Motorcar Parts of America (MPAA) Q4 2021 Earnings Call Transcript

Motorcar Parts of America (MPAA -2.46%)
Q4 2021 Earnings Call
Jun 14, 2021, 1:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day. Thank you for standing by. Welcome to the Motorcar Parts of America's fiscal 2021 fourth-quarter year-end conference call. [Operator instructions] As a reminder, this conference call is being recorded.

I would now like to turn the call over to Gary Maier, investor relations. Please go ahead.

Gary Maier -- Investor Relations

Thank you. Thank you, Charlie. Thanks. Thanks, everyone, for joining us for our call today.

Before we begin, I'll turn the call over to Selwyn Joffe, chairman, president, and chief executive officer; and David Lee, the company's chief financial officer. I'd 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 today's conference call. Such forward-looking statements are based on the current 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 the 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. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

For a more detailed discussion of some of the ongoing risks and uncertainties of the business, I refer you to the company's various filings with the Securities and Exchange Commission. With that, I would like to begin the call by turning the call over to Selwyn for some remarks.

Selwyn Joffe -- Chairman, President, and Chief Executive Officer

Thank you, Gary. I appreciate everyone joining us today for our year-end call. I hope everyone is safe and healthy and starting to venture out as vaccinations are more readily available. We're excited to be able to reserve a personal interaction with our customers and team members.

As noted in this morning's press release, we achieved record sales for our fiscal fourth quarter and full year, notwithstanding the sharp drop in the first quarter of fiscal 2021. Equally significant, net income was up sharply for both periods and the new fiscal year is off to a strong start with strong demand for our products. I will now address our company's current position and outlook for our business, and then David will then address our financial results in detail. The outlook for hard parts replacement continues to be positive and we're excited about the company's position in the market.

In addition, the electric vehicle marketplace is fast evolving, and our electric vehicle subsidiary should substantially benefit from the momentum. Let me provide some color to these dynamics. Demand for automotive hard part is strong as drivers return to the roads. The availability of vaccines across the country is clearly helping and it appears that people are getting back to more normal routines and rely on their vehicles for everyday activities and vacation travel.

Overall, we are benefiting from our investments from multi-growth platforms in our hard parts business. We expect each of our product lines to grow and we are focused on meeting the increased demand in all categories. Our newest product line, brake calipers, continues to gain traction and we are focused on meeting the increasing demand in the brake category. The market for our current categories for internal combustion engines represents more than $6 billion at the retail level.

There are approximately 287 million vehicles on the road with an average age of 12.1 years in the United States alone, which fuels optimism about the growth opportunities in our aftermarket hard parts business. This will fuel growth in the aftermarket parts replacement industries well beyond 2030. You've heard me say before that people are keeping their vehicles longer. In recent months, news reports have indicated that used car sales are at record levels, resulting in increased miles driven by OKVs, old kind of vehicle.

Obviously, this bodes well for the aftermarket parts replacement industry and our nondiscretionary product offerings. And in fact, we are seeing demand increased. As these vehicles age, the rate of replacement of parts increases substantially. For example, cars in the zero-to-three-year age group have a replacement rate for alternators of 2.42%, compared with 6.65% in the 12-year-and-above age group.

Though new car sales should return at some point, we expect them to benefit because used car scrap rates are lower than the new car sales, resulting in an increase in the average age and the number of cars on the road, generating further increases in demand for parts replacement. Of course, any new car sales will drive aftermarket play through -- aftermarket parts replacement in the future. As I emphasized last quarter, our facility expansion in Malaysia is now complete, and we are focused on utilizing this increased capacity and productivity across multiple product lines to reduce dependence on outsourcing. While COVID and related supply chain challenges continue in Malaysia and throughout Asia, we see tremendous opportunities to leverage our presence in Malaysia and support our customers.

In short, our strategy before and since the pandemic has been to leverage our significant channel relationships for aftermarket parts and offer superior parts and solutions to our customers and consumers. We are equally excited about opportunities in the EV space. Our strategic position in the EV space is gaining momentum. For example, let me highlight several exciting developments we recently announced.

