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Motorcar Parts Of America (MPAA)
NASDAQ:MPAA
US Market
MPAA
Motorcar Parts Of America
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Motorcar Parts Of America (MPAA) Risk Analysis

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Public companies are required to disclose risks that can affect the business and impact the stock. These disclosures are known as “Risk Factors”. Companies disclose these risks in their yearly (Form 10-K), quarterly earnings (Form 10-Q), or “foreign private issuer” reports (Form 20-F). Risk factors show the challenges a company faces. Investors can consider the worst-case scenarios before making an investment. TipRanks’ Risk Analysis categorizes risks based on proprietary classification algorithms and machine learning.

Motorcar Parts Of America disclosed 31 risk factors in its most recent earnings report. Motorcar Parts Of America reported the most risks in the “Macro & Political” category.

Risk Overview Q1, 2026

Risk Distribution
31Risks
26% Macro & Political
23% Production
19% Finance & Corporate
13% Ability to Sell
10% Tech & Innovation
10% Legal & Regulatory
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
This chart displays the stock's most recent risk distribution according to category. TipRanks has identified 6 major categories: Finance & corporate, legal & regulatory, macro & political, production, tech & innovation, and ability to sell.

Risk Change Over Time

2022
Q4
S&P500 Average
Sector Average
Risks removed
Risks added
Risks changed
Motorcar Parts Of America Risk Factors
New Risk (0)
Risk Changed (0)
Risk Removed (0)
No changes from previous report
The chart shows the number of risks a company has disclosed. You can compare this to the sector average or S&P 500 average.

The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.

Risk Highlights Q1, 2026

Main Risk Category
Macro & Political
With 8 Risks
Macro & Political
With 8 Risks
Number of Disclosed Risks
31
+2
From last report
S&P 500 Average: 31
31
+2
From last report
S&P 500 Average: 31
Recent Changes
4Risks added
2Risks removed
1Risks changed
Since Mar 2026
4Risks added
2Risks removed
1Risks changed
Since Mar 2026
Number of Risk Changed
1
+1
From last report
S&P 500 Average: 0
1
+1
From last report
S&P 500 Average: 0
See the risk highlights of Motorcar Parts Of America in the last period.

Risk Word Cloud

The most common phrases about risk factors from the most recent report. Larger texts indicate more widely used phrases.

