CarParts.com(PRTS)2024-03-08 04:20Financial Data and Key Metrics - Q4 2023 sales were 676 million, up 2% YoY and 16% on a 2-year stack [13] - Adjusted EBITDA for Q4 was 19.7 million for the full year 2023, down from 51.6 million, flat YoY, while full-year gross profit was 230.9 million in 2022 [16] - GAAP net loss for Q4 was 6.2 million in the prior year, and full-year GAAP net loss was 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 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 51 million in cash and an untapped revolver of up to 129 million, down from 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]