Well, good morning. Thank you all for joining us. My name is Brian Nagel. I'm a Senior Equity Research Analyst here at Oppenheimer, covering consumer growth and e-commerce. This is day two of our 26th Annual Oppenheimer Consumer Growth and E-commerce Conference. We very much appreciate everyone tuning in. I'm very pleased to have with us our next presenting company, Motorcar Parts of America, and the company's President and CEO, Selwyn Joffe. Selwyn, thank you for joining us. Brian, thanks for having us. Look forward to it. We're going to structure this as an informal Fireside Chat with me asking questions and Selwyn respond to the questions. To the extent there are questions from the audience, just put them in the chat, and I'll be happy to work them into our conversation. Again, Selwyn, thank you. Selwyn, I think maybe the first place to start, you and your company reported a very nice fiscal fourth quarter yesterday. I know a lot of us have been busy, so maybe we haven't had time to really dig through these results as much as we want to yet. I'd love just to kind of hear your thoughts on the quarter and the bright spots. We saw a nice bounce in the stock and reaction to the results. Just kind of get your overall view of the Q4 and what we should be interpreting from it. Yeah, I think Q4 stands out probably more than normal in that we had a little tougher start to the year with one of our main customers going through a little bit of a, not a little bit, quite a significant restructuring, which affected us pretty significantly. That customer's now resurfaced and came back and has hit what I think is their new norm. That really played a big part in sort of the return of where we should be in terms of performance. Always the fourth quarter is, for us, which is the March quarter, usually stronger because customers are getting ready for the summer and the hot weather and stocking up on inventory. Generally, the fourth quarter is more positive, and I think that is aided by the benefit of some of our customers coming back to the table, which is exciting because that's what we think the new norm is. I know we've talked about over the last few quarters, the disruption from this customer of yours. Is there a way to quantify, you look at Q2, Q3, then into Q4, the benefit of Q4, how much of this reflected that customer sort of, say, coming back online? Well, I think going into Q4, I think that customer was a drag of about $50 million of annualized sales. That's a pretty significant drag. I would say that in the fourth quarter, that drag was reduced and is now normal. I would say that's probably anywhere from sort of $15 million-$20 million swing. Again, I really, first of all, want to congratulate them on getting through their restructuring and congratulate them on some excellent results. We're excited to be part of a new norm for that customer. We think that this year is going to be a positive year for them and for us relative to that business. That's very helpful. Stepping back, I think as I talk to clients, Motorcar Parts of America is still a new name for a lot of clients. I would love you just to kind of discuss the position of the company within the broader aftermarket auto parts space. Yeah. All right. Just the general space on hard parts is probably $135 billion in the U.S. market alone. We play in two pieces of that aftermarket. We play in charging systems, which is rotating electrical, which is the alternator and the starter. Both of them are non-discretionary product lines. It's about a $1.5 billion category out of that big parts category. We've got about a 50% share in that arena. It's our legacy product. We're one of the few competitors, or maybe the only player that I'm aware of, that can do both remanufactured and new units. We also have 100% coverage in both areas. That's where we sit in the rotating electrical space, which is the charging system space. The other portion of our business is in the brake space. The charging space is basically, it's a failure category. You use the part until it fails. The brake space, which we have a full braking system offering, is basically it's wear replacement. Okay, all the cars are going to need, and again, non-discretionary. From the brakes, we can start with the pad that hits the rotor, and we sell both pads, rotors. The hydraulic system, which is the brake master cylinder, we sell brake master cylinders. The power brake system, which is the brake boosters, we sell the brake boosters. The anti-lock braking system, which is on the wheel hub, we sell that. We basically, fundamentally, other than some of the tubing and part of the business, we offer a relatively full brake line solution. That's a relatively new business for us. We like it a lot. The growth opportunity for us there is enormous. We're still fairly small in that size of the business, picking up significant share there. Our pad business is starting to show some-- it's a massive business. It's a wear replacement business. I think it's an $8 point-Something billion business that's starting to pick up significantly. It's a decent margin business, and it's technology agnostic. Whether it be electric cars, hydrogen fuel cells, hybrid cars, they all need braking systems. Very excited about our positioning in the aftermarket space. We also have diagnostics that