Orders from two global electrical -- global electric vehicle manufacturers in China and Europe for advanced power hardware-in-the-loop testbeds and inverter test systems. The establishment of a collaboration agreement with National Instruments also known as the NI, which has a strong offering for the development and production of electric vehicles. It will seamlessly integrate the EV's technology, supported by global salesforce to market our products and technology. We also recently announced the opening of our first state-of-the-art technical center in the Detroit area, providing automobile manufacturers with a convenient location for electric powertrain testing solutions and for onsite engineering support.

We also announced a development program of an extremely fast EV charger, spearheaded by Delta Electronics' automotive division and sponsored by the U.S. Department of Energy, that utilizes our emulated technology. In short, we believe our EV subsidiary provides us with meaningful opportunities for growth while complementing our leadership presence within the automotive hard parts market. We believe both of these businesses provide our shareholders with exciting opportunities as transportation needs and driving options evolve.

In short, all our initiatives continue to enhance our position as a valued premier supplier of automotive aftermarket parts in North America and the rapidly emerging electric vehicle in the aerospace markets. Certainly, there are challenges facing the aftermarket industry today, including supply chain, freight, and other pandemic-related headwinds. We continue to experience supply chain challenges for steel semiconductors and packaging, to mention a few items. We think these are short-term issues and we are working hard with our global team to manage production while working with our suppliers and logistic providers to address the challenges.

Market dynamics and rational economics, including price increases, supported by customers will contribute to overcoming these challenges as we continue to focus on taking full advantage of our competitive strengths. In summary, our entire company is well-positioned for sustainable top and bottom-line growth for parts and solutions that move our world today and tomorrow. Our footprint for the future has become a reality. We are no -- we are now focused on benefiting from this move in the following ways: increase sales due to higher capacity; better gross margins due to economies of scale from a consolidation of operations, including the brake caliper launch; pricing initiatives; and other product line transition activities.

In short, we're excited about the continuing growth opportunities and utilizing our highly efficient new footprint. As noted in today's earnings release, given the ongoing global pandemic and near-term related considerations, the company believes it is still not prudent at this time to provide specific annual sales and gross margin guidance. We will reevaluate this policy as fiscal 2022 evolves. However, we are currently experiencing strong customer demand for our aftermarket parts and our EV solutions.

I will now turn the call over to David to review the results for the fourth quarter and fiscal 2021 year-end.

David Lee -- Chief Financial Officer

Thank you, Selwyn. To begin, I encourage everyone to read the 8-K file this morning with respect to our March 31, 2021, earnings press release or more detailed explanations of the results. For information about the items that impacted the results, see Exhibits 1 to 5 of the press release. Let me take a moment to review the financial highlights, including record sales for both our fiscal '21 fourth quarter and fiscal year.

Net sales for the fiscal '21 fourth quarter increased 11.5% to $168.1 million from $150.7 million for the same period a year earlier. Gross profit for the fiscal '21 fourth quarter was $32.1 million, compared with $36.6 million a year earlier. Gross profit as a percentage of net sales for the fiscal '21 fourth quarter was 19.1%, compared with 24.3% a year earlier. Gross margin for the fiscal '21 fourth quarter was negatively impacted by an aggregate of 6.4% by the following: 2.8% for brake caliper start-up costs and relocation and transition expenses, 1.4% due to higher freight costs and expenses related to COVID, 1.4% noncash core premium memorization impacting sales.

0.6% noncash reevaluation of cores on customers' shelves, and 0.2% customer allowances related to new business and the impact of tariff. Let me provide a little more color to the factors impacting gross margin. Break calipers or start-up costs and relocation transition expenses are part of our footprint expansion in Mexico. As you may recall, we completed the construction of our buildings in Mexico this past fiscal year and focus on increasing the production of brake calipers, including core sorting and related activities to meet current and future demand.

We anticipate that these cost expenses will diminish significantly in the first half of the current fiscal year. We also incurred higher freight costs due to a freight shortage -- a shortage of freight caused by COVID as someone noted earlier. With regard to additional corporate-related expenses, we have addressed health and safety initiatives that also impact the gross margins. Fortunately, these COVID-relate expenses have been slowly decreasing.

Core premium amortization and reevaluation of cores on customers' shelves that impact the gross margins are noncash, noneconomic. For a summary of items impacting gross profit, please see Exhibit 3 in this morning's earnings press release. We also incurred higher costs for raw materials and supplies. I should also mention that we experienced offshore wage inflation, which further impacted results.

