[Management Commentary and Strategic Outlook](index=1&type=section&id=Management%20Commentary%20and%20Strategic%20Outlook) Management explores strategic alternatives, achieved positive Adjusted EBITDA in June, expects $10 million in annualized savings, and provides no 2025 financial outlook - The company is nearing completion of a process to explore strategic alternatives, including a potential sale or strategic investments to enhance capabilities[3](index=3&type=chunk) - A key operational milestone was achieved in June 2025 with **positive Adjusted EBITDA**, indicating strategic efforts are yielding tangible results[4](index=4&type=chunk) - Ongoing initiatives in fulfillment network realignment, AI, and automation are projected to generate approximately **$10 million in annualized cost savings**[4](index=4&type=chunk) - Due to the evaluation of strategic alternatives, the company is not providing financial guidance for 2025[10](index=10&type=chunk) [Second Quarter 2025 Financial Performance](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Performance) Net sales increased to **$151.9 million**, but gross margin declined, leading to a wider **net loss** and an **Adjusted EBITDA loss** Q2 2025 Key Metrics vs. Q2 2024 | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Sales | $151.9 million | $144.3 million | | Gross Profit | $49.8 million | $48.4 million | | Gross Margin | 32.8% | 33.5% | | Net Loss | ($12.7) million | ($8.7) million | | Net Loss per Share | ($0.23) | ($0.15) | | Adjusted EBITDA | ($3.1) million | ($0.1) million | | Cash Balance | $19.8 million | - | | Inventory | $94.0 million | - | [Detailed Financial Analysis](index=2&type=section&id=Detailed%20Financial%20Analysis) - Net sales increased by **5% year-over-year**, primarily driven by higher consumer demand through the carparts.com e-commerce channel, partially offset by weakness in marketplace sales[6](index=6&type=chunk) - Gross margin decreased by **70 basis points to 32.8%**, mainly due to product mix and the impact of tariffs, while outbound transportation costs remained flat as a percentage of net sales[7](index=7&type=chunk) - Total operating expenses rose to **$62.2 million** from **$57.1 million** in the prior year, attributed to unfavorable marketing spend and one-time fees related to strategic alternatives exploration[8](index=8&type=chunk) [Financial Statements](index=6&type=section&id=Financial%20Statements) This section presents unaudited consolidated financial statements for Q2 and H1 2025, covering operations, balance sheets, and cash flows [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) Statement of Operations Highlights (Thirteen Weeks Ended, USD Thousands) | Account | June 28, 2025 | June 29, 2024 | | :--- | :--- | :--- | | Net sales | $151,949 | $144,270 | | Gross profit | $49,779 | $48,393 | | Loss from operations | ($12,417) | ($8,728) | | Net loss | ($12,711) | ($8,687) | | Basic and diluted net loss per share | ($0.23) | ($0.15) | [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) Balance Sheet Highlights (USD Thousands) | Account | June 28, 2025 | December 28, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $19,774 | $36,397 | | Inventory, net | $94,010 | $90,353 | | Total current assets | $126,418 | $138,868 | | Total assets | $189,584 | $210,574 | | Total current liabilities | $86,152 | $90,423 | | Revolving loan payable | $10,000 | $0 | | Total liabilities | $127,138 | $125,399 | | Total stockholders' equity | $62,446 | $85,175 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary (Twenty-Six Weeks Ended, USD Thousands) | Cash Flow Activity | June 28, 2025 | June 29, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($20,060) | $18 | | Net cash used in investing activities | ($4,408) | ($14,607) | | Net cash provided by (used in) financing activities | $7,845 | ($2,384) | | **Net change in cash and cash equivalents** | **($16,623)** | **($16,886)** | [Non-GAAP Financial Measures and Reconciliations](index=4&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section details Adjusted EBITDA as a non-GAAP measure, its purpose, and provides reconciliation from net loss - Adjusted EBITDA is a non-GAAP measure defined as net loss before interest, taxes, depreciation, amortization, share-based compensation, and other specific costs such as workforce transition and strategic alternatives exploration[15](index=15&type=chunk) Reconciliation of Net Loss to Adjusted EBITDA (Thirteen Weeks Ended, USD Thousands) | Line Item | June 28, 2025 | June 29, 2024 | | :--- | :--- | :--- | | **Net loss** | **($12,711)** | **($8,687)** | | Depreciation & amortization | $4,978 | $4,455 | | Stock compensation expense | $2,273 | $3,328 | | Workforce transition costs | $1,657 | $108 | | Strategic alternatives exploration costs | $379 | $0 | | Other adjustments | $218 | $748 | | **Adjusted EBITDA** | **($3,116)** | **($118)** | [Supplementary Information](index=2&type=section&id=Supplementary%20Information) This section provides supplementary details, including conference call information, a corporate overview, and the Safe Harbor statement - A conference call with CEO David Meniane and CFO Ryan Lockwood was scheduled for August 12, 2025, at 5:00 p.m. Eastern time to discuss the quarterly results[11](index=11&type=chunk) - The press release contains forward-looking statements regarding future performance and growth, which are subject to risks and uncertainties as outlined in the company's SEC filings[19](index=19&type=chunk)[20](index=20&type=chunk)

Core Insights - CarParts.com, Inc. reported a net sales increase of 5% to $151.9 million for the second quarter of 2025 compared to $144.3 million in the same quarter last year, driven by higher consumer demand through its primary eCommerce sales channel [5][11] - The company is actively exploring strategic alternatives to maximize shareholder value, including a potential sale and strategic investments, with management expressing confidence that this process is nearing completion [3][9] - The company achieved positive Adjusted EBITDA in June 2025, indicating that strategic initiatives are beginning to yield tangible results, with expected annualized cost savings of approximately $10 million from investments in AI and automation [4][11] Financial Performance - Gross profit for the second quarter was $49.8 million, up from $48.4 million year-over-year, but gross margin decreased by 70 basis points to 32.8% due to product mix and tariffs [6][11] - Total operating expenses rose to $62.2 million from $57.1 million in the prior year, with operating expenses as a percentage of net sales increasing to 40.9% [7][11] - The net loss for the quarter was $12.7 million, compared to a net loss of $8.7 million in the same quarter last year, primarily due to lower gross margin and higher marketing expenses [8][11] Cash and Balance Sheet - As of June 28, 2025, the company had a cash balance of $19.8 million and a revolving loan balance of $10 million, compared to no revolver debt and a cash balance of $36.4 million at the end of the previous fiscal year [8][25] - Inventory stood at $94 million, reflecting an increase from $90.4 million at the end of the previous fiscal year [25] - Total assets decreased to $189.6 million from $210.6 million, while total liabilities increased slightly to $127.1 million [25][26] Market Position and Strategy - CarParts.com operates over 1 million quality automotive parts and accessories, positioning itself as a leading eCommerce provider in the automotive sector [13] - The company is focused on enhancing its fulfillment network and investing in technology to improve operational efficiency and customer experience [4][11] - The mobile app has achieved approximately 1 million cumulative downloads, indicating a growing digital presence [11]

Company Overview - CarParts.com, Inc. is a technology-led ecommerce company offering over 1 million quality automotive parts and accessories [3] - The company has been operating for over 25 years and has established itself as a premier destination for drivers seeking repair, maintenance, and upgrade solutions [3] - CarParts.com aims to deliver a seamless, mobile-friendly shopping experience and is committed to exceptional value through its nationwide distribution network and experienced customer service [3] Upcoming Financial Results - CarParts.com will hold a conference call on August 12, 2025, at 2:00 p.m. Pacific Time to discuss its financial results for the second quarter ended June 28, 2025 [1] - The financial results will be reported in a press release prior to the call [1] - The conference call will be hosted live by CEO David Meniane and CFO Ryan Lockwood via an audio webcast [1]