relate to both rotating electrical, the charging system. We have the leading diagnostics in the world related to producing alternators and starters, we have a business that does very nicely in that space. Then we have power management, electric powertrain, electric vehicle technology. Some of that, we're looking at some strategic alternatives, this technology is really, and even more recently, just been acquired by the top OE companies in the world. We will look at potentially spinning off a piece of that. We still have electric technology capability and certainly feel that the knowledge base on the OE side will lead us to being ahead of the curve when electric vehicles come in, which is a long way from now in terms of the aftermarket. That's the general positioning. Our leverage, very nominal leverage. We have $80 million of bank debt. A bank debt to EBITDA of less than one, generating cash. We see upside opportunities. We're looking at 7%-10% of committed revenue growth, we expect to have, by the end of this fiscal year, another $100 million of annualized revenue. Overall picture looks fundamentally good. The aftermarket itself is very strong. I think there's 295 million vehicles on the road. The average age continues to get older. These cars, as they get older, they need more replacement parts. New car sales are down, used car sales are up, in particular, the price of new cars has gone up pretty dramatically, the fundamentals of the aftermarket to me are very strong. We have high fuel prices, which does affect it short term, we think that neutralizes as time goes on. I do want to touch there again, before we maybe talk more specifically about MPAA and the opportunity for MPAA, just the macro backdrop. I've been talking through this conference a number of operators of lumber within your specific sector. Just kind of helping to size, if you will, the macro backdrop and what impact, as you just mentioned a moment ago, the elevated gas prices and other factors are having upon demand trends within the space. Let me get your thoughts there. Yeah. We have seen a small downtick in miles driven in the most recent months. Generally, miles driven affects failures. If you don't drive your car as much, the odds of it failing are a little bit lower. I think the bigger neutralization for us is perhaps some milder weather, because failure rates go up in extreme weather. I think right now, miles driven is not a huge factor. It could end up being a bigger factor in a little bit of softness, in that people filling your car up is very expensive, they'll look to reduce the amount they drive. The other side of it is airline prices have gone up, the alternative ways of transportation costs have gone up. Relative to the rest of the market, even though you've got inflation in fuel prices, your vehicle is the last thing you're cutting back on. You're moving from more luxurious transportation to more basic transportation. Whether it be if you're not driving your own vehicle, you're going to use rideshare. Again, rideshare's got tons of failure as well. It's better to have low fuel prices, that's for sure. I think that hopefully this is relatively short-term, which no one really knows. We shouldn't see that much of an impact. I do think weather is a little bit of an impact though right now. As you look at the weather, I know it's always a funny one. Yeah. It could change at the moment. Yeah. Looking out my window, it's quite nice here. Oh. Is weather right now a positive or a negative? I mean. It's a negative right now. The weather's great. Everybody's loving the weather. That's a negative. When everyone's complaining about how hot or cold it is, that's a positive for us. When you're miserable with the weather, think about buying MPA stock. If we go into this really, what I hear a lot of. I want to talk just about the sector dynamics. You've had what I consider to be some really significant competitive upheaval within your space. In fact, my team and I published a rather substantial initiation report on MPA back in early March. We talked a lot about this. I guess from your perspective, as you look at what's happened out there competitively. Where's the opportunity for MPAA? You were talking before about a brake category, a newer category. I think this does open up the opportunity. I'll let you elaborate on where you see the opportunity- Yeah. ... for MPAA now given the competitive landscape. I think that's a great question, Brian. I think the key, First Brands were acquirers of Centric Corporation, which I think was, I don't know the exact numbers, but estimates are mid $300 million of revenue. And they were also acquirers of Brake Parts International, which I think was in the $300+ million. Combined, it's probably $700 million at sometime back. I don't know where, and I don't think anyone really knows exactly where that ended up, just because of all the irregularities in First Brands. To us, we see probably a $500 million opportunity overall. We certainly don't expect or have delusions of getting all of that. The big opportunity for us is in our brake parts. The categories that we're in that overlap with First Brands is in brake parts, and they played in all of the braking system, and we think that there's lots of revenue opportunity. We're seeing it already. I think we've given some