CarParts.com(PRTS) - 2024 Q4 - Annual Results

Report Overview & Highlights Management Commentary CEO David Meniane emphasized 2024's strategic shift towards margin improvement, operational efficiency, and sustainable growth through key initiatives like an AI-powered website and CarParts+ membership - The company's 2024 strategy focused on three key elements: strengthening gross and net margins, accelerating efficiency for improved profitability, and achieving sustainable growth with strong long-term free cash flow[4] - The challenging economic environment for lower-income consumers led to a significant pullback in spending and deferral of auto repairs[6] - Strategic initiatives include enhancing site conversion, strengthening SEO, driving mobile app adoption (over 800,000 downloads), and expanding the wholesale channel[5][6] - Key operational achievements in 2024 include making the new Las Vegas distribution center fully operational, re-platforming the website with AI and machine learning, and launching the CarParts+ paid membership[5] Fiscal Year 2024 Highlights Fiscal Year 2024 saw a 13% decrease in net sales to $588.8 million, a net loss of ($40.6) million, and negative Adjusted EBITDA of ($7.1) million Fiscal Year 2024 vs. 2023 Financial Summary | Metric | Fiscal Year 2024 | Fiscal Year 2023 | | :--- | :--- | :--- | | Net Sales | $588.8 million | $675.7 million (-13%) | | Gross Profit | $196.7 million | $229.4 million | | Gross Margin | 33.4% | 33.9% | | Net Loss | ($40.6) million | ($8.2) million | | Net Loss Per Share | ($0.71) | ($0.15) | | Adjusted EBITDA | ($7.1) million | $19.7 million | | Cash Balance | $36.4 million | $51.0 million | Fourth Quarter 2024 Highlights Q4 2024 net sales declined 15% to $133.5 million, with a net loss of ($15.4) million and Adjusted EBITDA of ($6.8) million Fourth Quarter 2024 vs. 2023 Financial Summary | Metric | Q4 2024 | Q4 2023 | | :--- | :--- | :--- | | Net Sales | $133.5 million | $156.4 million (-15%) | | Gross Profit | $43.4 million | $51.6 million | | Gross Margin | 32.5% | 33.0% | | Net Loss | ($15.4) million | ($6.1) million | | Net Loss Per Share | ($0.27) | ($0.11) | | Adjusted EBITDA | ($6.8) million | $1.0 million | Detailed Financial Results Fiscal Year 2024 Financial Results FY2024 net sales decreased 13% to $588.8 million due to soft demand, with gross margin at 33.4%, operating expenses at 40.3% of sales, and a net loss of ($40.6) million - The 13% decline in annual net sales was primarily driven by soft consumer demand and significant pressures in lighting and mirrors, which were impacted by the flooding of non-compliant illegal parts[7] - Operating expenses increased to 40.3% of net sales, up from 35.4% in 2023, mainly due to investments in branding, higher customer acquisition costs, overlapping software expenses, and one-time costs related to the new Las Vegas distribution center[8] FY 2024 Key Financial Metrics | Metric | Fiscal Year 2024 (in millions) | Fiscal Year 2023 (in millions) | | :--- | :--- | :--- | | Net Sales | $588.8 | $675.7 | | Gross Profit | $196.7 | $229.4 | | Net Loss | ($40.6) | ($8.2) | | Adjusted EBITDA | ($7.1) | $19.7 | | Cash Balance (Year-End) | $36.4 | $51.0 | Fourth Quarter 2024 Financial Results Q4 2024 net sales decreased 15% to $133.5 million, with gross margin at 32.5%, a net loss of ($15.4) million, and negative Adjusted EBITDA of ($6.8) million Q4 2024 Key Financial Metrics | Metric | Q4 2024 (in millions) | Q4 2023 (in millions) | | :--- | :--- | :--- | | Net Sales | $133.5 | $156.4 | | Gross Profit | $43.4 | $51.6 | | Net Loss | ($15.4) | ($6.1) | | Adjusted EBITDA | ($6.8) | $1.0 | - The decline in Adjusted EBITDA was primarily attributed to higher-than-expected advertising cost per click and lower flow-through from the decrease in revenue[11] Outlook and Corporate Information 2025 Outlook CarParts.com is not providing 2025 financial guidance due to its ongoing evaluation of various strategic alternatives arising from inbound interest - The company