CarParts.com Reports Second Quarter 2024 Results TORRANCE, Calif. – July 30th, 2024 – CarParts.com, Inc. (NASDAQ: PRTS), a leading eCommerce provider of automotive parts and accessories, and a premier destination for vehicle repair and maintenance needs, is reporting results for the second quarter ended June 29, 2024. Second Quarter 2024Summary vs. Year-Ago Quarter ● Net sales decreased to $144.3 million, down 18% from the year-ago quarter. ● Gross profit of $48.4 million vs. $60.4 million, with gross margi ...

Core Insights - CarParts.com, Inc. reported a net sales decrease of 18% year-over-year, totaling $144.3 million in Q2 2024, primarily due to price increases and reduced consumer demand [3][19][21] - The company aims to achieve sustainable growth with a target of 6-8% Adjusted EBITDA margin and improved free cash flow generation in the medium term [3][45] - Adjusted EBITDA for Q2 2024 was ($0.1) million, a significant decline from $6.3 million in the same quarter last year [5][19] Financial Performance - Gross profit for Q2 2024 was $48.4 million, down from $60.4 million, with a gross margin of 33.5%, reflecting a 70 basis point decrease year-over-year but an improvement from 32.4% in Q1 2024 [19][21] - The net loss for the quarter was ($8.7) million, or ($0.15) per share, compared to a net loss of ($0.7) million, or ($0.01) per share in the prior year [19][22] - Total operating expenses decreased to $57.1 million from $61.3 million year-over-year [4] Strategic Outlook - The company is focusing on enhancing gross margins and targeting more profitable customers through updated pricing and marketing strategies [20][45] - For the full year 2024, CarParts.com expects net sales to be in the range of $600 million to $625 million, with a gross margin target of approximately 33% [46] - The CEO expressed confidence in the company's roadmap and opportunities within the $400 billion automotive aftermarket market [45]

Michael Huffaker, CarParts.com Chief Operating Officer, highlighted the significance of the new facility saying, "This building will serve as our West Coast flagship, housing between 80% to 90% of our product assortment. With its advanced technology, it efficiently handles both conveyable and non-conveyable items, enabling faster order fulfillment and shipping." "Our focus has always been on understanding and meeting our customers' needs, and our new Las Vegas fulfillment center is a testament to that," add ...

TORRANCE, Calif., July 18, 2024 /PRNewswire/ -- CarParts.com, Inc. (NASDAQ: PRTS), a technologydriven eCommerce company offering over 1 million high-quality automotive parts and accessories, today announced the appointment of strategic marketing leader Christina Thelin as Chief Marketing Officer (CMO). She will serve as a member of CarParts.com's leadership team, reporting directly to CEO David Meniane. Thelin will oversee product and brand marketing, performance marketing, loyalty marketing, creative, and ...

Company Overview - CarParts.com, Inc. is a technology-driven eCommerce company that offers over 1 million high-quality automotive parts and accessories [6] - The company has been operating for over 25 years and has established itself as a premier destination for drivers seeking repair and maintenance solutions [6] - CarParts.com is headquartered in Torrance, California [8] Business Model and Commitment - The company places the customer at the forefront of its operations, evident in its easy-to-use, mobile-friendly website and app [6] - CarParts.com aims to simplify the automotive repair process, eliminating uncertainty and stress associated with vehicle maintenance [6] - The company is committed to affordability and customer satisfaction, ensuring swift delivery of top-quality parts from leading brands across the nation [6] Upcoming Events - CarParts.com will hold a conference call on July 30, 2024, at 2:00 p.m. Pacific Time to discuss its financial results for the second quarter ended June 29, 2024 [4] - The results will be reported in a press release prior to the call [4] - The conference call will be hosted by CEO David Meniane, CFO Ryan Lockwood, and COO Michael Huffaker, followed by a question and answer period [5]

Today, CarParts.com proudly debuts its first major campaign in over two decades. The future of DIY car care is here with CarParts.com. The brand's new campaign, "Now That's My Speed," showcases how easy it is to access over 1 million parts at your fingertips with the CarParts.com app. "Our customers have always been at the center of our business," said David Meniane, Chief Executive Officer of CarParts.com. "This campaign was developed using extensive testing to ensure our message resonates deeply with our ...

Ryan Sigdahl - Craig-Hallum Capital Group Ryan Meyers - Lake Street Capital Markets. Operator Good afternoon. At this time, all participants will be in a listen-only mode. After the presentation, there will be a question-and-answer session. Please note this call is being recorded. Tina Mirfarsi Hello, everyone and thank you for joining us for the CarParts.com first quarter conference call. Joining me today are David Meniane, Chief Executive Officer; Ryan Lockwood, Chief Financial Officer; and Michael Huffak ...

