CarParts.com(PRTS) - 2021 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenues for Q1 2021 reached $144.8 million, a 65% increase from $87.8 million in Q1 2020 [14] - Gross profit also grew significantly to $49.2 million, up 65% year-over-year, with a gross margin of 34%, an increase of 10 basis points [15] - The total net loss for the quarter was $2.7 million, compared to a net loss of $1 million in Q1 2020, primarily due to increased non-cash charges [16] - Adjusted EBITDA was $3.6 million, down from $4.3 million in the previous year [16] - Cash position improved to $45.9 million from $35.8 million, driven by working capital improvements [18] Business Line Data and Key Metrics Changes - More than 30% of revenue comes from repeat purchases, indicating strong customer loyalty [6] - Mechanical parts accounted for approximately 23% of sales in Q1, with a goal to increase this mix closer to 50% over time [53] Market Data and Key Metrics Changes - The average new car price has crossed the $40,000 mark, leading consumers to keep their cars longer, which is expected to increase maintenance and repair demand [25] - The company is well-positioned to serve the growing electric vehicle (EV) market, as 90% of its products are compatible with various powertrains [25] Company Strategy and Development Direction - The company aims for 20% to 25% compounded top-line growth and plans to evolve from a parts supplier to a provider of turnkey solutions in the auto repair industry [2][11] - Expansion of the Texas warehouse by adding 156,000 square feet to increase inventory availability and support growth [20] - Focus on building brand awareness through partnerships and marketing campaigns [21] Management's Comments on Operating Environment and Future Outlook - Management believes that the current economic environment, including the chip shortage affecting new car manufacturing, will serve as a long-term tailwind for the business [32] - The company is optimistic about Q2 2021, citing improved inventory and capacity [62] Other Important Information - The company is in discussions to expand its Texas warehouse, which will enhance its distribution capabilities [19] - A new board member, Henry Maier, was welcomed, bringing extensive experience from FedEx [26] Q&A Session Summary Question: Are you 100% fully ramped now at the Texas facility? - Management confirmed that the Texas facility is operating at full outbound capacity but is currently 60% full [30] Question: How might the chip shortages impact your business over the next 12 months? - Management indicated that the aging fleet and longer vehicle retention will positively impact the business for an extended period [32] Question: Can you provide an update on the mobile mechanic initiative? - The mobile mechanic initiative remains in beta, with plans to analyze interactions before expanding [34] Question: How much of the revenue came from Texas in the quarter? - It was estimated that about $25 million of sales came from the Texas facility [36] Question: What is driving the rapid expansion of your distribution centers? - Management noted that the demand and operational success of existing distribution centers are key factors [38] Question: How quickly can you adjust your inventory orders? - Inventory orders can be adjusted in semi-real time, with weekly buys based on demand [49] Question: How much did mechanical parts contribute to sales in Q1? - Mechanical parts accounted for about 23% of sales in Q1, with plans to increase this mix [53] Question: How do you view the balance between driving website traffic and improving inventory selection? - Management believes both aspects are important for optimizing customer experience and sales [56]