guidance on committed revenues, committed accounts that we have, and we think that there's a real opportunity at another $100 million of annualized revenue in the brake parts space. Looking back- For this year. For this year. Looking back at yesterday's fiscal fourth quarter report, in the sales upside there, so was any of that sales upside, did any of that pertain to what we're talking about here with the brake, or is that all on the come? Very little. It's all to come. I think you're going to see it at the back end of this fiscal year. I think there's a lot of liquidation of inventory that's delaying the orders from new business. Customers were able to buy inventory out of First Brands Group in excess to stock their supply chain and have a softer landing in making sure when they change. We've got a lot of commitments, and I think that we'll start seeing the benefit later in the year. Even though we have the commitments now, I think the big demand will come later. Yeah. I think the fundamentals of the business remain strong. I do think that generally the first quarter is softer than the fourth quarter. In the ramp-up, the weather's been a little mild. We're very confident for the year and of the run rate numbers. In talking about that market share opportunity, how should we think about this from a margin profile? Those incremental sales, potential incremental sales, what type of margin should we expect to get from those? If you're looking at if this is likely to benefit MPA more in the latter part of what I'm going to call fiscal 2026, so the March 2027 year, have you talked yet about how big that opportunity could be in the next fiscal year? Let's just start with margin profile. I think that as the revenue grows in the brake line, it becomes accretive to our current margin levels. We're not out there giving guidance on significant margin enhancement. We're playing in a competitive space. We do think there's efficiencies in what we're doing. We've talked about low 20s in our guidance that we have out there. We do think there's upside over time to that number. The brake categories that we're in are very respectable margin businesses. Very competitive, though, so I don't want to get ahead of that curve. Efficiencies and overhead absorption, we've been planning for this over the last probably pre-COVID, where we've talked about how we want to become a major brake supplier. Quite frankly, it's arrived. We are now a major brake supplier. In many categories, and in the categories that we're still small, we see tremendous potential coming at us. It's a great place to be because, again, it's a wear business. There's always replacements, and you cannot drive your car. We're in the power business, making the car go, and we're in the stopping business, making the car stop. Both sides of the fundamental equations of that, and there's big upside. By the way, we're only talking about the U.S. market right now. The Mexican market we're starting to unfold into, that'll be a big opportunity. The whole South American market, the whole international market is something that we will tackle. It's just at the right time. We have so much local opportunity still to absorb. Certainly, we're playing in just a small part of the global market, and we have global capability. Is it selling more braking products through the existing customers, the customers where MPA has enjoyed some real nice relationships for a long time? It is. It's that and also opening doors where we haven't had relationships. It's both. The brake pad formulations that we have are tried, tested, and are very successful. We own all of the Centric formulations, the former Centric formulations. The consumer, the professional installer understands and knows those formulations and can see them. They stand out. When you look at it in the box, you can tell that it's now under Quality-Built, but it's a Quality-Built formulation. The installer trusts it. It's got a great feel. It's a great product. Very, very reliable. We're excited about that opportunity. It's small for us right now, and that's even more exciting in a category that's, I believe it's over an $8 billion category in the U.S. alone. That's a very significant opportunity. Yeah. I think lots of upside, lots of work to be done, and we have lots of capacity. I think that certainly over the next wave of growth, and we talked about a $900 million run rate by the end of this fiscal year. I think we're going to have a lot of leverage on our overhead. I don't think there's much overhead we need to add. Well, that's the question I wanted to ask someone is, again, looking at this braking opportunity, you just mentioned labor, how much investment is needed to basically manufacture into this opportunity? It's inventory. Our entire infrastructure's already in place to handle this opportunity. Yeah. There's no fixed overhead. I shouldn't say no. There's always a small amount, but the leverage on the fixed overhead is significant. If we continue to grow, we've got some more We can move to the billion-dollar mark without significant fixed cost investment. Are there other competitors, there you have this opportunity. Like you said a moment ago, you've been eyeing this opportunity now for several years. You've had this competitive disruption within the space that's opened the opportunity