions for tax positions of prior year | (223,000) | (434,000) | (227,000) |
Balance at end of period | 1,104,000 | 1,011,000 | 1,083,000 |
Unrecognized tax benefits that would impact effective tax rate | 923,000 | 823,000 | 938,000 |
Recognized interest and penalties | (16,000) | (50,000) | $ (23,000) |
Interest and penalties accrued | $ 58,000 | $ 74,000 |
Defined Contribution Plans (Details) - 401 (K) Plan [Member] - USD ($) |
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Defined Benefit Plan Disclosure [Line Items] | |||
Minimum age required to participate in defined contribution plan | 21 years | ||
Minimum service period required to participate in defined contribution plan | 6 months | ||
Employer's matching contribution | 50.00% | ||
Employer's maximum contribution specified as percentage of employee compensation | 6.00% | ||
Matching contributions vesting period | 5 years | ||
Matching contribution, amount | $ 507,000 | $ 496,000 | $ 445,000 |
Share-based Payments (Details) - shares |
Mar. 31, 2021 |
Mar. 31, 2020 |
---|---|---|
2004 Non-Employee Director Stock Option Plan [Member] | ||
Share-based Compensation Description [Abstract] | ||
Shares of common stock available for grant (in shares) | 0 | 0 |
Option to purchase common stock, outstanding (in shares) | 30,000 | 51,000 |
2010 Incentive Award Plan [Member] | ||
Share-based Compensation Description [Abstract] | ||
Common stock shares reserved for grants (in shares) | 5,150,000 | |
Shares of common stock available for grant (in shares) | 1,267,802 | 629,823 |
Option to purchase common stock, outstanding (in shares) | 1,714,885 | 1,485,123 |
2010 Incentive Award Plan [Member] | Restricted Stock Units [Member] | ||
Share-based Compensation Description [Abstract] | ||
Number of shares outstanding (in shares) | 184,752 | 148,199 |
2010 Incentive Award Plan [Member] | Restricted Shares [Member] | ||
Share-based Compensation Description [Abstract] | ||
Number of shares outstanding (in shares) | 100,000 | 0 |
2014 Non-Employee Director Incentive Award Plan [Member] | ||
Share-based Compensation Description [Abstract] | ||
Common stock shares reserved for grants (in shares) | 342,000 | |
Shares of common stock available for grant (in shares) | 76,746 | 143,909 |
2014 Non-Employee Director Incentive Award Plan [Member] | Restricted Stock Units [Member] | ||
Share-based Compensation Description [Abstract] | ||
Number of shares outstanding (in shares) | 69,732 | 53,784 |
Share-based Payments, Stock Option Activity (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |||
Options outstanding, shares (in shares) | 1,744,885 | ||
Options outstanding, weighted average exercise price (in dollars per share) | $ 17.51 | ||
Options outstanding, weighted average remaining life | 5 years 10 months 6 days | ||
Options outstanding, aggregate intrinsic value | $ 11,097,000 | ||
Options exercisable, shares (in shares) | 1,141,629 | ||
Options exercisable, weighted average exercise price (in dollars per share) | $ 17.72 | ||
Options exercisable, weighted average remaining life | 4 years 4 months 9 days | ||
Options exercisable, aggregate intrinsic value | $ 7,839,000 | ||
$5.20 to $6.47 [Member] | |||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |||
Exercise price of options, lower range (in dollars per share) | $ 5.20 | ||
Exercise price of options, upper range (in dollars per share) | $ 6.47 | ||
Options outstanding, shares (in shares) | 301,234 | ||
Options outstanding, weighted average exercise price (in dollars per share) | $ 6.46 | ||
Options outstanding, weighted average remaining life | 1 year 8 months 26 days | ||
Options exercisable, shares (in shares) | 301,234 | ||