Risk Factors Full Breakdown - Total Risks 31

Macro & Political
Total Risks: 8/31 (26%)Above Sector Average
Economy & Political Environment4 | 12.9%
Economy & Political Environment - Risk 1
Changed
Developments in global and local economic, political, and social conditions, such as international trade disputes, disruptions from rapid changes in trade policy and new or increased tariffs, a foreign or domestic debt crisis, currency volatility, natural disasters, war, such as the war in Ukraine and the conflicts in Iran, Israel, Gaza and the surrounding areas, epidemics and pandemics, the fear of spread of contagious diseases and civil unrest, may have a material impact on our results of operations and financial condition, and the continuation of or worsening of such conditions could have a similar or worse impact.
Geopolitical tensions in the Middle East, including direct or indirect conflict involving Iran, have had and could continue to have significant global economic and operational impacts. Such conflicts may disrupt global trade routes, energy supplies, and financial markets, and may lead to increased volatility in fuel prices, transportation costs, and availability and pricing of key materials. In particular, disruptions in critical maritime shipping routes, including those in or near the Strait of Hormuz or other strategic chokepoints, could significantly delay or increase the cost of transporting goods and raw materials. Additionally, such conflicts may result in the imposition of sanctions, export controls, or other trade restrictions that could affect our ability to source components or conduct business in certain regions. These developments could materially disrupt our supply chain, increase our operating costs, reduce customer demand, and adversely impact our business, results of operations, and financial condition. A variety of economic, political, and social conditions have led to adverse impacts on the U.S. and global economies and created uncertainty regarding the potential effects of such conditions on our employees, supply chains, operations, and customer demand including international trade disputes, disruptions from rapid changes in trade policy and new or increased tariffs, a foreign or domestic debt crisis, currency volatility, natural disasters, war, epidemics and pandemics, the fear of spread of contagious diseases and civil unrest. Certain of these conditions may impact our operations and the operations of our customers, suppliers, and vendors in a number of ways, including but not limited to, the following: - significantly increased costs and uncertainty in future costs due to higher tariff rates charged on components and finished goods by the U.S. and by other countries, and uncertainty regarding future tariff rates due to rapidly evolving trade policy in the U.S. and the potential for retaliatory tariffs charged by other countries;- 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 from some countries or areas;- 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;- 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.
Economy & Political Environment - Risk 2
Unfavorable economic conditions may adversely affect our business.
Adverse changes in economic conditions, including inflation, slower economic growth and the potential for a recession, increased fuel prices, rapid changes in trade policy, new or increased tariffs, including retaliatory tariffs, global trade disruptions, unemployment levels, decreased availability of consumer credit, taxation or instability in the financial markets or credit markets may either lower demand for our products or increase our operational costs, or both. In addition, rapidly evolving federal, state and local government policies, the results of elections, and other changes in the political landscape could have similar effects, and responding to such changes in policy may divert the attention of senior management from our operations. Such conditions may also have a material impact on our customers, suppliers and other parties with whom we do business. Our revenue will be adversely affected if demand for our products declines, including if we are forced to make our products more expensive for customers as a result of increasing costs, including regulatory expenses such as tariffs, and our customers don't agree with these increased costs. The impact of unfavorable economic conditions may also impair the ability of our customers to pay for products they have purchased. As a result, reserves for doubtful accounts and write-offs of accounts receivables may increase, and delay or failure to collect a significant portion of amounts due on those receivables could have a material adverse effect upon our business, results of operations, and financial condition. In addition, we also get pressure from our suppliers to pay them faster and from our customers to pay us slower, which impacts our cash flows.
Economy & Political Environment - Risk 3
Weakness in conditions in the global credit markets and macroeconomic factors, including interest rates, could adversely affect our financial condition and results of operations.
The banking industry and global credit markets also experience difficulties from time to time, and issues involving our lenders could impact our deposits, the availability, terms and cost of borrowings or our ability to refinance our debt. Any weakness in the credit markets could result in significant constraints on liquidity and availability of borrowing terms from lenders and accounts payable terms with vendors. These issues could also result in more stringent lending standards and terms and higher interest rates. In addition, we are exposed to changes in interest rates primarily as a result of our borrowing and receivable discount programs, which have interest costs that vary with interest rate movements. Any limitations on our ability to fund our operations could have a material adverse effect on our business, financial condition and ability to grow.
Economy & Political Environment - Risk 4
Our offshore remanufacturing and logistic activities expose us to increased political and economic risks and place a greater burden on management to achieve quality standards.
Our international operations, especially our operations in Mexico, increase our exposure to political, criminal or economic instability in the host countries and to currency fluctuations. Risks are inherent in international operations, including: - 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;- uncertainty in laws and regulations relating to export and import restrictions;- exposure to government actions;- increased required employment related costs;- labor union activities, and - exposure to local political or social unrest including resultant acts of war, terrorism or similar events. These and other factors may have a material adverse effect on our international activities and on our business, results of operations and financial condition. Our overall success as a business depends substantially upon our ability to manage our foreign operations. We may not continue to succeed in developing and implementing policies and strategies that are effective in each location where we do business, and failure to do so could materially and adversely impact our business, results of operations, and financial condition.
Natural and Human Disruptions1 | 3.2%
Natural and Human Disruptions - Risk 1
Natural disasters or other disruptions in our business in California, Baja California, Mexico, and Asia could increase our operating expenses or cause us to lose revenues.
