Good day, everyone, and welcome to the Motorcar Parts of America fiscal 2008 and fourth quarter year-end conference call. This call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Mr. Gary Maier. Please go ahead, sir.

Thank you very much and thanks everyone for joining us for Motorcar Parts of America fiscal fourth quarter and year-end conference call. Before we begin and I turn the call over to Selwyn Joffe, Chairman, President, and Chief Executive Officer, and David Lee, the company’s Chief Financial Officer, I would like to remind everyone of the Safe Harbor statement included in today’s press release. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for certain forward-looking statements including statements made during the course of today’s conference call. Such forward-looking statements are based on the company’s current expectations and beliefs concerning future developments and their potential effects on the company. There can be no assurance that future developments affecting the company will be those anticipated by Motorcar Parts of America. Actual results may differ from those projected in these forward-looking statements. These forward-looking statements involve significant risks and uncertainties, some of which are beyond the control of the company and are subject to change based upon various factors. For a more detailed discussion of some of these ongoing risks and uncertainties of the company’s business, I refer you to the company’s various filings with the Securities and Exchange Commission. With that said, I would now like to begin the call and turn it over to Selwyn Joffe. Selwyn.

Thanks, Gary. Good morning or afternoon, everybody. I appreciate you joining us today for our fiscal 2008 fourth quarter and year-end conference call. As highlighted in today’s financial release, we are on our way to accomplishing our goals. We are continuously focused on increasing top line revenue growth and these efforts have been bearing fruit, as indicated by our solid sales increase for the fourth quarter, with sales climbing more than 14% for the quarter. In addition to sales growth, we have significantly completed our offshore transition and are now realizing our anticipated savings from this initiative. Our gross profit reached record levels for both the fourth quarter and the year. Gross margin jumped to 31% for the quarter from 11% a year earlier, while gross margin for the year climbed to 28% from 16% in fiscal 2007. David will discuss the contributing factors in more detail in a few minutes. In addition to the benefits of the relocation of our manufacturing operations offshore, which are now substantially completed and which should help stabilize future profitability, let me also highlight several other key operating metrics that were noted in today’s press release. We recorded a $1.5 million inventory write-down of finished goods on hand to reflect our current lower production costs. This will have a positive impact on future gross margins as we sell through that inventory. Fiscal fourth quarter results also include a non-cash accelerator promotion expenses of $1.5 million to one of our customers. From a cash perspective, these credits are granted evenly over the year. I would also like to note that full year results reflect the accrual of customs expense for cause of approximately $1.3 million, of which $80,000 was accrued in the fourth quarter. We are hopeful that this expense will be reversed upon a…

Thank you, Selwyn. As announced this morning, net sales in the fourth quarter of fiscal 2008 were $35.9 million, compared with $31.4 million in the same quarter last year, representing an increase of 14.3%, as Selwyn mentioned earlier. Gross profit in the quarter increased more then three-fold to $11.3 million, or 31.4% of sales from $3.3 million, or 10.6% of sales in the same quarter of fiscal 2007. The increase in the gross margin was due to the lower manufacturing costs resulting from improvements in manufacturing efficiencies at our Mexican facility, as Selwyn noted. The gross profit for the quarter was impacted by the $1.5 million write-down of inventory due to lower production costs. Despite the write-down, which negatively affected our gross margin, it certainly is encouraging that our current production costs are less than the costs we incurred to produce our finished goods inventory. This is a result of the fact that our initiatives offshore are continuing to pay off. We look at a trailing 12-month average on our standard costs to value our inventory at the lower of cost to our market. Excluding the inventory write-down, gross margin would have been approximately 36% for the quarter. General and administrative expenses decreased 21.7% to $4.7 million from $6 million a year ago. This reduction was due primarily to a decrease in Sarbanes-Oxley compliance costs of $870,000 in the fiscal 2008 fourth quarter, and a $211,000 net realized gain recorded from the redemption of short-term investments for the payment of deferred compensation liabilities in the fourth quarter of fiscal 2008. Sales and marketing expenses decreased $270,000 to $906,000 from $1,176,000 in the same quarter of fiscal 2007. Operating income during the fiscal fourth quarter was $5.3 million, up from an operating loss of $4.2 million a year ago. The company…

