OREANDA-NEWS. Fenix Parts, Inc., a leading recycler and reseller of original equipment manufacturer (“OEM”) automotive products, today announced first quarter 2016 results.

Consolidated net revenues of Fenix Parts were $32.8 million for the first quarter of 2016 compared to $30.2 million in the fourth quarter of 2015 and $31.4 million on a combined pro forma basis in the first quarter of 2015. Sales of recycled OEM products were $28.8 million for the first quarter of 2016, up from $26.7 million for the fourth quarter of 2015 and $27.3 million in the first quarter of 2015, including sales contributed by Ocean County, Butler and Tri-City during both periods. Sales from other ancillary activities, which include the sale of commodities, were approximately $4.0 million in the first quarter of 2016 compared to $3.5 million in the fourth quarter of 2015 and $4.1 million in the first quarter of 2015. While commodity prices improved slightly during the first quarter of 2016 as compared to the fourth quarter of 2015, they are still substantially lower than the first quarter of 2015. Sales from the Company’s Canadian operations were $3.1 million in the first quarter of 2016 compared to $3.7 million for the fourth quarter of 2015 and $3.4 million in the first quarter of 2015. The first quarter 2016 reduction compared to each period was a result of the Company’s change in sourcing strategy, which limits its foreign exchange exposure to parts procured in the US and sold in Canada.

Reported Operating Loss for the first quarter of 2016 was $44.2 million. Reported Net Loss, after a $3.3 million benefit for income taxes, was $41.0 million. After factoring in net adjustments of $43.5 million during the period, Adjusted Operating Loss was $0.7 million for the first quarter of 2016. The adjustments included the following:
  • The amortization of the fair market value adjustment of acquired inventory was $0.9 million during the first quarter;
  • Depreciation and amortization expense was $1.5 million during the first quarter, including $0.3 million allocated to Cost of Goods Sold;
  • Share-based compensation attributable to equity awards was $1.3 million for the first quarter of 2016;
  • A reduction in the expected payout of contingent consideration was $2.5 million in the first quarter;
  • A change in indemnification receivable related to a reduction in uncertain tax positions of $2.1 million in the first quarter;
  • The non-cash portion of rent expense was $0.2 million for the first quarter, primarily due to the straight lining of rent expense;
  • A reduction of $3.4 million in cost of goods sold related to a retrospective inventory adjustment based on refinements to management estimates of the opening fair market value of acquired inventory during the one-year measurement period, which included the following:
    • A $1.3 million change in estimate of inventory related to the refinement to the inputs used in the Company’s retail inventory method calculation that relates to periods prior to December 31, 2015
    • A reduction in the inventory mark-up to fair value of $2.1 million related to the opening balance sheet
  • Goodwill impairment charge of approximately $43.3 million, initially triggered by a decline in the Company’s stock price of 32% during the quarter ended March 31, 2016. This forced a revaluation of historic operating results through March 31, 2016 and an update in the Company’s future operating projections, risk premiums and other assumptions about enterprise value, which also contributed to the impairment charge.
Fenix Parts is a leading recycler and reseller of original equipment manufacturer (“OEM”) automotive products.  The company’s primary business is auto recycling, which is the recovery and resale of OEM parts, components and systems reclaimed from damaged, totaled or low value vehicles.  Customers include collision repair shops (body shops), mechanical repair shops, auto dealerships and individual retail customers. Fenix provides its customers with high-quality recycled OEM products, extensive inventory and product availability, responsive customer service and fast delivery.

Fenix was founded in 2014 to create a network that offers sales, fulfillment and distribution in key regional markets in the United States and Canada.  The Fenix companies have been in business an average of more than 25 years and currently operate from 16 locations throughout the Eastern U.S. and in Ontario, Canada.