A substantial portion of our operations are located in Southern California, Baja California, Mexico, and Asia, including our headquarters, remanufacturing and warehouse facilities. Any natural disaster, such as an earthquake, or other damage to our facilities from weather, fire or other events could cause us to lose inventory, delay delivery of orders to customers, incur additional repair-related expenses, disrupt our operations or otherwise harm our business. These events could also disrupt our information systems, which would harm our ability to manage our operations worldwide and compile and report financial information. As a result, we could incur additional expenses or liabilities or lose revenues, which could exceed any insurance coverage and would adversely affect our financial condition and results of operations.
Capital Markets3 | 9.7%
Capital Markets - Risk 1
Unfavorable currency exchange rate fluctuations could adversely affect us.
We are exposed to market risk from material movements in foreign exchange rates between the U.S. dollar and the currencies of the foreign countries in which we operate. In fiscal 2026, approximately 29% of our total expenses were in currencies other than the U.S. dollar. As a result of our extensive operations in Mexico, our primary risk relates to changes in the rates between the U.S. dollar and the Mexican peso. To mitigate this currency risk, we enter into forward foreign exchange contracts to exchange U.S. dollars for Mexican pesos. We also enter into forward foreign exchange contracts to exchange U.S. dollars for Chinese yuan in order to mitigate risk related to our purchases and payments to our Chinese vendors. The extent to which we use forward foreign exchange contracts is periodically reviewed in light of our estimate of market conditions and the terms and length of anticipated requirements. The use of derivative financial instruments allows us to reduce our exposure to the risk that the eventual net cash outflow resulting from funding the expenses of the foreign operations will be materially affected by changes in the exchange rates. We do not engage in currency speculation or hold or issue financial instruments for trading purposes. These contracts generally expire in a year or less. Any change in the fair value of foreign exchange contracts is accounted for as an increase or decrease to foreign exchange impact of lease liabilities and forward contracts in the consolidated statements of operations. We recorded a non-cash gain of $2,515,000, and non-cash losses of $4,179,000, and $1,373,000, due to the change in the fair value of the forward foreign currency exchange contracts during fiscal 2026, 2025, and 2024, respectively. In addition, we recorded a gain of $6,409,000, a loss of $11,713,000, and a gain of $5,187,000, in connection with the remeasurement of foreign currency-denominated lease liabilities during fiscal 2026, 2025, and 2024, respectively.
Capital Markets - Risk 2
Changes in trade policy and other factors beyond our control could materially adversely affect our business.
We are affected by trade policy, including global tariffs. In December 2019, the United States, Mexico and Canada signed the amended United States-Mexico-Canada Agreement (the "USMCA"). The U.S. government has indicated that it intends to negotiate changes to the USMCA in 2026 with the Mexican and Canadian governments. The effects of such negotiations and any changes to the USMCA may negatively impact our operations in Mexico and Canada and may significantly and materially increase our costs by increasing the cost of shipping products from our distribution center or remanufacturing facilities in Mexico and our subsidiaries in Canada. It remains difficult to predict what effect the USMCA or other trade agreements and organizations will have on our business. If the U.S. were to withdraw from or materially modify any other international trade agreements to which it is a party or if the U.S. imposes significant additional tariffs on imports from China or other restrictions, it could have a materially adverse impact on our business, results of operations, and financial condition.
Capital Markets - Risk 3
Tariffs imposed by the United States government could have a material adverse effect on our results of operations.
The U.S. government has placed increased tariffs on certain goods imported from China and other countries and may impose new tariffs on goods imported from China and other countries, including products that we import. In response, China and other countries have, and may again in the future, impose increased tariffs on a wide range of products imported from the U.S. and adjust the value of its currency. Further, the U.S. government has imposed new tariffs on additional countries, including Mexico and Canada from which we remanufacture and distribute products, and we have operations. While such tariffs on Mexico and Canada were paused in connection with an agreement to renegotiate the USMCA, similar tariffs could significantly increase the cost of the products that we import and may materially impact our cost of goods and business. If renegotiations related to existing or threatened tariffs are unsuccessful or additional tariffs or trade restrictions are implemented by the U.S. or other countries in connection with a global trade war, the resulting escalation of trade tensions could have a material adverse effect on world trade and the global economy. Even in the absence of further tariffs or trade restrictions, the related uncertainty and the market's fear of an economic slowdown could lead to a decrease in consumer spending, and we may experience lower net sales than expected. Reduced net sales may result in reduced operating cash flows if we are not able to appropriately manage inventory levels or reduce expenses. In addition, recent legal challenges to U.S. trade measures, including tariffs imposed under statutes such as the International Emergency Economic Powers Act ("IEEPA"), have introduced further uncertainty regarding the scope, duration and enforceability of such tariffs. In early 2026, the U.S. Supreme Court affirmed a lower court decision invalidating certain tariffs previously imposed under IEEPA, and subsequent executive actions have created additional uncertainty regarding the potential reinstatement, modification or replacement of such tariffs. These developments may result in shifting trade policies, including the possibility of retroactive adjustments, refund claims or new tariff regimes, which could impact the cost of imported components, the competitiveness of our products and our overall supply chain strategy. Ongoing or future litigation and regulatory actions may continue to create volatility in trade policy, making it difficult to predict the ultimate impact on our business, financial condition and results of operations.
Production
Total Risks: 7/31 (23%)Above Sector Average
Manufacturing2 | 6.5%
Manufacturing - Risk 1
Our financial results are affected by automotive parts failure rates that are outside of our control.
Our operating results are affected over the long term by automotive parts failure rates. These failure rates are impacted by a number of factors outside of our control, including the reliability and durability of vehicles, the installation of the part, the number of miles driven by consumers, and the average age of vehicles on the road. These trends could reduce the demand for our products and thus adversely affect our sales and profitability.
Manufacturing - Risk 2
If we do not respond appropriately, the evolution of the automotive industry could adversely affect our business.
Many leaders and consumers in the automotive industry are increasingly focused on the development of hybrid and electric vehicles and of advanced driver assistance technologies, with the goal of a commercially-viable, fully-automated driving experience. There has also been an increase in consumer preferences for mobility on demand services, such as car and ride sharing, as opposed to automobile ownership, which may result in a long-term reduction in the number of vehicles per capita. In addition, some industry participants are exploring transportation through alternatives to automobiles. These evolving areas have also attracted increased competition from entrants outside the traditional automotive industry. If we do not continue to innovate and develop, or acquire, new and compelling products that capitalize upon new technologies in response to consumer preferences, it could have a materially adverse impact on our business, results of operations, and financial condition. These changes may also reduce demand for our products for combustion engine vehicles.
