CarParts.com(PRTS) - 2026 Q4 - Annual Report

Financial Performance - For fiscal year 2025, the company reported net sales of $547,525, a decrease of 7.0% from $588,846 in fiscal year 2024[224]. - The company incurred a net loss of $50,443 in fiscal year 2025, compared to a net loss of $40,601 in fiscal year 2024[224]. - Adjusted EBITDA for fiscal year 2025 was $(14,008), worsening from $(7,055) in fiscal year 2024[224]. - Gross profit decreased by 8.8% to $179,348, with gross margin declining by 60 basis points to 32.8% in fiscal year 2025[225]. - Total expenses increased in fiscal year 2025 compared to fiscal year 2024, primarily driven by cost of sales and operating expenses[226]. - Operating expenses decreased by $9,151, or 3.9%, for fiscal year 2025 compared to fiscal year 2024, primarily due to favorable payroll costs and marketing spend[244]. - Total other (expense) income, net, decreased by $1,507, or 500.7%, for fiscal year 2025 compared to fiscal year 2024, mainly due to increased interest expense and decreased interest income[245]. - Income tax provision increased by $95, or 35.6%, for fiscal year 2025 compared to fiscal year 2024[246]. Cash Flow and Debt - Cash and cash equivalents decreased by $10,576, from $36,397 as of December 28, 2024, to $25,821 as of January 3, 2026[251]. - Net cash used in operating activities was $(34,076) for fiscal year 2025, a decrease from $10,338 in fiscal year 2024[253]. - Net cash provided by financing activities was $31,397 for fiscal year 2025, compared to $(4,422) for fiscal year 2024, primarily due to the issuance of Convertible Notes[256]. - Total debt increased to $34,010 as of January 3, 2026, from $12,313 as of December 28, 2024[257]. - The company issued Convertible Notes with an aggregate principal amount of $25,000, accruing interest at 2% per annum, with a maturity date of September 10, 2028[258]. - The Amended Credit Facility provides for a revolving commitment of $25,000, down from $75,000, and matures on September 8, 2026[259]. Asset Management and Impairment - The company maintained a valuation allowance of $55,405 against deferred tax assets as of January 3, 2026, due to cumulative losses in recent years[249]. - The company recognized an impairment charge of $3,690 on its long-lived assets for the year ended January 3, 2026, resulting in an impairment loss recorded in operating expense[274]. - No impairment loss was recorded during the year ended December 28, 2024[274]. - The fair value of the asset group was estimated to be less than its carrying amount, leading to the recognition of an impairment loss[274]. - The impairment loss was allocated to the long-lived assets' carrying values on a pro rata basis[274]. Market Conditions and Opportunities - The average age of U.S. light vehicles reached a record high of 12.8 years in 2025, indicating a growing demand for aftermarket parts[220]. - The U.S. Auto Care Association projects that online sales of auto parts and accessories will exceed $27 billion by 2028, highlighting a significant market opportunity[223]. - The company offers approximately 1,660,000 SKUs, providing a comprehensive selection for consumers[219]. Risk Management - The company is exposed to market risks, including interest rate changes and foreign currency fluctuations, in the ordinary course of business[275]. - A hypothetical 100 basis point change in interest rates would not materially affect the company's interest expense and cash flows[276]. - Purchases of auto parts from Asian suppliers are denominated in U.S. dollars, mitigating direct foreign currency risk[278]. - A hypothetical 10% change in foreign currency exchange rates would not have a material impact on the company's consolidated financial statements[279]. - The company does not currently use derivative financial instruments to manage foreign currency risk but may consider doing so in the future[279].