We have mitigated these expenses along with higher freight costs with price increases that have been implemented and will be realized shortly. Total operating expenses decreased by approximately $15.4 million for the fiscal fourth quarter on a year-over-year basis. This decrease includes $17.1 million of foreign currency-related net gains, which are noneconomic and related to lease liability remeasurement in Mexican peso forward contracts. This was partially offset by higher expenses such as COVID-related expenses of $520,000.

Interest expense was $3.7 million for the fourth quarter, compared with $5.5 million last year. The decrease in interest expense was primarily due to lower interest rates and lower net debt. Income tax expense for the fourth quarter was $939,000, compared with an income tax benefit of $2.8 million for the prior-year period. Net income for the fiscal '21 fourth quarter was $835,000, or $0.04 per diluted share, compared with a net loss of $8.2 million, or $0.43 per share a year ago.

Prior-year fourth-quarter results include the unfavorable foreign exchange impact of lease liabilities and forward contract totaling $20.7 million. Additional details of items impacting net income are in Exhibit 1 in this morning's earnings press release. Net sales for fiscal '21 were $540.8 million, compared with $535.8 million a year earlier, impacted by a sharp drop in demand in April due to the global pandemic. In addition, net sales were impacted by current pandemic supply chain challenges.

This was partially offset by the benefit of $12.8 million due to a realignment of inventory at two customer distribution centers with expected future sales benefits as the product mix changes. Gross profit for fiscal '21 was $109.5 million, compared with $118.4 million a year earlier. Gross profit as a percentage of net sales for fiscal '21 was 20.2%, compared with 22.1% a year earlier. Gross margin was negatively impacted by 5.5%, including brake caliper start-up costs, relocation transition expenses, and higher costs related to COVID-19 as I previously discussed.

A summary of factors impacting gross profit are in Exhibit 4 in this morning's earnings press release. Net income for fiscal '21 was $21.5 million, or $1.11 per diluted share, compared with a net loss of $7.3 million, or $0.39 per share a year ago. Additional details of items impacting net income are in Exhibit 2 in this morning's earnings press release. Net cash used in operating activities during the fiscal year '21 fourth quarter was $16.4 million, reflecting working capital requirements to support the company's record sales and inventory increases for anticipated business growth in fiscal 2022.

This compared with cash provided by operating activity of $23.2 million for the prior-year -- prior fiscal year fourth quarter. Net debt was $88.9 million on March 31, 2021, compared with $67.6 million on December 31, 2020. Net cash provided by operating activities during fiscal '21 was $56.1 million, compared with net cash provided by operating activities of $18.8 for the prior fiscal year. Net debt during fiscal '21 was reduced to $88.9 million on March 31, 2021, from $126.5 million on March 31, 2020.

As you know, there are various methods to calculate the return on invested capital. For our purchases, we calculate ROIC by taking operating income and adding back noncash expenses and certain one-time expenses. We believe this metric, consider together with GAAP measures, provides useful information to investors and to management regarding the company's return on invested capital. In short, we take this metric, which was approximately $77.1 million for the 12 months ended March 31, 2021, which included an extraordinarily weak fiscal first quarter as a result of the COVID-19 shutdown across the country, and divided by the average equity and net debt balance of $403 million, resulting in a 19.1% pre-tax return on invested capital.

We are just starting to realize the benefits of expanding our Mexico operations and the launch of our new great categories with the expectation of increased returns from both new and existing product lines. This should result in higher ROIC as a benefit of our strategic expansion are more fully realized. During the fourth quarter ended March 31, 2021, the company repurchased $1.1 million of shares, an average price of approximately $20.70. Under the authorized share repurchase program as of March 31, 2021, $16.8 million of the $37 million common stock authorization has been repurchased, and $20.2 million remain available to repurchase shares.

As I mentioned on March 31, 2021, our net debt was approximately $88.9 million. Total cash availability on the revolver credit facility was approximately $140.8 million on March 31, 2021, based on a total of 238.6 million revolver credit facility and subject to certain limitations. At March 31, 2021, the company had approximately 848 million total assets. Current assets were 423 million.

And current liabilities were 326 million. We recently announced that the company extended its credit facility with PNC Bank for five years through May of 2026, including amendments, which further increased the company's strong liquidity base. For the reconciliation of items that impacted results and non-GAAP financial measures, please refer to Exhibit 1 to 5 in this morning's earnings press release. I will now open the call for questions, and Selwyn would then provide some closing remarks.