Employment / Personnel1 | 3.2%
Employment / Personnel - Risk 1
Work stoppages, production shutdowns and similar events could significantly disrupt our business.
Because the automotive industry relies heavily on just-in-time delivery of components during the assembly and manufacture of vehicles, a work stoppage or production shutdown at one or more of our manufacturing and assembly facilities could have adverse effects on our business. Similarly, if one or more of our customers were to experience a work stoppage, that customer would likely halt or limit purchases of our products. We have had and could continue to have significant disruptions in the supply of several key components from Asia due to work stoppages, production shutdowns, government closures, and other supply chain issues at many of our suppliers, leading to an adverse effect on our financial results.
Supply Chain2 | 6.5%
Supply Chain - Risk 1
Interruptions or delays in obtaining component parts could impair our business and adversely affect our operating results.
In our remanufacturing processes, we obtain Used Cores, primarily through the core exchange programs with our customers, and component parts from third-party manufacturers. To supplement Used Cores received from our customers we purchase Used Cores from core brokers. Historically, the Used Core returned from customers together with purchases from core brokers have provided us with an adequate supply of Used Cores, however, increases or uncertainty in tariff rates and global trade disruptions may cause a significant disruption in the supply of Used Cores, which may cause our operating activities to be materially and adversely impacted. Additionally, increased Used Core acquisitions by existing or new competitors or other changes could further disrupt the supply of Used Cores and increase the significance of such impacts. In addition, a number of the other components used in the remanufacturing process are available from a very limited number of suppliers. We are, as a result, vulnerable to any disruption in component supply and often are forced to purchase new units to obtain particularly difficult-to-get cores, and any meaningful disruption in this supply from uncertainty in tariff rates and global trade disruptions or other factors would materially and adversely impact our operating results. The imposition of tariffs, or even the potential imposition of tariffs is likely to cause a significant disruption in our manufacturing process, depending on the level and breadth of such tariff.
Supply Chain - Risk 2
Our reliance on foreign suppliers for some of the automotive parts we sell to our customers or included in our products presents risks to our business.
A significant portion of automotive parts and components we use in our remanufacturing process are imported from suppliers located outside the U.S., including China and other countries in Asia. As a result, we are subject to various risks of doing business in foreign markets and importing products from abroad, such as the following, which we have recently experienced: - significant delays in the delivery of cargo due to port security and overcrowding considerations;- imposition of new and evolving duties, taxes, tariffs or other charges on imports;- financial or political instability in the countries in which our product is manufactured;- potential recalls or cancellations of orders for products that do not meet our quality standards;- disruption of imports by labor disputes or strikes and local business practices;- inability of our non-U.S. suppliers to obtain adequate credit or access liquidity to finance their operations; and - natural disasters, conflicts, disease epidemics and health related concerns, which could result in closed factories, reduced workforces, scarcity of raw materials and scrutiny or embargoing of goods. We also face the following risks related to doing business in foreign markets and importing products from abroad: - 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 foreign countries or 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; and - our ability to enforce agreements with our foreign suppliers. Any of the foregoing factors, or a combination of them, could increase the cost or reduce the supply of products available to us and materially and adversely impact our business, financial condition, results of operations or liquidity. In addition, because we depend on independent third parties to manufacture a significant portion of our brake-related products, and other purchased finished goods, we cannot be certain that we will not experience operational difficulties with such manufacturers, such as reductions in the availability of production capacity, errors in complying with merchandise specifications, insufficient quality controls and failure to meet production deadlines or increases in manufacturing costs.
Costs2 | 6.5%
Costs - Risk 1
An increase in the cost or a disruption in the flow of our imported products may significantly decrease our sales and profits.
Merchandise manufactured offshore represents a significant portion of our total product purchases. Disruptions in the shipping or cost of such merchandise recently have and may continue to or may more significantly decrease our sales and profits. In addition, if imported merchandise continues to become more expensive or less available due to increased tariff rates, trade disputes or other unfavorable impacts, the transition to alternative sources may not occur in time to meet our demands. Merchandise from alternative sources may also be of lesser quality and more expensive than those we currently import. Risks associated with our reliance on imported merchandise include disruptions in shipping and importation or increase in the costs of imported products. For example, common risks include: - increased sensitivity to changes in tariff rates;- 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. As well as the following common risks, which we may experience in the future: - 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. Products manufactured overseas and imported into the U.S. and other countries are subject to import restrictions and duties, which could delay their delivery or increase their cost. We are regularly in contact with customs officials from various countries and disagree from time to time on the amounts due. In addition, government agencies and self-regulatory organizations have the ability to conduct periodic examinations of and administrative proceedings regarding our business.
Costs - Risk 2
Increases in the market prices of key component raw materials could increase the cost of our products and negatively impact our profitability.
In addition to the continuous pressure on pricing which we have experienced from our largest customers, we also may not be able to recoup the higher costs of our products due to changes in the prices of raw materials, including, but not limited to, aluminum, copper, steel, and cardboard. We recover a substantial portion of our raw materials from Used Cores returned to us by our customers through the core exchange programs. To supplement Used Cores received from our customers, we purchase Used Cores from core brokers. Although this is not a primary source of Used Cores, it is a critical source for meeting our raw material demands. The higher prices of these Used Cores that we purchase could impact the cost of raw materials. Raw material price increases have had an impact on our product costs and profitability and continued increases will similarly adversely affect us.