Thanks, David. As I mentioned on last quarter’s call, we are actively seeking new business and are optimistic about our growth opportunities. But we are cautious that we only to take advantage of these opportunities if the are profitable, priced right to reflect increased commodity prices, and provide a fair return to our shareholders. We continue to remain optimistic about our prospects for expanding the company’s presence in both the do-it-yourself and the do-it-for-me markets. In the professional installer market, we continue to make inroads by leveraging our quality built brand name. As our retail customers focus on expanding their professional installer sales, we look forward to the greater growth opportunities we expect to experience alongside them. Given Motorcar Parts’ strong customer relations and reputation as a value-added supplier, we believe we are in an excellent position to benefit from our customers’ efforts to expand their share of the rotating electrical market and to increase market share for new customer additions. In summary, long-term market statistics for our industry are favorable though there continue to be some deferred maintenance trends that the after-market industry is experiencing. Overall we see an expanding pool of older vehicles on the road and we should experience growth in our sales as a result of this. Despite recent reports that certain retail automotive outlets are experiencing some sales softness for discretionary products in this challenging economy, our products are not discretionary and sales of our products are somewhat immune to the current economic situation. We do believe, however, that lower miles driven will cause deferral of replacement rates. The industry continues to undergo consolidation and Motorcar Parts is clearly in an ideal position to capture the opportunities available in the market. We have nominal leverage and an increasingly favorable operating structure, which places the company in a strong position to pursue growth strategies that enhance shareholder value. I appreciate your interest in the company and I am happy to answer any questions you may have.

(Operator Instructions) We’ll take our first question from Mitchell Sachs with Grand Slam.

Congratulations on a nice quarter. I wanted to just sort of walk through EBITDA for the fourth quarter and for this last year, this last fiscal year. So for the fourth quarter if I calculate it right, it comes to a $9 million number, using your release. Is that correct?

The detail of the way we come to this number is we have adjusted for both The Pep Boys and the inventory write-down. That’s about $3.1 million, and then we have about $200,000 from 123R stock compensation expense, non-cash, and the depreciation of $677,000, so we end up with about $9.2 million in adjusted EBITDA.

Okay. And can you do the same thing for me for the year, for the fiscal year?

I’m going to give it to David. Do you want to do that?

Sure.

It’s much more of a tongue-twister.

For the year, reported operating income is $12.75 million and depreciation is $2.4 million, so to that, to cost of goods sold we have our standard inventory write-down of $3.2 million and we have customs accrual of $1.4 million. So the items affecting cost of goods sold totals $4.6 million. In G&A, we have stock compensation expense of $1.1 million, and we include other costs such as severance in connection with the offshore transition. That was approximately $800,000. We have also costs for restatements, as well as NASDAQ listing related costs. That amounted to approximately $250,000 combined. We have Laverne distribution warehouse closure costs. In the third quarter, we closed our Laverne, Tennessee distribution warehouse. That was approximately $110,000. We also experienced costs to change over our auditors, as well as legal fees related to the customs. And finally, we have a cost incurred with the SEC comment letter. Those last three items, the auditor change, customs related legal fees, and well as the SEC comment letter costs, is approximately $260,000. So the total G&A adjustments we’re looking at was about $2.5 million, so combined with the cost of goods sold of $4.6 million and G&A of 2.5, we’re looking at operating income of approximately $19.9 million, adding depreciation of approximately $2.4 million, to get to EBITDA approximately $22.3 million.

In your 10-K, it looks like G&A is about $3 million. Is it using a lower number?

In the cash low statement, you will see that we have two lines that really affect depreciation and amortization and you have --

There’s a negative. I see it. Okay. And then -- okay, so then for this year, you previously talked about doing $35 million in EBITDA for fiscal ’09. Is that still in the ballgame?

Yeah, and I think I just want to clarify that takes into account adjusted for the inventory write-downs and other non-cash expenses.

Okay. And then in terms of revenue growth, you’ve got a 150 number that you put out in your release. I think you talked about the acquisition as adding roughly $6 million, so basically you are looking for $11 million of organic growth then roughly? Is that a fair number?