Questions & Answers:

Operator

[Operator instructions] Your first question comes from the line of Scott Stember with C.L. King. Your line is now open. 

Scott Stember -- C.L. King & Associates -- Analyst

Hi. Good afternoon, guys, and thanks for taking my questions. 

Selwyn Joffe -- Chairman, President, and Chief Executive Officer

Hey, Scott.

David Lee -- Chief Financial Officer

Hi, Scott.

Scott Stember -- C.L. King & Associates -- Analyst

Yeah, coming out of the third quarter, there was a fair amount -- I think it was like $17 million worth of sales that kind of got caught up because some of the supply chain is [Audio gap] 

Selwyn Joffe -- Chairman, President, and Chief Executive Officer

Scott, you faded out. I'm not sure if you're on. 

Scott Stember -- C.L. King & Associates -- Analyst

Q4 into Q1.

Selwyn Joffe -- Chairman, President, and Chief Executive Officer

Yeah, you faded out, but I'll guess your question, and I'll restate it. Are you asking about the deferral of the revenue that we talked about? That deferral continues on. 

Scott Stember -- C.L. King & Associates -- Analyst

OK. 

Selwyn Joffe -- Chairman, President, and Chief Executive Officer

That deferral continues on. I mean, there are supply chain challenges in the industry and there are significant deferrals. So the strong revenue is despite the fact there is still continued deferral. 

Scott Stember -- C.L. King & Associates -- Analyst

Got it. Can you tell us how much is being deferred or, at this point, it's going to be an ongoing thing? 

Selwyn Joffe -- Chairman, President, and Chief Executive Officer

It's an ongoing thing. It's going to be an ongoing thing right now, Scott. It's unpredictable. It's hard to measure because some get caught up and then additional deferrals come in.

So I think it's just a fundamental right now in the industry. I think the whole industry is experiencing this. But the industry needs these funds, and when a supply chain catches up, we should catch that up.

Scott Stember -- C.L. King & Associates -- Analyst

Got it. And just in general, I know that we can all look at the -- your customers and look at their retail sales orders there. Comparable sales numbers, they just continue to improve. Can you talk about what you're seeing, do-it-for-me versus do-it-yourself? I know that miles driven have been definitely improving continually.

Just what are you seeing, the strengths -- the pockets of strength that you're seeing right now?

Selwyn Joffe -- Chairman, President, and Chief Executive Officer

Yeah, so, you know, it started out as a big recovery in the DIY and a boom in the DIY. But we're now seeing it at the DIFM as well. So, you know, you've got to, you know, just a lot more people relying on their vehicles, used cars that were in parking lots that are now being driven, and the professional stores are busy. Just come off a couple of professional installer conferences, and they're doing very well.

Professional installers are happy. So it's both right now.

Scott Stember -- C.L. King & Associates -- Analyst

Got it. And just lastly before I jump back in the queue, I appreciate that a lot of volatility right now, hence the no guidance. But is there anything you can give us just as far as high-level expectations, well, you know, expectations of growth in 2022 just from a sales perspective margins, earnings, just some high-level data that we can kind of on with the trajectory of the business?

Selwyn Joffe -- Chairman, President, and Chief Executive Officer

We expect our margins to be accretive as the year progresses based on the things we mentioned in call, price increases, and hopefully, we'll have more stability in the supply chain. The supply chain is very unpredictable as you know. There are ships stuck in ports. Product is not being manufactured.

There's reoutbreaks of COVID in Southeast Asia. So very, you know, significant unpredictive demand is predictably very strong. The question is is the supply going to be strong enough to keep up with the demand. We're in a great position if we can get enough inventory that meet -- to meet our demand, we're in a great position.

But we'll have to see how it unfolds over the next few months.

Scott Stember -- C.L. King & Associates -- Analyst

Got it. Thanks a lot.

Operator

Your next question comes from the -- pardon me. Your next question comes from the line of Brian Nagel with Oppenheimer. Your line is now open. 

Brian Nagel -- Oppenheimer & Co. Inc. -- Analyst

Hi, good afternoon. Good morning, I guess. Nice quarter. Congratulations. 

Selwyn Joffe -- Chairman, President, and Chief Executive Officer

Thank you. 

David Lee -- Chief Financial Officer

Thank you. 