Financial Data and Key Metrics Changes - In the first quarter, the company reported revenues of $147.4 million, down 11% from $166.3 million last year, primarily due to inclement weather and softer consumer demand [16] - Gross profit for the quarter was $47.3 million, down 12% compared to the prior year, with a gross profit margin of 32.1%, slightly down from 32.4% [16] - GAAP net loss for the quarter was $15.3 million, compared to a loss of $6.5 million in the prior year, driven by lower gross margins and higher marketing costs [17] - Adjusted EBITDA loss was $6.2 million, down from adjusted EBITDA of $1.1 million in the prior year, primarily due to soft consumer demand and increased competitive pressure [17] - The company ended the quarter with $38.5 million in cash and no revolver debt, generating $300,000 in interest income [17] Business Line Data and Key Metrics Changes - The company has onboarded over 700 new commercial customers in the wholesale segment, targeting collision shops and mechanics [11] - The collision parts account for approximately two-thirds of purchases, primarily sourced from Taiwan, which is not subject to high tariffs imposed on products from China [13] Market Data and Key Metrics Changes - The company experienced a significant increase in cost per click rates on search engines, attributed to the growth of AI models taking market share from traditional search [7] - Selling prices for parts online fell as retailers attempted to capture demand, impacting overall profitability [7] Company Strategy and Development Direction - The company is focused on upgrading its customer base to include higher income and less price-sensitive customers, diversifying its acquisition mix [9] - Strategic initiatives include scaling and optimizing the vertically integrated supply chain, investing in a proprietary fitment-based catalog, and enhancing the mobile app experience [12][14] - The company aims to capture opportunities in the $400 billion auto parts market, emphasizing the importance of a strong balance sheet and cash flow management [20] Management's Comments on Operating Environment and Future Outlook - Management noted soft consumer demand and adverse weather conditions impacted performance in the first quarter, but expressed confidence in the foundation laid over the past 18 months for long-term sustainable profitability [19] - The company is committed to navigating a dynamic macroeconomic environment, including tariffs and volatile prices, while focusing on growth and profitability [11][19] Other Important Information - The company is proactively investing in inventory ahead of tariffs to improve supply chain continuity, resulting in about two extra weeks of stock [17] - The mobile app is projected to reach 1 million users and currently accounts for over 10% of e-commerce revenue, contributing to a long-term reduction in customer acquisition costs [14] Q&A Session Summary Question: What are the company's strategic alternatives? - Management stated that they would not take questions related to the strategic alternatives process beyond what was announced on March 5, indicating that the process is ongoing with oversight from the Board of Directors [4] Question: How is the company addressing tariff impacts? - Management discussed various actions to mitigate tariff impacts, including pre-buying inventory, seeking cost concessions from vendors, and optimizing supply chain and operating expenses [6]

Financial Data and Key Metrics Changes - The company reported revenues of $147.4 million, down 11% from $166.3 million in the prior year, primarily due to inclement weather and softer consumer demand [15] - Gross profit for the quarter was $47.3 million, down 12% compared to the prior year, with a gross profit margin of 32.1%, slightly down from 32.4% [15] - GAAP net loss for the quarter was $15.3 million, compared to a loss of $6.5 million in the prior year, driven by lower gross margins and higher marketing costs [16] - Adjusted EBITDA loss was $6.2 million, down from adjusted EBITDA of $1.1 million in the prior year, primarily due to soft consumer demand and increased competitive pressure [16] Business Line Data and Key Metrics Changes - The company experienced gross margin compression and increased advertising spend, which put significant pressure on profitability in the first quarter [8] - The wholesale side onboarded over 700 new commercial customers, targeting collision shops and mechanics in key markets [11] Market Data and Key Metrics Changes - The first two months of 2025 saw soft consumer demand and bad weather affecting performance [7] - Increased cost per click rates on search engines were noted, attributed to the growth of AI models taking share from traditional search [7] Company Strategy and Development Direction - The company is focused on upgrading its customer base to higher income and less price-sensitive customers, diversifying its acquisition mix [8] - Strategic initiatives include scaling and optimizing the vertically integrated supply chain, investing in a proprietary catalog, and enhancing the mobile app experience [12][14] - The company aims to capture opportunities in the $400 billion auto parts market while maintaining a strong balance sheet and managing cash flow [20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in the first quarter but highlighted significant progress in key areas that position the company well for future growth [15] - The company is confident that improvements made over the last eighteen months will lead to long-term sustainable positive net income and adjusted EBITDA [19] Other Important Information - The company has proactively invested in inventory ahead of tariffs to improve supply chain continuity, resulting in about two extra weeks of stock [17] - The inventory balance was $94 million at quarter end, compared to $90 million at the end of the previous year [18] Q&A Session Summary - No specific Q&A session content was provided in the transcript, indicating that the call did not take questions beyond the prepared remarks [4]

