Motorcar Parts of America (NASDAQ:MPAA -5.9%) shares slid sharply on Tuesday despite beating sales estimates for its fiscal fourth quarter.
For the quarter, the Los Angeles-based auto parts provider reported a 2.5% decline in revenue from the prior year to $163.92M, above the $150.5M anticipated by analysts.
“We reported record sales for fiscal 2022, despite continued global supply chain constraints and fluctuations from historical customer order patterns during the fiscal fourth quarter,” CEO Selwyn Joffe said. “Demand for replacement parts remains strong, and we are confident in the long-term demand dynamics given tailwinds from an aging car fleet.”
For the full year ahead, net sales are expected to be between $680M and $700M, largely exceeding expectations of about $681M.
However, EPS of $0.15 came in well below the expectation of $0.47, likely leading to the downside pressure on shares. While Joffe indicated the company is “keenly focused on gross profit growth”, supply chain and inflation issues continue to weigh on results. Additionally, the company holds a heightened level of inventory as compared to the prior year.
“We built higher than normal overall inventory levels during fiscal 2022 to meet expected demand and address an unstable supply chain,” Joffe said. “These levels should stabilize as fiscal 2023 evolves and customer order patterns are realigned, which should contribute to positive annual cash flow targets.”
Shares fell 6.4% shortly after Tuesday’s market open.
Read more on the full year earnings estimates for the company.