Financial Performance - Net sales for Q1 2024 were $166.3 million, a decrease of 5% compared to $175.5 million in Q1 2023[6] - Gross profit was $53.9 million, down from $62.6 million, resulting in a gross margin of 32.4%, a decline of 320 basis points year-over-year[7] - The company reported a net loss of $6.5 million, or $0.11 per share, compared to a net income of $1.1 million, or $0.02 per share in the prior year[7] - Adjusted EBITDA for Q1 2024 was $1.1 million, significantly lower than $9.4 million in Q1 2023[7] - Net loss for the thirteen weeks ended March 30, 2024, was $6,478 million, compared to a net income of $1,051 million for the same period in 2023[28] Guidance and Projections - The company aims for net sales in the range of $600 million to $625 million for the full year 2024, down from previous guidance of $662 million to $688 million[13] - Gross margin is expected to be around 33%, plus or minus 100 basis points, which is an improvement from the previous guidance of 31%[13] - The company is targeting a 6-8% Adjusted EBITDA margin in the medium term while increasing free cash flow generation[6] Cash and Liquidity - Cash balance as of March 30, 2024, was $46.0 million, with no revolver debt, down from $51.0 million at the end of the previous fiscal year[9] - Cash and cash equivalents decreased to $46,046 million from $50,951 million, a decline of about 11.5%[28] - Net cash provided by operating activities was $3,652 million, a significant decrease from $32,781 million in the prior year[28] - Cash received during the period for interest was $437 million, compared to $11 million in the prior year, indicating improved interest income[28] Assets and Liabilities - Total assets increased to $263,224 million as of March 30, 2024, up from $257,855 million on December 30, 2023, representing a growth of approximately 2.7%[26] - Total current liabilities remained relatively stable at $112,188 million, slightly down from $112,986 million[26] - Total stockholders' equity decreased to $109,152 million from $112,831 million, reflecting a decline of approximately 3.0%[26] Inventory and Capital Expenditure - Inventory levels decreased to $120,015 million from $128,901 million, a reduction of about 6.9%[26] - Additions to property and equipment amounted to $7,431 million, compared to $2,745 million in the same period last year, indicating increased capital expenditure[28] Operational Focus - The mobile app now contributes over 8% of total eCommerce revenue, with 38% of revenue coming from repeat customers[3] - The company is focusing on margin expansion through pricing optimization, marketing, supply chain, and technology improvements[5] - The company reported a depreciation and amortization expense of $4,025 million, up from $3,919 million in the previous year[28]