Finance & Corporate
Total Risks: 6/31 (19%)Below Sector Average
Share Price & Shareholder Rights1 | 3.2%
Share Price & Shareholder Rights - Risk 1
Our stock price is volatile and could decline substantially.
Our stock price has fluctuated in the past and may decline substantially in the future as a result of developments in our business, the volatile nature of the stock market, and other factors beyond our control. Our stock price and the stock market generally has, from time to time, experienced extreme price and volume fluctuations. Many factors may cause the market price for our common stock to decline, including: (i) our operating results failing to meet the expectations of securities analysts or investors in any period, (ii) downward revisions in securities analysts' estimates, (iii) market perceptions concerning our future earnings prospects, (iv) public or private sales of a substantial number of shares of our common stock, (v) adverse changes in general market conditions or economic trends, and (vi) market shocks generally or in our industry. Our stock price is also affected by volume, which impacts the ability of investors to buy or sell our stock.
Accounting & Financial Operations2 | 6.5%
Accounting & Financial Operations - Risk 1
Our failure to maintain effective internal control over financial reporting may affect our ability to accurately report our financial results and could materially and adversely affect the market price of our common stock.
Under the Sarbanes-Oxley Act, we must maintain effective disclosure controls and procedures and internal control over financial reporting, which requires significant resources and management oversight. Effective internal and disclosure controls are necessary for us to provide reliable financial reports and effectively prevent fraud and to operate successfully as a public company. If we cannot provide reliable financial reports or prevent fraud, our reputation and operating results would be harmed. We cannot assure you that our internal control over financial reporting will be effective in the future or that other material weakness will not be discovered in the future. Any failure to maintain effective controls or timely effect any necessary improvement of our internal and disclosure controls could harm operating results or cause us to fail to meet our reporting obligations, which could affect our ability to remain listed with the Nasdaq Global Select Market or subject us to adverse regulatory consequences. Ineffective internal and disclosure controls could also cause investors to lose confidence in our reported financial information, which would likely have a negative effect on the trading price of our stock.
Accounting & Financial Operations - Risk 2
Our operating results may continue to fluctuate significantly.
We have experienced significant variations in our annual and quarterly results of operations. These fluctuations have resulted from many factors, including shifts in the demand and pricing for our products, general economic conditions, including changes in prevailing interest rates, wage inflation and multiple minimum wage increases in Mexico in the past and likely in the future, and the introduction of new products. Our gross profit percentage fluctuates due to numerous factors, some of which are outside of our control. These factors include the timing and level of marketing allowances provided to our customers, actual sales during the relevant period, pricing strategies, the mix of products sold during a reporting period, and general market and competitive conditions. We also incur allowances, accruals, charges and other expenses that differ from period to period based on changes in our business, which causes our operating income to fluctuate.
Debt & Financing2 | 6.5%
Debt & Financing - Risk 1
Our debt can impact our operating results and cash flows and limit our operations.
As of March 31, 2026, we had $94,668,000 of debt outstanding under our credit facility, which is at variable interest rates. Fluctuations in those rates could impact our operating results and cash flows. The weighted average interest on our debt was 6.79% at March 31, 2026 compared to 7.46% at March 31, 2025. In addition, our credit facility has restrictions that could limit aspects of our operations. In addition, on March 31, 2023, we issued and sold $32,000,000 in aggregate principal amount of 10.0% convertible notes due in 2029 (the "Convertible Notes"). The issuance of shares of our common stock upon conversion of the Convertible Notes may dilute the ownership interests of existing stockholders and reduce our per share results of operations. Any sales in the public market of our common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock. We may also incur additional debt in the future, which could further increase our leverage, reduce our cash flow or further restrict our business.
Debt & Financing - Risk 2
Our lenders may not waive future defaults under our credit agreements.
Our credit agreement with our lenders contains certain financial and other covenants. If we fail to meet any of these covenants in the future, there is no assurance that our lenders will waive any such defaults or that we will otherwise be able to cure them. If we obtained a waiver, it may impose significant costs or covenants on us. In addition, as the capital markets get more volatile, it may become more difficult to obtain such waivers or refinance our debt.
Corporate Activity and Growth1 | 3.2%
Corporate Activity and Growth - Risk 1
We have made and may continue to make strategic acquisitions of other companies and businesses, and these acquisitions have and may continue to introduce significant risks and uncertainties, including risks related to integrating the acquired businesses and achieving benefits from the acquisitions.
In order to position ourselves to take advantage of growth opportunities, we have made, and may continue to make, strategic acquisitions that involve significant risks and uncertainties. These risks and uncertainties include: - 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. We may also incur significant expenses to pursue and consummate acquisitions. Any of the foregoing, or a combination of them, could cause us to incur additional expenses and materially and adversely impact our business, financial condition, results of operations or liquidity.
Ability to Sell
Total Risks: 4/31 (13%)Below Sector Average
Competition3 | 9.7%
Competition - Risk 1
Added
Disruptions in the automotive aftermarket industry, including the financial distress or bankruptcy of significant competitors, suppliers, or customers, could adversely affect our business and operating results.
The automotive aftermarket industry has experienced, and may continue to experience, consolidation and financial distress among market participants, including manufacturers, distributors, and suppliers. The bankruptcy or restructuring of a significant industry participant, such as a major competitor, could result in substantial disruption to the market. Such disruptions may include aggressive pricing or liquidation of inventory by distressed competitors, changes in customer purchasing behavior, supply shortages, loss of key suppliers, or shifts in market share. In addition, we may experience increased pressure from customers seeking more favorable pricing or terms as a result of such disruptions, or may be required to assume additional operational or financial burdens in response to changes in the competitive landscape. These dynamics could negatively impact our sales, margins, supply chain stability, and overall financial performance. We cannot predict the timing or extent of such disruptions or their impact on our business.
Competition - Risk 2
Added
Increased competition from manufacturers in China and other low-cost regions, including those with advanced automated manufacturing capabilities, could adversely affect our business, results of operations, and financial condition.