here. Are there others that are basically positioned like you to get into this space? There's a lot of good competitors. It's a massive market. Wherever you have a massive market, you have a lot of competitors. There are a lot of competitors. There's enough space for all of us. We're certainly not saying we're going to be an $8 billion or even a $4 billion player in the brake business. We just want a small share, and we want the share that we are known for, which is a high-profile professional installer base share. That's what we're very much focused on in the brake category, very much around the professional installer. We think that we can play in that. There are competitors in that space too that are very good competitors, but there's room for a number of players. I think, again, I think that if we were starting out with something that was unproven, I'd be a little more cautious. We've got a proven product. This is a product that for many years dominated the friction business, in the space that we're targeting. That message has to get out to the consumer and to the installer, and we believe that there's a high degree of loyalty that they'll come back to this product. We're seeing it. We're seeing it, and we're hearing it. Do you want to shift gears just a bit? I know as our time starts to wind down here. Tariffs and trade policies. To what extent have tariffs impacted Motorcar Parts of America, and how are you dealing with it? Oh, God. It affects us significantly. One day there are tariffs and, we're passing them through. The next day that there are no tariffs and we have to refund and, it's an ongoing part of our life now. I think that, sometimes, we have, I think Warren Buffett used to say, "What makes you good is being fortunate, and makes you even better is being able to take advantage of being fortunate." I think we're fortunate in that we've got a footprint that plays well within the tariff structure, in that we're USMCA compliant on most of our product, and we're mostly out of China, which has higher duties than other countries. We have a great ship direct capability out of our Malaysia facilities. I think we're fortunate in that we saw this coming, not so much the tariffs, but we saw some of the challenges on the Chinese infrastructure coming, and we moved. Then tariffs came, and I think we're now in a position, and I think we're able to take advantage of that, of being fortunate with this new footprint. We're going to have to see where tariffs go and what this all means day by day. I think overall, we're in a pretty good spot. The final question, again, like I said, our time's going to wind down here, but you mentioned early on just the solid capital position of the company. Maybe just address that the balance sheet, your debt levels seem to be very subdued, cash at this point. We have bank debt of $80 million. On EBITDA, that's north of $80 million. Our guidance is in the mid-90s and pushing on close to $100 million or a little over $100 million. Debt to EBITDA is below one, and we'll continue to generate cash. We don't think we're going to be a net user of cash, so that only gets us in a better position. We have been buying back shares. We think we're a good value, and so, to the extent that we'll continue to do that. We do have a convert out there at 15. The mentality of that convert is as an equity play and not as a debt play. But we were able to the extent the stock's below 15, we were able to significantly reduce share count by buying back stock. We'll have a lot of capital to deploy in the right ways. I think the supply chain in general is private equity owned. I think that they're over-leveraged and there was a time when debt was more available than it is today, and refinancing that debt, I think, is challenging and we're nowhere near having any of those issues. We have lots of liquidity, and quite frankly, we haven't even tapped the capability of the amount of liquidity we could get. We have favorable interest rates, and we have great relationships with our lenders. From a financial perspective, I think we talk about being fortunate enabled, but matching our financial capability to the opportunity, I think it's there. We've got a lot of financial capability. Was there anything we didn't discuss that we should have discussed here? No. I appreciate you. We've participated in these conferences for a long time. Thank you so much for keeping inviting us, and we like to be here. Thank you so much for taking an interest in our company and providing coverage. I think that's great, and look forward to continuing dialogue and we very much have our core values that we live by, which is EPIQ. It's excellence, passion, productivity, innovation, and integrity, community, and last but not, we spell EPIQ with a Q, and last of all is quality. We think applying those basic core values to our vision statement to being the global leader for parts and solutions that move our world today and tomorrow will make us an industry leader, and already has made us an industry leader. The opportunity is very sustainable over a long period of time. I thank you for being interested. Well, thank you. Congratulations on the- Yeah. ... recent successes here, and I look forward to watching it continue to play out. Thank you so much. Appreciate it so much, Brian. Thank you.