Options exercisable, weighted average exercise price (in dollars per share) | $ 6.46 | ||
Options exercisable, weighted average remaining life | 1 year 8 months 26 days | ||
$6.48 to $18.20 [Member] | |||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |||
Exercise price of options, lower range (in dollars per share) | $ 6.48 | ||
Exercise price of options, upper range (in dollars per share) | $ 18.20 | ||
Options outstanding, shares (in shares) | 526,990 | ||
Options outstanding, weighted average exercise price (in dollars per share) | $ 13.32 | ||
Options outstanding, weighted average remaining life | 6 years 11 months 4 days | ||
Options exercisable, shares (in shares) | 177,333 | ||
Options exercisable, weighted average exercise price (in dollars per share) | $ 9.57 | ||
Options exercisable, weighted average remaining life | 2 years 6 months | ||
$18.21 to $22.83 [Member] | |||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |||
Exercise price of options, lower range (in dollars per share) | $ 18.21 | ||
Exercise price of options, upper range (in dollars per share) | $ 22.83 | ||
Options outstanding, shares (in shares) | 488,171 | ||
Options outstanding, weighted average exercise price (in dollars per share) | $ 19.58 | ||
Options outstanding, weighted average remaining life | 7 years 9 months 14 days | ||
Options exercisable, shares (in shares) | 234,772 | ||
Options exercisable, weighted average exercise price (in dollars per share) | $ 19.46 | ||
Options exercisable, weighted average remaining life | 7 years 7 months 9 days | ||
$22.84 to $28.04 [Member] | |||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |||
Exercise price of options, lower range (in dollars per share) | $ 22.84 | ||
Exercise price of options, upper range (in dollars per share) | $ 28.04 | ||
Options outstanding, shares (in shares) | 197,066 | ||
Options outstanding, weighted average exercise price (in dollars per share) | $ 26.22 | ||
Options outstanding, weighted average remaining life | 5 years 5 months 19 days | ||
Options exercisable, shares (in shares) | 196,866 | ||
Options exercisable, weighted average exercise price (in dollars per share) | $ 26.22 | ||
Options exercisable, weighted average remaining life | 5 years 5 months 15 days | ||
$28.05 to $34.17 [Member] | |||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |||
Exercise price of options, lower range (in dollars per share) | $ 28.05 | ||
Exercise price of options, upper range (in dollars per share) | $ 34.17 | ||
Options outstanding, shares (in shares) | 231,424 | ||
Options outstanding, weighted average exercise price (in dollars per share) | $ 29.62 | ||
Options outstanding, weighted average remaining life | 4 years 11 months 8 days | ||
Options exercisable, shares (in shares) | 231,424 | ||
Options exercisable, weighted average exercise price (in dollars per share) | $ 29.62 | ||
Options exercisable, weighted average remaining life | 4 years 11 months 8 days | ||
Stock Options [Member] | |||
Number of Shares [Roll Forward] | |||
Outstanding at beginning of period (in shares) | 1,536,123 | ||
Granted (in shares) | 345,423 | ||
Exercised (in shares) | (58,848) | ||
Forfeited (in shares) | (77,813) | ||
Outstanding at end of period (in shares) | 1,744,885 | 1,536,123 | |
Weighted Average Exercise Price [Roll Forward] | |||
Outstanding at beginning of period (in dollars per share) | $ 18.18 | ||
Granted (in dollars per share) | 15.16 | ||
Exercised (in dollars per share) | 12.24 | ||
Forfeited (in dollars per share) | 24.32 | ||
Outstanding at end of period (in dollars per share) | $ 17.51 | $ 18.18 | |