That’s a fair number. I mean, that will be -- there may be another acquisition or two small ones which would change that number, but we expect to add, you know, separate from the acquisitions we expect to add new business of around $11 million, $12 million.

Okay. And then could you talk a little bit about how commodity prices are impacting your business? I mean, you must consume I’m sure some of the metals that go into remanufacturing. Can you just talk about that a little bit?

Yeah. Clearly we’ve seen dramatic increases in copper prices, dramatic increases in aluminum and steel, and the two-fold discussion really is for those who manufacture new product, mostly the Chinese imports, they are becoming less competitive because the cost of metal has gone up significantly. For us in the reman business, predominantly the reman business, certainly as we replaced components our material costs has gone up. I think we are cognizant in making sure that our pricing needs to reflect this and with our greatly enhanced operating structure, we’ve been able to absorb it fairly efficiently. And so -- but that’s something we need to keep an eye on.

Is your competition doing anything in terms of price increases due to commodities?

I think that the general market is looking at price increases due to commodities. I definitely think that we will see some inflation relative to that in pricing. Our competitors seem to be moving in that direction. You’ve also got the incremental cost of freight and freight surcharges, which I assume need to be passed on to the consumer at some point.

And just a final question before I step back into the queue; can you talk a little bit about your quarters? I mean, you had some lumpy quarters in fiscal ’08. How do I think about it in fiscal ’09?

I think, Mitch, one of the things that -- I think that’s a very good question, especially in light of the fuel prices and the fluctuation. As prices of fuel go up, we see these little spikes in the downturn of miles being driven and then it comes back up. We expect to see fluctuating quarters. This is not going to be an even year in terms of quarters. And while they are going to be fluctuating, we are confident that we can accomplish our year-end number. But I think that the public should be cognizant that this is just not flat, you know, smooth sailing through this economy.

Thanks a lot, guys. Appreciate it.

We’ll move next to Steve Emerson with Emerson Investing Group.

I would like to compliment both management and the prior caller.

Oh, yeah, he did a good job answering questions. Thank you.

The $19 million for last year EBITDA, can you perhaps just total the extraordinary items on top of that that won’t be expenses this year? For instance, of the $1 million increase in auditor fees, how much lower will that be this year?

Let me try and take a stab at what David outlined for these adjustments in terms of non-recurring, and I’ll start with the COGS analysis which he broke down into two components. One was our standard inventory write-down and our customs accrual. We certainly don’t believe the customs accrual for $1.4 million will occur and I personally am optimistic that we should have favorable outcome to the resolution on customs.

So 1.4, we should use a range of zero to 1.4 for the coming year?

I would think again, in my mind, and this is not resolved yet, but it should be zero.

Okay, excellent.

And then on the standard inventory valuation write-down, that’s sort of a little bit of a trick question because we do believe that we will continue to have some declining costs in our production, so we may see another $3 million over the next 12 months in reduced inventory write-down, which would be good news for us because that means we’re furthering our efforts in reducing our costs. On the 123 stock option compensation, I think that will be recurring, even though it’s non-cash. It will be recurring. We will have some severance still. We’ve still got people that will need to be laid off, so we still do have some severance that we would -- but it will not be this significant. I think it will be 25% of this.

Okay.

So from $800,000 down to $200,000.

Excellent.

On restatements, with $144,000, we certainly do not expect to have anymore restatements and we already are listed on NASDAQ so we don’t expect to have application fees for NASDAQ again. We’ve closed down our distribution warehouse in Tennessee, so we don’t expect that to be recurring. Our auditor transition costs, certainly we’re very happy with our auditors at this point in time and do not expect any changes there.

How much do we save of the million dollar increase?

So in total -- in total -- no, there’s no -- it’s actually a million dollar decline going forward in total fees. So we expect to save just of the one-time that we announced, that would be -- just give me one second; of $1.4 million I think of the one-time amounts would $1 million at least -- a million of it, at least a million of it.

What I’m trying to get at is the $19 million EBITDA plus extraordinaries that are not going to continue, give us what adjusted EBITDA for the last year?

I think you could add at least $2.5 million back to that number.