Brian Nagel -- Oppenheimer & Co. Inc. -- Analyst

My first question, I think it's a bit of a follow up to the -- to prior question, but I'm asking is I guess more from a color standpoint. But as the economy, you know, market by market has been opening now, and we're heading toward this hopefully post-COVID world. What are you seeing as far as demand trends? And I -- what I'm getting at is from your business, obviously, you know, we do see the very strong results at your retail partners. But what do you see in that it could basically help us think about the sustainability of this demand, particularly relative to like pre-pandemic levels?

Selwyn Joffe -- Chairman, President, and Chief Executive Officer

Yeah, you know, what's interesting is, again, without announcing specific customers, I had a cross-section of conversations with various suppliers for the professional installer market. And, you know, some of them were quoting 70% gains over the prior, you know, pre-COVID revenue levels. Some of it's hard to explain to be honest with you. But I think we've been talking about for years the statistics where the average, you know, cost or aging.

This morning's newspapers were covered everywhere with, you know, average age went from 11.9 to 12.1 in the last year and a half. Number of cars up on the road, you know, new car sales a little slower than they have been. But I think a lot of these used cars are getting back on the road. So cars that were, you know, perhaps in the car population that weren't being driven.

So we see a resurrection of miles. You know, it looks like the fundamentals are really strong, whether the sustainability of the -- I mean, current demand levels are a record. Is that sustainable? I, you know, I don't know that, but I don't anticipate it being softer than, you know, than in pre-COVID levels. I do see more dependence on the vehicle and even -- and just people spending more money on their cars across the board. 

Brian Nagel -- Oppenheimer & Co. Inc. -- Analyst

Yeah, it's very helpful. 

Selwyn Joffe -- Chairman, President, and Chief Executive Officer

Hopefully, that just gives you color, Brian. I don't -- you know, I can't give you any stats because I don't -- I haven't seen any out there. But the color, wherever I turn and whatever conversation I had in the marketplace, and I'm talking much more granularly with the, you know, with the consumer sort of statistics, just people -- the demand is up. 

Brian Nagel -- Oppenheimer & Co. Inc. -- Analyst

I get it. That's very helpful. The second question I have is also bigger picture in nature. We've talked a lot about, you know, the push on the part of your company to EBIT, talking available market today about it.

At what point does that become a real needle mover for MPAA, this EBIT push? 

Selwyn Joffe -- Chairman, President, and Chief Executive Officer

I tell you, I expect 100% growth in the business this year. Again, it's not in -- it doesn't move the needle. But, you know, we've got some exciting things that there -- in the works. We haven't announced them publicly, so I'll stay away from any specifics.

But we think that there's an opportunity to keep that growth rate going. It's a little more unpredictable because two reasons. It's -- number one, on a global basis, it's a brand-new market that's evolving. And number two, it's brand new for us.

So we're a little bit in, you know, learning mode, you know, look and listen mode. But indications for what we have are very positive. 

Brian Nagel -- Oppenheimer & Co. Inc. -- Analyst

Got it. And then just one final question for me just on -- I didn't catch if you talk about this in your prepared comments, but I was looking at consumer probably. I mean, inflation is a massive topic right now. What are you seeing in terms of your business as far as inflation, either from your cost perspective or, you know, what you're -- or your -- or potentially pricing changes you've made to your customers and any reaction to that?

Selwyn Joffe -- Chairman, President, and Chief Executive Officer

Yeah, I mean, I will tell you, our margins are lower than [Audio gap] a little bit this quarter. Even, you know, when you look at the various considerations that affected it. And so we've implemented price increases. And we're one of everyone that has implemented price increases.

Costs are up. And it's my expectation, there'll be some -- you know, the consumer is going to have to pay a little more for their parts. I mean, it's real cost. And it's real inflation, to be honest.

And there is no choice. I mean, the industry is taking -- has taken price increases. And I think we just got to keep our eye on the producer price index and see how that evolves. But for now, the outlook is fairly inflationary and certainly, as a company, you know, we intend to keep, you know, to keep our eye on our pricing.

Brian Nagel -- Oppenheimer & Co. Inc. -- Analyst

Well, thank you, and congrats again.

Selwyn Joffe -- Chairman, President, and Chief Executive Officer

Thanks so much. Appreciate the questions.

David Lee -- Chief Financial Officer

Thank you.