Number of stock options unvested (in shares) | 603,256 | ||
Weighted average exercise price of stock options unvested (in dollars per share) | $ 17.10 | ||
Pre-tax intrinsic value of options exercised | $ 546,000 | $ 508,000 | $ 788,000 |
Fair value of vested stock options | $ 2,184,000 | $ 2,189,000 | $ 1,973,000 |
Closing stock price (in dollars per share) | $ 22.50 | ||
Total unrecognized compensation expense, options | $ 2,745,000 | ||
Weighted average vesting period over which compensation expense is expected to be recognized | 1 year 9 months 18 days |
Share-based Payments, Restricted Stock Units (Details) - Restricted Stock [Member] |
12 Months Ended | |
---|---|---|
Mar. 31, 2021
USD ($)
Installment
$ / shares
shares
|
Mar. 31, 2020
USD ($)
$ / shares
shares
|
|
Number of Shares [Roll Forward] | ||
Non-vested at beginning of period (in shares) | 201,983 | |
Granted (in shares) | 251,801 | 113,483 |
Vested (in shares) | (94,320) | |
Forfeited (in shares) | (4,980) | |
Non-vested at end of period (in shares) | 354,484 | 201,983 |
Weighted Average Grant Date Fair Value [Roll Forward] | ||
Non-vested at beginning of period (in dollars per share) | $ / shares | $ 20.06 | |
Granted (in dollars per share) | $ / shares | 16.48 | |
Vested (in dollars per share) | $ / shares | 21.32 | |
Forfeited (in dollars per share) | $ / shares | 17.65 | |
Non-vested at end of period (in dollars per share) | $ / shares | $ 17.22 | $ 20.06 |
Estimated fair value of awards granted | $ | $ 4,150,000 | $ 2,112,000 |
Number of equal annual installments in which awards vest | Installment | 3 | |
Number of shares withheld (in shares) | 22,202 | 58,802 |
Total unrecognized compensation expense, restricted stock | $ | $ 3,637,000 | |
Weighted average vesting period over which compensation expense is expected to be recognized | 1 year 7 months 6 days |
Share Repurchase Program (Details) - Common Stock [Member] - USD ($) |
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Stock Repurchase Program [Abstract] | |||
Stock repurchase program, approved amount | $ 37,000,000 | ||
Repurchase of shares (in shares) | 54,960 | 0 | 163,815 |
Repurchase of shares | $ 1,139,000 | $ 4,062,000 | |
Shares utilized, amount | 16,831,000 | ||
Shares available for repurchase, amount | $ 20,169,000 | ||
Shares repurchased and retired (in shares) | 730,521 |
Subsequent Event (Details) |
12 Months Ended | |
---|---|---|
May 28, 2021 |
Mar. 31, 2021 |
|
Credit Facility [Member] | ||
Amended Credit Facility [Abstract] | ||
Debt instrument, maturity date | Jun. 05, 2023 | |
Subsequent Event [Member] | Third Amended Credit Facility [Member] | ||
Amended Credit Facility [Abstract] | ||
Debt instrument, maturity date | May 28, 2026 |
Unaudited Quarterly Financial Data (Details) - USD ($) |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2021 |
Dec. 31, 2020 |
Sep. 30, 2020 |
Jun. 30, 2020 |
Mar. 31, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2021 |
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Unaudited Quarterly Financial Data [Abstract] | |||||||||||
Net sales | $ 168,128,000 | $ 122,568,000 | $ 154,730,000 | $ 95,356,000 | $ 150,735,000 | $ 125,574,000 | $ 150,374,000 | $ 109,148,000 | $ 540,782,000 | $ 535,831,000 | $ 472,797,000 |
Cost of goods sold | 136,021,000 | 98,327,000 | 115,004,000 | 81,969,000 | 114,152,000 | 97,913,000 | 113,801,000 | 91,565,000 | 431,321,000 | 417,431,000 | 383,623,000 |
Gross profit | 32,107,000 | 24,241,000 | 39,726,000 | 13,387,000 | 36,583,000 | 27,661,000 | 36,573,000 | 17,583,000 | 109,461,000 | 118,400,000 | 89,174,000 |
Operating expenses [Abstract] | |||||||||||