Financial Performance - Net sales for Q1 2025 decreased by 11% to $147.4 million compared to $166.3 million in Q1 2024[6] - Gross profit was $47.3 million, down from $53.9 million, with a gross margin of 32.1%, a decrease of 30 basis points[7] - Net loss for the quarter was ($15.3) million, or ($0.27) per share, compared to a net loss of ($6.5) million, or ($0.11) per share in the prior year[5] - Adjusted EBITDA for Q1 2025 was ($6.2) million, a decline from $1.1 million in Q1 2024, primarily due to soft consumer demand[9] - Operating expenses increased to $62.5 million, representing 42.4% of net sales, up from 36.3% in the year-ago quarter[8] Cash and Assets - The company reported a cash balance of $38.5 million with no revolver debt as of March 29, 2025[9] - Cash and cash equivalents at the end of the period were $38,532 thousand, an increase of $2,135 thousand from $36,397 thousand at the beginning of the period[28] - Total current assets increased to $149,239 thousand as of March 29, 2025, up from $138,868 thousand on December 28, 2024, representing an increase of 8.8%[26] - Accounts receivable increased to $10,211 thousand as of March 29, 2025, from $6,098 thousand on December 28, 2024, marking a growth of 67.7%[26] - Inventory levels increased to $94,207 thousand as of March 29, 2025, compared to $90,353 thousand on December 28, 2024, which is an increase of 4.8%[26] Liabilities and Equity - Total liabilities rose to $143,685 thousand as of March 29, 2025, compared to $125,399 thousand on December 28, 2024, reflecting an increase of 14.6%[26] - Total stockholders' equity decreased to $72,770 thousand as of March 29, 2025, down from $85,175 thousand on December 28, 2024, a decline of 14.5%[26] Operational Highlights - Cumulative net downloads of the mobile app reached approximately 900,000, with over 5,000 CarParts+ and Roadside Assistance Memberships sold year to date[5] - For the first 6 weeks of Q2 2025, revenues increased by double digits year-over-year despite lower marketing spend[4] - Management emphasized the importance of targeting higher-margin sales and diversifying customer acquisition strategies to improve profitability[3] - The company is currently evaluating various strategic alternatives and is not providing guidance for 2025[10] Other Financial Metrics - Net loss for the thirteen weeks ended March 29, 2025, was $15,283 thousand, compared to a net loss of $6,478 thousand for the same period in 2024, indicating a deterioration of 135.5%[28] - Net cash provided by operating activities for the thirteen weeks ended March 29, 2025, was $5,505 thousand, up from $3,652 thousand in the same period of 2024, representing a growth of 50.7%[28] - The company reported depreciation and amortization expense of $5,482 thousand for the thirteen weeks ended March 29, 2025, compared to $4,025 thousand in the same period of 2024, an increase of 36.3%[28] - Cash paid during the period for interest was $256 thousand, a decrease from $300 thousand in the same period of 2024, indicating a reduction of 14.7%[28]

Core Insights - CarParts.com, Inc. reported a decline in net sales of 11% year-over-year, totaling $147.4 million for Q1 2025, down from $166.3 million in Q1 2024, primarily due to soft consumer demand and adverse weather conditions [5][10] - The company experienced a gross profit of $47.3 million, with a gross margin of 32.1%, a decrease of 30 basis points compared to the previous year [6][10] - A net loss of $15.3 million was reported, compared to a net loss of $6.5 million in the same quarter last year, attributed to higher marketing costs and lower gross margins [7][10] Financial Performance - Net sales for Q1 2025 were $147.4 million, down from $166.3 million in Q1 2024 [5][21] - Gross profit decreased to $47.3 million from $53.9 million, with a gross margin of 32.1% compared to 32.4% in the prior year [6][21] - Total operating expenses rose to $62.5 million from $60.4 million, leading to an operating expense percentage of 42.4% of net sales, up