Operator

Your next question comes from the line of Sarkis Sherbetchyan with B. Reilly. Your line is now open.

Sarkis Sherbetchyan -- B. Riley FBR -- Analyst

Hey, good afternoon and thank you for taking my questions here. Selwyn, it looks like you're building working capital. And, you know, clearly, it's going to look like a drag on operating cash flow. So -- and you're highlighting you have inventory increases for the anticipated business growth in this fiscal year.

And I appreciate, you know, kind of not providing guidance here in the near term, and you'll reevaluate that. But help us understand the magnitude of inventory growth expected and also linked to that, if you expect the business to generate free cash flow this fiscal year?

Selwyn Joffe -- Chairman, President, and Chief Executive Officer

Yeah. Well, I'll start with the free cash flow. We definitely expect free cash flow this year. It will come a little later in the year.

As you can see, we invested fairly significantly in inventory in the quarter. Our receivables are growing, you know, because of the increased sales. We expect bigger demand for the year. I mean, Sarkis, I'd love to give guidance.

I'm just concerned of the unpredictability of when this is all going to happen and how this is going to unfold. I mean we've got, I would say, you know, over 1 million units tied up between -- stuck in ports, whether it be in the United States ports or whether it be in the Asian ports. And, you know, accidents that have happened in ports. I mean, we have closures in Malaysia right now, mandatory TUI closure.

So it's very unpredictable. But what is predictable is that the demand is there. What's unpredictable is how fast we can meet that demand. Having said that, you know, we are meeting most of it, and we're doing well.

But, you know, we could be -- we have strong numbers, but these numbers could be even much stronger, I mean, based on demand if we could meet all the demand. So I think inventory should plateau barring, you know, barring some additional big wins, which we always look for. And I'm, you know, I'm confident we'll generate positive cash flow for the year, you know. So hopefully, that gives you color.

I'm not sure I was very specific, but -- 

Sarkis Sherbetchyan -- B. Riley FBR -- Analyst

Yeah. No, that's helpful. I think another interesting point is, you know, you said inventory should plateau barring some big wins. I guess, can you maybe talk about which categories you're maybe gunning to win some more business.

You know, I think your traditional kind of core business that we're aware of, right, probably more of a market share story, but from the brake calipers and related products and certainly the diagnostics, it seems like there could be a little bit more of an open and larger opportunity. I guess, you know, any comments on magnitude of what you're pursuing there? 

Selwyn Joffe -- Chairman, President, and Chief Executive Officer

Yeah. I mean I would say that, first of all, all the categories have big opportunities for growth. I think brake calipers, you know, we're probably looking at 70%, 80% growth for this year. So, a lot going on there.

We're busy ramping up. You know, there's inefficiencies in the ramp-up in the beginning, but lots of opportunity there and lots in all the other product lines. So, you know, it's a tough market out there, as always, hard to predict, but we feel, again, pretty good about demand. We just, again, one more time, we just got to make sure we can get the supply.

And so whatever we can get our hands on in inventory, we're getting our hands on. You know, we may -- if we're going to make a mistake now, we're going to make a mistake on having more inventory than less just because of the supply. And I don't know what's going to happen, you know, as the -- you know, there has -- there seems to be a resurgence of the COVID issues in Asian countries. And certainly, India, Malaysia, Thailand, Taiwan, certain cities in China.

I mean, that, you know, all sort of having some type of resurgence. But we've got our eye on it closely. And, you know, I expect it to be a positive year still, but giving guidance a little difficult right now.

Sarkis Sherbetchyan -- B. Riley FBR -- Analyst

OK. No worries. I'll hop back in the queue. Thank you.

Selwyn Joffe -- Chairman, President, and Chief Executive Officer

Thank you.

David Lee -- Chief Financial Officer

Thank you.

Operator

Your next question comes from Matthew Koranda with ROTH Capital. Your line is now open. 

Mike Zabran -- ROTH Capital Partners -- Analyst

Hey, guys. This is Mike Zabran on for Matt Koranda. Thanks for taking my question.

Selwyn Joffe -- Chairman, President, and Chief Executive Officer

Hey.

David Lee -- Chief Financial Officer

Hi.

Mike Zabran -- ROTH Capital Partners -- Analyst

First, could you guys provide some color on the revenue buildup for the quarter? And maybe talk about the momentum you're seeing in the rotating electrical category specifically?