We face increasing competition from overseas manufacturers, particularly those located in China and other regions with lower labor and production costs. Certain of these competitors are investing heavily in advanced automated manufacturing technologies, including robotics, artificial intelligence-driven production systems, and large-scale manufacturing infrastructure. These capabilities may allow such competitors to produce automotive aftermarket products at lower cost, with greater speed, scalability, and consistency than we are able to achieve. As a result, our competitors may be able to offer more competitive pricing, improved product availability, or enhanced product features, which could result in loss of market share, pressure on our margins, or reduced customer demand for our products. In addition, government support, subsidies, or favorable industrial policies in certain foreign jurisdictions may further enhance the competitive position of these manufacturers. If we are unable to effectively compete with these manufacturers, including by continuing to invest in automation, operational efficiencies, and technological innovation, our business, results of operations, and financial condition could be materially and adversely affected.
Competition - Risk 3
Failure to compete effectively could reduce our market share and significantly harm our financial performance.
Our industry is highly competitive, and our success depends on our ability to compete with suppliers of automotive aftermarket products, some of which may have substantially greater financial, marketing and other resources than we do. The automotive aftermarket industry is highly competitive, and our success depends on our ability to compete with domestic and international suppliers of automotive aftermarket products. Due to the diversity of our product offering, we compete with several large and medium-sized companies, including (i) Terrepower and DRiV for hard parts, (ii) Burke Porter and Langdi Measurement Control for test solutions and diagnostic equipment, and (iii) a large number of smaller regional and specialty companies. We also face competition from original equipment manufacturers, which, through their automotive dealerships, supply many of the same types of replacement parts we sell. In addition, other overseas competitors, particularly those located in Asia, are increasing their operations and are becoming a significant competitive force. Some of our competitors may have larger customer bases and significantly greater financial, technical and marketing resources than we do. In addition, some of our competitors may have a different manufacturing and distributing structure and footprint. These factors may allow our competitors to: - 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;- Absorb more regulatory, tax, and tariff costs than the Company; and - allocate more money and resources on marketing and promotion. Increased competition could put additional pressure on us to reduce prices or take other actions, which may have an adverse effect on our operating results. We may also lose significant customers or lines of business to competitors.
Demand1 | 3.2%
Demand - Risk 1
We rely on a few customers for a majority of our business, and the loss of any of these customers, significant changes in the prices, marketing allowances or other important terms provided to any of these customers, or adverse developments with respect to the financial condition of these customers, could harm our operating results.
Our net sales are concentrated among a small number of our customers. Sales to our three largest customers in the aggregate represented 85%, and sales to our largest customer represented 42% of our net sales during fiscal 2026. We are under ongoing pressure from our major customers to offer lower prices, extend payment terms, increase marketing and other allowances and other terms more favorable to these customers because our sales to these customers are concentrated, and provide the market in which we operate is very competitive. Customer demands have put continued pressure on our operating margins and profitability, resulted in periodic contract renegotiation to provide more favorable prices and terms to these customers and significantly increased our working capital needs. The loss of or a significant decline in sales to any of these customers could adversely affect our business, results of operations, and financial condition. In addition, customer concentration leaves us vulnerable to any adverse change in the financial condition of these customers. We regularly review our 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 amounts owed to us. We participate in trade accounts receivable discount programs with our major customers. If the creditworthiness of any of our major customers was downgraded, we could be adversely affected as we may be subjected to higher interest rates on the use of these discount programs or we could be forced to wait longer for payment. In certain cases, we have experienced higher interest rates due to changes in customer credit profiles, which have had an impact on the overall cost of these financing arrangements. Should our customers experience significant cash flow problems, our financial position and results of operations could be materially and adversely affected, and our losses could include the outstanding receivable balance, Used Cores expected to be returned by customers, and the value of the Remanufactured Cores held at customers' locations. We maintain an allowance for credit losses that, in our opinion, provides for an adequate reserve to cover losses that may be incurred. However, we cannot assure you that our losses will not exceed our reserve for the reasons and risks above. Changes in terms with, significant allowances for, and collections from these customers could affect our operating results and cash flows.
Tech & Innovation
Total Risks: 3/31 (10%)Below Sector Average
Cyber Security1 | 3.2%
Cyber Security - Risk 1
Cyber-attacks or other breaches of information technology security could adversely impact our business and operations.
Cybersecurity threats continue to evolve in sophistication and scale, and may be exacerbated by geopolitical tensions, including potential cyberwarfare conducted by nation-state actors or affiliated organizations. These attacks may target critical infrastructure, supply chains, financial systems, or corporate networks. As a result, we may face increased risk of cyber-attacks that could disrupt our operations, compromise sensitive data, impair our systems, or result in financial loss. Such attacks could include ransomware, data exfiltration, denial-of-service attacks, or other forms of malicious activity. Although we have implemented cybersecurity measures and risk management practices, these measures may not be sufficient to prevent or mitigate all potential threats. A successful cyber-attack could result in operational disruption, reputational harm, legal liability, and increased costs, any of which could materially and adversely affect our business, results of operations, and financial condition.
Technology2 | 6.5%
Technology - Risk 1
If our technology and telecommunications systems were to fail, or we were not able to successfully anticipate, invest in or adopt technological advances in our industry, it could have an adverse effect on our operations.
We rely on computer and telecommunications systems to communicate with our customers and vendors and manage our business. The temporary or permanent loss of our computer and telecommunications equipment and software systems, through casualty, operating malfunction, software virus or service provider failure, could disrupt our operations. In addition, our future growth may require additional investment in our systems to keep up with technological advances in our industry. If we are not able to invest in or adopt changes to our systems, or such upgrades take longer or cost more than anticipated, our business, financial condition and operating results may be adversely affected.