is not providing guidance for 2025[12] - The reason for withholding guidance is that the company is currently evaluating various strategic alternatives in response to inbound interest[12] About CarParts.com, Inc. CarParts.com is a technology-driven e-commerce company with over 25 years of experience, offering over 1 million automotive parts and focusing on customer-centricity, affordability, and efficient fulfillment - CarParts.com is a technology-driven eCommerce company with over 25 years of operating history, offering over 1 million high-quality automotive parts and accessories[14] - The company emphasizes a customer-first approach through a mobile-friendly website/app, affordability, and a company-operated fulfillment network for fast delivery[14] - The company's vision is 'Empowering Drivers Along Their Journey' and it is headquartered in Torrance, California[15] Financial Statements & Non-GAAP Measures Non-GAAP Financial Measures Adjusted EBITDA, a non-GAAP measure, is used to supplement GAAP results, providing a clearer view of operational trends by excluding specific non-cash and one-time costs, with a reconciliation to net loss provided - Adjusted EBITDA is a non-GAAP measure used to provide supplemental information to management and investors, offering an additional way to view the company's operations[16][17] - Adjusted EBITDA is calculated by taking net loss and adding back interest, taxes, depreciation & amortization, share-based compensation, workforce transition costs, and distribution center costs[16] Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | | Fifty-Two Weeks Ended Dec 28, 2024 | Fifty-Two Weeks Ended Dec 30, 2023 | | :--- | :--- | :--- | | Net loss | $ (40,601) | $ (8,223) | | Depreciation & amortization | 18,975 | 16,690 | | Amortization of intangible assets | 121 | 36 | | Interest (income) expense, net | (301) | (636) | | Income tax provision | 267 | 145 | | EBITDA | $ (21,539) | $ 8,012 | | Stock compensation expense | 11,985 | 11,675 | | Workforce transition costs | 617 | — | | Distribution center costs | 1,882 | — | | Adjusted EBITDA | $ (7,055) | $ 19,687 | Consolidated Statements of Operations FY2024 net sales were $588.8 million, with a loss from operations of ($40.6) million, resulting in a net loss of ($40.6) million, or ($0.71) per share Consolidated Statements of Operations (In Thousands, Except Per Share Data) | | Fiscal Year 2024 | Fiscal Year 2023 | | :--- | :--- | :--- | | Net sales | $ 588,846 | $ 675,729 | | Gross profit | 196,739 | 229,406 | | Loss from operations | (40,635) | (9,881) | | Net loss | (40,601) | (8,223) | | Basic and diluted net loss per share | $ (0.71) | $ (0.15) | Consolidated Balance Sheets As of December 28, 2024, total assets were $210.6 million, driven by decreases in cash ($36.4 million) and inventory ($90.4 million), with total liabilities at $125.4 million and equity at $85.2 million Consolidated Balance Sheet Highlights (In Thousands) | | Dec 28, 2024 | Dec 30, 2023 | | :--- | :--- | :--- | | ASSETS | | | | Cash and cash equivalents | $ 36,397 | $ 50,951 | | Inventory, net | 90,353 | 128,901 | | Total current assets | 138,868 | 193,338 | | Total assets | $ 210,574 | $ 257,855 | | LIABILITIES & EQUITY | | | | Total current liabilities | 90,423 | 112,986 | | Total liabilities | 125,399 | 145,024 | | Total stockholders' equity | 85,175 | 112,831 | Consolidated Statements of Cash Flows FY2024 net cash from operations was $10.3 million, a decline from $50.0 million in 2023, with net cash used in investing activities increasing to ($20.6) million Consolidated Statements of Cash Flows Highlights (In Thousands) | | Year Ended Dec 28, 2024 | Year Ended Dec 30, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $ 10,338 | $ 50,001 | | Net cash used in investing activities | (20,557) | (11,901) | | Net cash used in financing activities | (4,422) | (5,916) | | Net change in cash and cash equivalents | (14,554) | 32,184 | | Cash and cash equivalents, end of period | $ 36,397 | $ 50,951 |