from 36.3% [7][21] - Adjusted EBITDA was reported at ($6.2) million, a significant decline from $1.1 million in the previous year [8][21] Management Commentary - Management emphasized the need to upgrade the customer base to target higher-income, less price-sensitive customers and diversify acquisition strategies [3] - The CEO noted that early Q2 results showed double-digit revenue growth year-over-year, despite lower marketing spend, indicating a positive trend in repeat customers and mobile app traffic [4] Strategic Outlook - The company is currently evaluating various strategic alternatives and is not providing guidance for 2025 [9] - The focus remains on enhancing customer lifetime value through the mobile app and increasing high-margin fee income [3][4] Cash Position - As of March 29, 2025, the company had a cash balance of $38.5 million, an increase from $36.4 million at the end of the previous fiscal year [8][10]

Company Overview - CarParts.com, Inc. is a technology-driven eCommerce company that offers over 1 million high-quality automotive parts and accessories [3] - The company has been operating for over 25 years and has established itself as a premier destination for drivers seeking repair and maintenance solutions [3] - CarParts.com focuses on customer satisfaction and affordability, simplifying the automotive repair process through a user-friendly website and app [3] Upcoming Financial Results - CarParts.com will hold a conference call on May 13, 2025, at 2:00 p.m. Pacific Time to discuss its financial results for the first quarter ended March 29, 2025 [1] - The financial results will be reported in a press release prior to the call [1] - CEO David Meniane and CFO Ryan Lockwood will host the conference call, which will include a question and answer period [2] Accessing the Conference Call - Participants can pre-register for the conference call using a provided link, and will receive a confirmation email with dial-in details [2] - The live webcast of the event can be accessed on the company's investor relations page [2] - A replay of the webcast will be archived on the company's website for future access [2] Company Mission - CarParts.com is united by a vision of empowering drivers along their journey [4] - The company is headquartered in Torrance, California [4]

Financial Data and Key Metrics Changes - For the full year 2024, revenues were $589 million, down 13% from $675.7 million in 2023, which was the highest revenue number in company history [21][22] - Gross profit for the year was $197 million, with a gross profit margin of 33.4%, down from 33.9% in 2023 [11][24] - GAAP net loss for the year was $40.6 million, compared to a loss of $8.2 million in 2023 [24] - Adjusted EBITDA loss for the full year was $7.1 million, improved from a loss of $19.7 million in 2023 [25] Business Line Data and Key Metrics Changes - The lighting and mirror business faced significant pressure due to low-cost, non-compliant parts flooding the market [9] - The company expanded its product offering and repriced products to target higher margin sales, contributing to a gross profit margin near the upper end of guidance [10][11] Market Data and Key Metrics Changes - The economic environment in 2024 was challenging for lower-income consumers, leading to a significant pullback in spending on auto repairs [9] - The company is the second largest importer of aftermarket collision parts in the U.S., with collision parts primarily sourced from Taiwan [16] Company Strategy and Development Direction - The company is focused on three key elements: driving growth and net margin, accelerating efficiency, and achieving sustainable growth with strong long-term free cash flow [8] - Priorities for 2025 include expanding product offerings, monetizing website visits, scaling B2B offerings, growing the mobile app business, and maintaining a strong balance sheet [28][30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in 2024 but emphasized significant progress in key areas that position the company well for future growth [20] - The company is confident that improvements made throughout 2024 have set a path to achieve long-term sustainable positive adjusted EBITDA [28] Other Important Information - The company ended the year with $36.4 million in cash and no revolver debt, with an inventory balance of $90.4 million at year-end [26] - The company is currently evaluating various strategic alternatives in response to inbound interest and is not providing guidance for 2025 [27] Q&A Session Summary - No specific questions or answers were documented in the provided content, indicating that the call may have been focused on prepared remarks without a Q&A segment.