Excellent. Now trying to elaborate on the last questioner’s sales issues, what is a reasonable way to look at the market, or per unit? In other words, if we’re going to get $11 million of organic growth, how much of that would you guess is price, how much of that is real unit growth or are we looking at a real unit decline if miles driven is going to decline a few percent?

We’re expecting to get real unit growth through the acquisition of new customers, both through acquisitions and through just organic new customers coming on board. And so the pricing is relatively flat. I think we should hopefully see a little price accretion through just the fact that the most later model applications are higher priced than early model applications, and so I think the majority of our growth that we’ve outlined is new unit growth.

Okay. New unit growth is -- I’m trying to figure out a baseline, something equivalent to same-store sales. In other words, let’s say where you are fully utilized by a customer and you’re their sole source, are sales per customer going down 2%, flat, or going up?

I think sales per customer are in the 2% accretion range.

Okay, and that --

And the rest would then be units.

And that would assume a 3% decline in miles driven?

And that assumes -- that is correct.

Something like that.

About that. The reason I say that is because our customers are not only selling to their existing customer base but they are growing their reach by reaching into the professional installer market. So we think their market share will go up, even though --

Okay.

-- purchases in total may not be growing that fast.

Of that growth that you are seeing, how much of it is from the professional market versus your traditional DIY, DYI customer? In other words, we’ve discussed this on previous calls. That’s excellent growth in the face of declining miles, so obviously your, as you just said, your professional market is growing very rapidly but maybe you could somehow quantify it or what percent is professional end market versus retail, last year, this year?

I would say that the vast majority, and I don’t have a defined percent, Steve. I can get back to you on that but the vast majority of our anticipated growth, whether it be through the retailer or through our traditional sales effort, will be in the professional installer market.

And would you guess that’s a quarter of your sales now or how -- in your opinion, what -- about how big is it for you?

Let me give that some thought for a second. I would say that 30% of our sales are today professional installer.

And how would that compare to a year ago? How quickly is that growing?

It’s up dramatically. Compared to a few years ago it was zero, so I mean that’s -- that sort of puts it into perspective. I'm not sure exactly what a year ago was but it continues to grow.

So it’s around a 10-point per year increment? Is that 30% of your revs growing at 30% or 25% or what?

That percentage of our revenues is growing at -- we expect to add on that 30%, we expect to add at least 10% to 15% minimum on that base, and maybe higher.

Well, I consider this excellent and I congratulate you.

Great. And I think the other thing to add is that we are now positioned to expand our channels into the heavy duty business, and so that overlaps a little with both the do-it-yourself and the professional installer market, and we intend to pick up some market share in the heavy duty agricultural industrial segment as well.

Well, I am looking forward to the day when I can call Motorcar Parts of America a low PE AG play.

Good.

Thank you very much.

(Operator Instructions) We’ll move to Irwin [Friedman], a private investor.

Congratulations, Mr. Joffe and the team. A great job. My questions have been answered.

Okay. Well, that was easy but thank you for the congratulations.

Thank you. We’ll move on to Richard Hoss with Roth Capital Partners.

A couple of questions here; David, if you can remind me what was last quarter’s write-down and of that, how much of that positively benefited gross margins for this quarter? And am I looking at that correctly?

In the third quarter, the inventory write-down was $1.1 million.

Okay. And would we have seen that positively impact the fourth quarter gross margins?

Yes.

You would see that but you would see it based on the number of turns, so if we are turning our inventory at four times, 25% of that cost would be showing up -- of that cost reduction would be showing up in the gross margin, I believe.

Okay, so stripping out the effect of that write-down, the gross margin, we’re still very, very solid for the quarter.

Yes.

Okay. And then as far as the acquisition, when does that start to contribute?

Now. I mean, I think this -- we’ve basically gone through the complete transition on the acquisition. There will be some transition costs reflected in this quarter but it took us basically 30 days to fully integrate the entire acquisition.

Okay, so that $6 million annualized run-rate should be reflected in the second quarter then, fully reflected in the second quarter?

In the second quarter, correct.

Okay. How much are you seeing price concessions, or additional price concessions from retailers? Any pressure there?