General and administrative | 15,637,000 | 14,005,000 | 12,518,000 | 11,687,000 | 13,814,000 | 14,390,000 | 12,483,000 | 12,537,000 | 53,847,000 | 53,224,000 | 45,000,000 |
Sales and marketing | 4,800,000 | 4,698,000 | 4,326,000 | 4,200,000 | 5,047,000 | 5,623,000 | 5,448,000 | 4,919,000 | 18,024,000 | 21,037,000 | 19,542,000 |
Research and development | 2,549,000 | 2,100,000 | 1,972,000 | 1,942,000 | 2,506,000 | 2,174,000 | 2,148,000 | 2,372,000 | 8,563,000 | 9,200,000 | 8,014,000 |
Foreign exchange impact of lease liabilities and forward contracts | 3,651,000 | (12,455,000) | (3,985,000) | (4,817,000) | 20,708,000 | (3,772,000) | 1,802,000 | (537,000) | (17,606,000) | 18,201,000 | 972,000 |
Total operating expenses | 26,637,000 | 8,348,000 | 14,831,000 | 13,012,000 | 42,075,000 | 18,415,000 | 21,881,000 | 19,291,000 | 62,828,000 | 101,662,000 | 73,528,000 |
Operating income | 5,470,000 | 15,893,000 | 24,895,000 | 375,000 | (5,492,000) | 9,246,000 | 14,692,000 | (1,708,000) | 46,633,000 | 16,738,000 | 15,646,000 |
Other expense [Abstract] | |||||||||||
Interest expense, net | 3,696,000 | 4,051,000 | 3,614,000 | 4,409,000 | 5,464,000 | 6,879,000 | 6,523,000 | 6,173,000 | 15,770,000 | 25,039,000 | 23,227,000 |
Income (loss) before income tax expense (benefit) | 1,774,000 | 11,842,000 | 21,281,000 | (4,034,000) | (10,956,000) | 2,367,000 | 8,169,000 | (7,881,000) | 30,863,000 | (8,301,000) | (7,581,000) |
Income tax expense (benefit) | 939,000 | 3,373,000 | 6,097,000 | (1,022,000) | (2,763,000) | 1,502,000 | 1,980,000 | (1,730,000) | 9,387,000 | (1,011,000) | 268,000 |
Net income (loss) | $ 835,000 | $ 8,469,000 | $ 15,184,000 | $ (3,012,000) | $ (8,193,000) | $ 865,000 | $ 6,189,000 | $ (6,151,000) | $ 21,476,000 | $ (7,290,000) | $ (7,849,000) |
Basic net income (loss) per share (in dollars per share) | $ 0.04 | $ 0.44 | $ 0.80 | $ (0.16) | $ (0.43) | $ 0.05 | $ 0.33 | $ (0.33) | $ 1.13 | $ (0.39) | $ (0.42) |
Diluted net income (loss) per share (in dollars per share) | $ 0.04 | $ 0.44 | $ 0.78 | $ (0.16) | $ (0.43) | $ 0.04 | $ 0.32 | $ (0.33) | $ 1.11 | $ (0.39) | $ (0.42) |
Schedule II - Valuation and Qualifying Accounts (Details) - USD ($) |
12 Months Ended | |||||
---|---|---|---|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
Mar. 31, 2019 |
||||
Accounts Receivable - Allowance for Credit Losses [Member] | ||||||
Movement in Valuation Allowances and Reserves [Roll Forward] | ||||||
Balance at beginning of period | $ 4,252,000 | $ 4,100,000 | $ 4,142,000 | |||
Charge to (recovery of) cost and expense | (1,000) | 610,000 | 224,000 | |||
Acquisition | 0 | 0 | 63,000 | [1] | ||
Amounts written off | 3,903,000 | 458,000 | 329,000 | |||
Balance at end of period | 348,000 | 4,252,000 | 4,100,000 | |||
Accounts Receivable - Allowance for Customer-Payment Discrepancies [Member] | ||||||
Movement in Valuation Allowances and Reserves [Roll Forward] | ||||||
Balance at beginning of period | 1,040,000 | 854,000 | 1,110,000 | |||
Charge to (recovery of) cost and expense | 694,000 | 1,626,000 | 731,000 | |||
Acquisition | 0 | 0 | 0 | |||
Amounts written off | 982,000 | 1,440,000 | 987,000 | |||
Balance at end of period | 752,000 | 1,040,000 | 854,000 | |||
Inventory - Allowance for Excess and Obsolete Inventory [Member] | ||||||
Movement in Valuation Allowances and Reserves [Roll Forward] | ||||||
Balance at beginning of period | 13,208,000 | 11,899,000 | 6,682,000 | |||
Charge to (recovery of) cost and expense | 12,803,000 | 13,372,000 | 11,153,000 | |||
Acquisition | 0 | 0 | 0 | |||
Amounts written off | 12,765,000 | 12,063,000 | 5,936,000 | |||
Balance at end of period | $ 13,246,000 | $ 13,208,000 | $ 11,899,000 | |||
|
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