Financial Data and Key Metrics - Q4 2023 sales were $156 million, bringing full-year 2023 sales to a record-breaking $676 million, up 2% YoY and 16% on a 2-year stack [13] - Adjusted EBITDA for Q4 was $1 million, and $19.7 million for the full year 2023, down from $26.1 million in 2022 [13][30] - Gross profit for Q4 was $51.6 million, flat YoY, while full-year gross profit was $229.4 million, down slightly from $230.9 million in 2022 [16] - GAAP net loss for Q4 was $6.1 million, compared to $6.2 million in the prior year, and full-year GAAP net loss was $8.2 million versus $1 million in 2022 [27] - The company repurchased 726,000 shares in Q4, bringing total repurchases in 2023 to 1.2 million shares [13][31] Business Line Data and Key Metrics - The mobile app now generates over 7% of total e-commerce revenue, with over 250,000 downloads [20][29] - Revenue from the friction category (brakes and rotors) increased by over 40% YoY, accounting for approximately 5% of total volume [20] - The third-party premium brands business grew over 25% YoY, now a profitable $100 million revenue business [21] - Website traffic reached over 100 million visits in 2023, with 38% of e-commerce revenue coming from repeat customers [20] Market Data and Key Metrics - The company saw sustained price deflation due to macroeconomic challenges, with unit growth of approximately 8% in Q4 2023 [13] - The automotive aftermarket is valued at $389 billion, and the company is well-positioned to capture market share as consumer confidence rebounds [13] - The company expects revenue growth in 2024 to range from -2% to +2%, driven by deflation and mid- to high single-digit unit growth [8] Company Strategy and Industry Competition - The company is focusing on expanding its tech and product offerings, including growing third-party premium brands and enhancing the e-commerce experience [21][64] - A new semi-automated facility in Las Vegas is expected to open in Q2 2024, driving operating leverage and reducing last-mile transportation costs [14][22] - The company is prioritizing marketing and branding efforts, including YouTube content, which saw a 10x increase in views YoY in early 2024 [7][64] - The company aims to reduce marketing spend from 12.3% to 10% of revenue, with a focus on app engagement and organic growth [45][49] Management Commentary on Operating Environment and Future Outlook - The company faced a challenging macroeconomic environment in 2023, with price compression and deflation impacting margins [8][9] - Management expects deflation to continue through the first three quarters of 2024, with gross profit margins projected to be around 31% ±100 basis points [8] - The company is focused on cost reduction initiatives, including the elimination of 150 global roles, expected to save $10 million annually [62] - Management remains confident in the company's long-term growth potential, citing a large TAM, an aging car fleet, and low online penetration in the automotive aftermarket [52][58] Other Important Information - The company ended 2023 with $51 million in cash and an untapped revolver of up to $75 million [13][24] - Inventory at the end of Q4 was $129 million, down from $136 million in the prior year [31] - The company renewed its share repurchase program through July 2026, with $25 million remaining [31] Q&A Session Summary Question: Focus areas for 2024 and cost reduction efforts [35] - Management highlighted three key priorities for 2024: e-commerce experience and app engagement, product offering expansion, and marketing/branding [41] - The company is deferring some initiatives, such as the do-it-for-me offering, to focus on immediate growth opportunities [53] Question: Impact of cost reductions and gross margin guidance [47][59] - The company reduced 15% of corporate roles and 10% of frontline roles, with annualized savings of $10 million [47] - Gross margin guidance for 2024 is 31% ±100 basis points, impacted by deflation and outbound freight costs [59] Question: Mobile app growth and marketing spend flexibility [49] - The mobile app has seen strong organic growth, with higher average selling prices and repeat purchase rates [49] - The company aims to reduce marketing spend by 100-200 basis points over the next few years [49] Question: Revenue guidance range and factors influencing it [51] - Revenue guidance for 2024 is -2% to +2%, with the range influenced by price compression, deflation, and macro factors [51] Question: Do-it-for-me offering and its contribution in 2024 [53] - The do-it-for-me initiative is a long-term bet, but the company is deferring it to focus on immediate growth opportunities in 2024 [53]

Financial Performance - For fiscal year 2023, the company generated net sales of $675,729, an increase of 2.1% compared to $661,604 in fiscal year 2022[199]. - The company incurred a net loss of $8,223 in fiscal year 2023, compared to a net loss of $951 in fiscal year 2022[199]. - Gross profit decreased by 0.6% to $229,406, with a gross margin decline of 100 basis points to 33.9% in fiscal year 2023[200]. - Operating expenses increased by $9,048, or 3.9%, for fiscal year 2023, totaling $239,287, representing 35.4% of net sales[218]. - Adjusted EBITDA for fiscal year 2023 was $19,687, down from $26,113 in fiscal year 2022[206]. - The company’s net loss before interest, taxes, depreciation, and amortization was $19,687 in fiscal year 2023[199]. - The increase in net sales was primarily driven by continued demand despite a decrease in gross margin due to unfavorable freight costs[217]. - Total other income increased by $2,773, or 285.9%, for fiscal year 2023 compared to fiscal year 2022, primarily due to higher interest income from increased interest rates and cash balance[219]. - Income tax provision decreased by $487, or 77.1%, from $632 in fiscal year 2022 to $145 in fiscal year 2023[220]. Cash Flow and Debt Management - Cash and cash equivalents rose to $50,951 as of December 30, 2023, representing a $32,184 increase from $18,767 as of December 31, 2022[222]. - Net cash provided by operating activities increased to $50,001 for the fiscal year ended December 30, 2023, compared to $15,368 for the prior year[225]. - Total debt decreased to $16,635 as of December 30, 2023, down from $20,669 as of December 31, 2022[228]. - 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[229]. - The Company had no outstanding revolving loan balance as of December 30, 2023[230]. Tax and Deferred Assets - The Company maintained a valuation allowance of $38,458 against deferred tax assets due to cumulative losses in recent years[220]. - Federal and state NOL carryforwards were $105,224 and $84,780, respectively, with federal NOL carryforwards beginning to expire in 2029[221]. Market Trends and Product Offering - The average age of U.S. light vehicles reached a record-high of 12.5 years in 2023, indicating increased demand for aftermarket parts[197]. - The U.S. Auto Care Association projects that online sales of auto parts and accessories will reach approximately $21 billion by 2025, supporting the company's growth strategy[198]. - The company offers approximately 1,047,000 SKUs on its flagship website and app, providing a comprehensive selection for consumers[196]. Investment Activities - Net cash used in investing activities was $11,901 for the fiscal year ended December 30, 2023, primarily due to additions to property and equipment[226].