Technology - Risk 2
Added
Our failure to effectively adopt and integrate artificial intelligence and other emerging technologies into our operations and products could adversely affect our competitiveness and business performance.
While we currently utilize artificial intelligence ("AI") technologies in certain aspects of our business, the pace of technological advancement in AI and related fields is rapid and may significantly impact the automotive aftermarket industry. Competitors that successfully integrate AI into manufacturing, supply chain management, pricing, forecasting, customer service, and product development may achieve meaningful competitive advantages. If we are unable to timely and effectively adopt, implement, or scale AI and other advanced technologies, we may experience reduced operational efficiency, higher costs, slower innovation cycles, and diminished customer value propositions. This could result in loss of market share, reduced profitability, and decreased competitiveness relative to peers who more effectively leverage such technologies. Additionally, the costs associated with developing, acquiring, and implementing AI technologies may be significant, and we may not realize the expected benefits of such investments.
Legal & Regulatory
Total Risks: 3/31 (10%)Below Sector Average
Taxation & Government Incentives1 | 3.2%
Taxation & Government Incentives - Risk 1
Added
We could be subject to changes in tax rates, the adoption of new U.S. or international tax legislation, or exposure to additional tax liabilities.
Our effective income tax rate depends on many factors, including changes in tax laws or treaties and their interpretation, accounting guidance, changes in the valuation of our deferred tax assets and liabilities, and our ability to sustain tax positions on examination. We operate in multiple jurisdictions, which increases the complexity of our tax profile and may result in greater volatility in our effective tax rate. Adverse audit outcomes or increased compliance requirements could increase our tax obligations and adversely affect our results of operations. International tax reform initiatives, including the Organization for Economic Cooperation and Development's global minimum tax framework, have been enacted or proposed in certain jurisdictions in which we operate, and additional guidance continues to evolve. In addition, recent and future changes to U.S. tax legislation, including the provisions of the 2025 One Big Beautiful Bill Act, may affect our tax obligations. While the ultimate impact of these developments remains uncertain, they could increase our tax expense or effective tax rate in future periods.
Environmental / Social2 | 6.5%
Environmental / Social - Risk 1
Increased attention to environmental, social, and governance matters may impact our business, financial results, or stock price.
In recent years, investors and other stakeholders have often focused on corporate activities related to environmental, social, and governance ("ESG") matters in public discourse. A number of advocacy groups, both domestically and internationally, have campaigned for governmental and private action to promote change at public companies related to ESG matters, including through the investment and voting practices of investment advisers, public pension funds, universities, and other members of the investing community. As they evaluate investment decisions, many investors and customers, look not only at company disclosures but also to ESG rating systems that have been developed by third parties to allow ESG comparisons among companies. Although we participate in a number of these ratings systems, we do not participate in all such systems. The criteria used in these ratings systems may conflict and change frequently, and we cannot predict how these third parties will score us, nor can we have any assurance that they score us accurately or other companies accurately or that other companies have provided them with accurate data. We supplement our participation in ratings systems with published disclosures of our ESG activities, but some investors and other stakeholders may desire other disclosures that we do not provide. We also incur significant costs in complying with reporting obligations and could incur liability if a regulator or other third party disagrees with our statements. In addition, some of the domestic and foreign jurisdictions in which we operate could mandate additional ESG disclosure and impose additional requirements on us. For example, in October 2023, California passed the Climate Corporate Data Accountability Act ("SB-253"), which mandates the disclosure of greenhouse gas emissions, including Scope 1, Scope 2 and Scope 3 emissions; and the Climate-Related Financial Risk Act ("SB-261"), which mandates the disclosure of climate-related financial risks, and measures adopted to reduce and adapt to such risks. California has delayed formal rulemaking for SB-253 until the first quarter of 2026. As of the date of this Annual Report, SB-261 is subject to a court injunction on its implementation. We continue to monitor and review developments relating to SB-253 and SB-261. A failure to comply with investor or other stakeholder expectations and standards, which are evolving, or if we are perceived to not have responded appropriately to the growing concern for ESG issues, regardless of whether there is a legal requirement to do so, could also cause reputational harm to our business and could cause certain investors to be unwilling to invest in our stock, which could adversely impact our ability to raise capital and could have other material adverse effects on us.
Environmental / Social - Risk 2
Regulations related to conflict minerals could adversely impact our business.
The Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank") contains provisions to improve transparency and accountability concerning the supply of certain minerals, known as "conflict minerals", originating from the Democratic Republic of Congo ("DRC") and adjoining countries. These rules could adversely affect the sourcing, supply, and pricing of materials used in our products, as the number of suppliers who provide conflict-free minerals may be limited. We may also suffer reputational harm if we determine that certain of our products contain minerals not determined to be conflict-free or if we are unable to modify our products to avoid the use of such materials. We may also face challenges in satisfying customers who may require that our products be certified as containing conflict-free minerals. The products we manufacture or contract to manufacture contain small quantities of Tin and Gold. We manufacture or contract to manufacture one product with small quantities of Tantalum. For the reporting year ending December 31, 2025, we surveyed 245 smelters or refiners for these minerals that are, or could be, in our supply chain. Of these, 85% were validated as Compliant or Conformant as conflict-free, per publicly available information on the Conflict Free Sourcing Initiative website. We have not been able to ascertain the conflict-free status of the remaining smelters or refiners. Our strategy for managing risks associated with conflict minerals in products includes continuing to encourage our suppliers to engage in conflict-free sourcing and obtaining data from our suppliers that is more applicable to the products we purchase. We continue to monitor progress on industry efforts to ascertain whether some facilities that suppliers identified are actually smelters. We do not believe conflict minerals pose risk to our operations. We are a member of the Automobile Industry Action Group (AIAG) and support their efforts in the conflict minerals area.
See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.