There’s continued pressure from the retailers on price concessions but I think the market is moving in the other direction. I think it’s coming to a point in time where the reality of increased costs are being portrayed by the supply chain, not only us but by our competitors and that this is a non-discretionary item and really the consumer’s got to pay for what the item really costs. So while there are pricing pressures, I do believe that we are in the trough of that and that the industry needs to start seeing some price increases.

Okay. And then as far as the existing capacity of the Mexican facility, I guess based on the current conditions, how much additional capacity is there that can be utilized? In other words, what sort of a revenue run-rate that you could still integrate in there without having to spend too much?

Well, I would tell you that our biggest challenge today is that we don’t have enough volume to run through our plans. We certainly believe that we are running -- we think the Mexico capacity right now is utilized at maybe 50% and in addition to that, we have excess capacity in our Malaysia facilities as well.

Okay, so you could easily get say $300 million through your existing facilities.

Yeah, nothing is easy but I think we could get that through.

Okay. And then -- okay, and then last question, the G&A level for this quarter, I know there’s a lot of one-timers and things go up and down -- 4.7, do we see that as the run-rate?

Currently we do. We are always looking at our costs and looking for opportunities for savings and we do have two locations here in Torrance as well as Mexico and looking to maximize the efficiencies.

One other proviso to that is that I believe we will be spending a little more on the sales and marketing effort to launch the heavy duty program. I think it will become accretive almost within a six month period, but yes, other than -- I just wanted to add that on to David’s answer.

Okay. So I guess looking at it from the full year, similar to what we saw in ’08 as a whole?

Our efforts as we continue throughout the year is looking to reduce costs, absolutely.

Okay, so we’ll look to come down a little bit?

Yes.

Okay, perfect. All right. Thank you very much, guys.

(Operator Instructions) We’ll move to Mitchell Sachs with Grand Slam.

I’ve got a follow-up question on the heavy duty; can you quantify roughly for me how big that market is, what kind of market share you currently have in the market, what you need to do to capture material share there?

Right. You know, that’s a very good question, Mitch. No research group that I’ve seen has been able to really specifically quantify the size of the market. The estimates that I’ve seen have been in the $600 million range. We have insignificant market share. I mean, we just made one small acquisition. We have a very small customer base in that area right now. We feel we have great capability in this area. We feel like we are able to compete effectively on cost at this point in that area and so where we can get to in the short-term, I’m not sure but I think we can make it accretive very quickly. And I think there’s a lot of revenue opportunity as time goes on in that category.

Does this get produced out of Mexico or Malaysia or where?

Combined. Everything we do is capable of being produced in either location.

And heavy duty, so that would be -- you said agriculture and what else falls into that category?

Heavy duty is also a word that is used differently in the industry a lot. I mean, when we talk about heavy duty, we are talking about anything that’s higher than a light truck, heavier than a light truck and then also including industrial, agricultural, and marine applications. So that would be forklifts, boats, you know, international harvester type equipment for farming and all those types of applications.

And the customers for buying -- the professional store customers who are buying this equipment, is it the same customers you are selling to now for the light application?

It’s the same -- there is an overlap but there is a separate distribution channel as well.

Okay, so you can only leverage some of your relationships then?

Yeah, yeah, but the leverage with the existing relationships is enough to get us going in a nice positive manner and then we would expand our channels into the more focused heavy duty distribution channels.

Okay. Thanks very much, appreciate it.

We have a question from Frank [Kristina] with Micro Capital.

Yes, thank you. Many of the questions have been answered. I did want to clarify -- the inventory write-downs have a negative affect on your gross margin, correct?

The inventory write-down negatively impacts the reported margin for the quarter.

Right, so -- I just want to make sure -- so if we were to strip that out, that $1.5 million, your ongoing gross margin was closer to like 36%.

Correct.

Okay. Excellent. Congratulations, guys. Great quarter.

It appears we have no further questions in our queue at this time. I will turn the call back over to Mr. Joffe for any additional or closing remarks.

Well, I wanted to thank everybody. I know people were waiting in anticipation of this quarter. I wanted to thank everybody for signing in to listen to our conference call and we will be actively communicating with the street as we continue through the year, and I think you all once again.

This does conclude our conference call for today. We do thank everyone for their participation.