Financial Performance - For fiscal year 2024, the company reported net sales of $588,846, a decrease of 12.9% from $675,729 in fiscal year 2023[195]. - The company incurred a net loss of $40,601 in fiscal year 2024, compared to a net loss of $8,223 in fiscal year 2023[195]. - Adjusted EBITDA for fiscal year 2024 was $(7,055), a significant decline from $19,687 in fiscal year 2023[197]. - Gross profit decreased by 14.2% to $196,739 in fiscal year 2024, with gross margin dropping to 33.4% from 33.9% in fiscal year 2023[198][214]. - Operating expenses for fiscal year 2024 were $237,374, a slight decrease of 0.8% from $239,287 in fiscal year 2023, but as a percentage of net sales, it increased to 40.3%[215]. - Total other income, net decreased by $1,502, or 83.3%, for fiscal year 2024 compared to fiscal year 2023, primarily due to a decrease in interest income from a lower cash balance[216]. - Income tax provision increased by $122, or 84.1%, from $145 in fiscal year 2023 to $267 in fiscal year 2024[217]. Cash Flow and Debt Management - Cash and cash equivalents decreased by $14,554, from $50,951 as of December 30, 2023, to $36,397 as of December 28, 2024[219]. - Net cash provided by operating activities decreased from $50,001 in fiscal year 2023 to $10,338 in fiscal year 2024[222]. - Net cash used in investing activities increased from $11,901 in fiscal year 2023 to $20,557 in fiscal year 2024, primarily due to additions to property and equipment[224]. - Total debt decreased from $16,635 as of December 30, 2023, to $12,313 as of December 28, 2024[226]. - The Company maintains a revolving Credit Facility with a principal amount of up to $75,000, which can be increased to $150,000 under certain conditions[227]. - As of December 28, 2024, the Company had no outstanding balance under its revolving loan[228]. - The Company believes existing cash, cash equivalents, and available financing will be sufficient to meet operational cash needs for at least the next twelve months[235]. - The Company is subject to interest rate risk related to its Credit Facility, with a SOFR-based interest rate of 6.46% as of December 28, 2024[230]. Market Trends and Opportunities - The average age of U.S. light vehicles reached a record high of 12.6 years in 2024, indicating a growing demand for aftermarket parts[193]. - The U.S. Auto Care Association projects that online sales of auto parts and accessories will exceed $23 billion by 2026, highlighting a significant market opportunity[194]. - The company offers approximately 1,544,000 SKUs, providing a comprehensive selection for consumers compared to traditional brick-and-mortar stores[192]. Strategic Initiatives - The increase in operating expenses is attributed to investments in brand and marketing, as well as one-time costs related to the new Las Vegas distribution center[215]. - The company’s re-pricing strategy aims to focus on higher value customers, which has impacted net sales and gross profit[198].