FAQ

What are “Risk Factors”?
Risk factors are any situations or occurrences that could make investing in a company risky.
    The Securities and Exchange Commission (SEC) requires that publicly traded companies disclose their most significant risk factors. This is so that potential investors can consider any risks before they make an investment.
      They also offer companies protection, as a company can use risk factors as liability protection. This could happen if a company underperforms and investors take legal action as a result.
        It is worth noting that smaller companies, that is those with a public float of under $75 million on the last business day, do not have to include risk factors in their 10-K and 10-Q forms, although some may choose to do so.
          How do companies disclose their risk factors?
          Publicly traded companies initially disclose their risk factors to the SEC through their S-1 filings as part of the IPO process.
            Additionally, companies must provide a complete list of risk factors in their Annual Reports (Form 10-K) or (Form 20-F) for “foreign private issuers”.
              Quarterly Reports also include a section on risk factors (Form 10-Q) where companies are only required to update any changes since the previous report.
                According to the SEC, risk factors should be reported concisely, logically and in “plain English” so investors can understand them.
                  How can I use TipRanks risk factors in my stock research?
                  Use the Risk Factors tab to get data about the risk factors of any company in which you are considering investing.
                    You can easily see the most significant risks a company is facing. Additionally, you can find out which risk factors a company has added, removed or adjusted since its previous disclosure. You can also see how a company’s risk factors compare to others in its sector.
                      Without reading company reports or participating in conference calls, you would most likely not have access to this sort of information, which is usually not included in press releases or other public announcements.
                        A simplified analysis of risk factors is unique to TipRanks.
                          What are all the risk factor categories?
                          TipRanks has identified 6 major categories of risk factors and a number of subcategories for each. You can see how these categories are broken down in the list below.
                          1. Financial & Corporate
                          • Accounting & Financial Operations - risks related to accounting loss, value of intangible assets, financial statements, value of intangible assets, financial reporting, estimates, guidance, company profitability, dividends, fluctuating results.
                          • Share Price & Shareholder Rights – risks related to things that impact share prices and the rights of shareholders, including analyst ratings, major shareholder activity, trade volatility, liquidity of shares, anti-takeover provisions, international listing, dual listing.
                          • Debt & Financing – risks related to debt, funding, financing and interest rates, financial investments.
                          • Corporate Activity and Growth – risks related to restructuring, M&As, joint ventures, execution of corporate strategy, strategic alliances.
                          2. Legal & Regulatory
                          • Litigation and Legal Liabilities – risks related to litigation/ lawsuits against the company.
                          • Regulation – risks related to compliance, GDPR, and new legislation.
                          • Environmental / Social – risks related to environmental regulation and to data privacy.
                          • Taxation & Government Incentives – risks related to taxation and changes in government incentives.
                          3. Production
                          • Costs – risks related to costs of production including commodity prices, future contracts, inventory.
                          • Supply Chain – risks related to the company’s suppliers.
                          • Manufacturing – risks related to the company’s manufacturing process including product quality and product recalls.
                          • Human Capital – risks related to recruitment, training and retention of key employees, employee relationships & unions labor disputes, pension, and post retirement benefits, medical, health and welfare benefits, employee misconduct, employee litigation.
                          4. Technology & Innovation
                          • Innovation / R&D – risks related to innovation and new product development.
                          • Technology – risks related to the company’s reliance on technology.
                          • Cyber Security – risks related to securing the company’s digital assets and from cyber attacks.
                          • Trade Secrets & Patents – risks related to the company’s ability to protect its intellectual property and to infringement claims against the company as well as piracy and unlicensed copying.
                          5. Ability to Sell
                          • Demand – risks related to the demand of the company’s goods and services including seasonality, reliance on key customers.
                          • Competition – risks related to the company’s competition including substitutes.
                          • Sales & Marketing – risks related to sales, marketing, and distribution channels, pricing, and market penetration.
                          • Brand & Reputation – risks related to the company’s brand and reputation.
                          6. Macro & Political
                          • Economy & Political Environment – risks related to changes in economic and political conditions.
                          • Natural and Human Disruptions – risks related to catastrophes, floods, storms, terror, earthquakes, coronavirus pandemic/COVID-19.
                          • International Operations – risks related to the global nature of the company.
                          • Capital Markets – risks related to exchange rates and trade, cryptocurrency.