David Lee -- Chief Financial Officer

So I can start out with the allocation of the sales by product line. This will all be available in the 10-K filed later today. For the fourth quarter, about 67% was rotating electrical, wheel hubs was about 19%. Regulated products was 11%, and other products was 3%. 

Mike Zabran -- ROTH Capital Partners -- Analyst

OK. Great. And in the fourth quarter, we saw new product start-up costs at $5.2 million, assuming that the Mexico move is mostly complete, should we expect this line item to move to zero? And if so, how soon?

David Lee -- Chief Financial Officer

Good question. So as I prepared in the -- as I said in the prepared remarks, in this new fiscal year, they're going to be diminishing significantly. So it will definitely go down to zero a little bit later in the fiscal year. 

Mike Zabran -- ROTH Capital Partners -- Analyst

Great. That's all. Thanks, guys.

David Lee -- Chief Financial Officer

Thank you.

Selwyn Joffe -- Chairman, President, and Chief Executive Officer

Thank you.

Operator

[Operator instructions] Your next question comes from the line of Matt Dhane with Tieton Capital Management. Your line is now open.

Matt Dhane -- Tieton Capital Management -- Analyst

Great. Thank you. That's Tieton Capital Management. So I wanted to ask, I know you just highlighted that you expect brake calipers to grow at 60% to 70% rate this year.

And just wanted to take a step back and ask, if we were to look at the biggest dollar revenue growth drivers as you look at what you expect here this fiscal year, what product lines or offerings do you expect to be the biggest dollar driver in revenue growth?

Selwyn Joffe -- Chairman, President, and Chief Executive Officer

Again, it's going to be hard to predict for the year. But we certainly -- again, I mentioned the brake calipers, I mentioned 100% growth in our EV business, and we expect solid growth in the other categories. 

Matt Dhane -- Tieton Capital Management -- Analyst

Is there any category that you're not expecting growth in at this point in time, Selwyn?

Selwyn Joffe -- Chairman, President, and Chief Executive Officer

No. 

Matt Dhane -- Tieton Capital Management -- Analyst

OK. No, that's helpful. Thank you.

Operator

And we have no further question at this time. Presenters, please continue.

Selwyn Joffe -- Chairman, President, and Chief Executive Officer

Great. Well, I appreciate everybody's interest. I wanted to thank all our team members, firstly, for their ongoing commitment and customer-centric focus on incredible service during these challenging times. Their health and safety are our top priority, and I'm excited about the number of people that are being vaccinated, and especially as we move into some of the third world countries that we're in.

We remain extremely vigilant to protect our global team from this horrible virus, and we're working diligently to get even more of our employees and their family members vaccinated. In fact, this Friday, June 18, we'll be hosting a Pfizer mobile vaccine clinic, which is open to our employees, neighbors, and we encourage everybody to attend. For the most part, our corporate team is continuing to work remotely, though we remain committed to gradually and safely returning our team back to the office as conditions permit. As a result of everyone's contributions, our operations have continued largely uninterrupted, and I'm extremely, extremely proud of our company.

In summary, our investments are bearing fruit. We have reached important inflection points with strong positive cash flow, solid earnings performance, debt reduction, and meaningful opportunities to enhance shareholder value in a dynamic $130 billion automotive aftermarket industry. And the emerging electric vehicle industry. We are proud of our more than 50-year history in the aftermarket industry and are excited about our emerging presence in the electric vehicle space.

And all of us are committed to our vision of being the global leader for parts and solutions that move our world today and tomorrow. We appreciate your continued support, and thank you again for joining us on the call. We look forward to speaking with you when we host our fiscal 2022 first-quarter conference call in August and at investor conferences and hopefully in person sometime in the future. Thank you. 

Operator

[Operator signoff]

Duration: 39 minutes

Call participants:

Gary Maier -- Investor Relations

Selwyn Joffe -- Chairman, President, and Chief Executive Officer

David Lee -- Chief Financial Officer

Scott Stember -- C.L. King & Associates -- Analyst

Brian Nagel -- Oppenheimer & Co. Inc. -- Analyst

Sarkis Sherbetchyan -- B. Riley FBR -- Analyst

Mike Zabran -- ROTH Capital Partners -- Analyst

Matt Dhane -- Tieton Capital Management -- Analyst

More MPAA analysis

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