TORRANCE, Calif., July 30,
2024 /PRNewswire/ --
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 2024 Summary 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 margin of
33.5%.
- Net loss was ($8.7) million, or
($0.15) per share, compared to a net
loss of ($0.7) million, or
($0.01) per share.
- Adjusted EBITDA of ($0.1) million
vs. $6.3 million.
- Cash of $34.1 million and no
revolver debt.
- Total cumulative mobile app downloads of 450,000, more than
double the number from the beginning of the year.
Management Commentary
"Last quarter we discussed our emphasis on financial discipline
and profitability by focusing on driving gross and net margins,
accelerating efficiency and effectiveness to quickly deliver
improved profitability; and achieving sustainable growth with
strong long-term free cash flow.
In the second quarter, we made significant progress on gross
margin and efficiencies, which reinforces our confidence that we're
on the right track. We are confident in our roadmap and our
opportunity as a leading online retailer in a highly fragmented
$400 billion automotive aftermarket
market.
In the first half of the year, we updated our pricing and
marketing acquisition strategies to target more profitable
customers and generate higher gross margins. As a result, in the
second quarter, we saw sequential margin improvement with product
margins at 54.0%, up 210 bps from Q1. We expect Q3 to be
sequentially higher.
We are forging on a path that we expect will result in
achieving sustainable and significantly positive Adjusted EBITDA
next year while working towards achieving a 6-8% Adjusted EBITDA
margin and enhanced free cash flow generation in the medium term"
said David Meniane, CEO.
Second Quarter 2024 Financial Results
Net sales in the second quarter of 2024 were $144.3 million, down 18% from the year-ago
quarter. The decrease was primarily driven by deliberate price
increases to drive gross margin expansion combined with softness in
consumer demand.
Gross profit in the second quarter was $48.4 million compared to $60.4 million, with gross margin decreasing 70
basis points to 33.5%, but up sequentially from 32.4% in the first
quarter of 2024. For fiscal year 2024, the Company is focused on
driving gross margin expansion. This improvement was primarily
driven by price increases and expanded branded gross margins,
offset by higher year-over-year freight costs.
Total operating expenses in the second quarter were $57.1 million compared to $61.3 million in the year-ago quarter.
Net loss in the second quarter was ($8.7) million compared to a
net loss of ($0.7) million in the
year-ago quarter.
Adjusted EBITDA in the second quarter was ($0.1) million compared to $6.3 million in the year-ago quarter.
On June 29, 2024, the Company had
a cash balance of $34.1 million and
no revolver debt, compared to no revolver debt and a $51.0 million cash balance at prior fiscal
year-end December 30, 2023.
2024 Outlook
For the full year 2024, we are targeting net sales and gross
profit to remain within the range we had previously forecasted. The
Company expects net sales at the low end in the range of
$600 million to $625 million and gross margin to be 33%, plus or
minus 100 basis points.
Conference Call
CarParts.com CEO David Meniane,
CFO Ryan Lockwood and COO
Michael Huffaker will host a
conference call today to discuss the results, followed by a
question-and-answer period.
Date: Tuesday, July 30, 2024
Time: 5:00 p.m. Eastern time
(2:00 p.m. Pacific time)
Webcast: www.carparts.com/investor/news-events
To listen to the live call, please click the link above to
access the webcast. A replay of the audio webcast will be archived
on the Company's website at
www.carparts.com/investor.
About CarParts.com, Inc.
CarParts.com, Inc. is a technology-driven eCommerce company
offering over 1 million high-quality automotive parts and
accessories. Operating for over 25 years, CarParts.com has
established itself as a premier destination for drivers seeking
repair and maintenance solutions. Our commitment lies in placing
the customer at the forefront of our operations, evident in our
easy-to-use, mobile-friendly website and app. With a commitment to
affordability and customer satisfaction, CarParts.com simplifies
the automotive repair process, aiming to eliminate the uncertainty
and stress often associated with vehicle maintenance.
Backed by a robust company-operated fulfillment network, we
ensure swift delivery of top-quality parts from leading brands to
customers across the nation.
At CarParts.com, our global team is united by a shared vision:
Empowering Drivers Along Their Journey.
CarParts.com is headquartered in Torrance, California.
Non-GAAP Financial Measures
Regulation G, and other provisions of the Securities Exchange
Act of 1934, as amended, define and prescribe the conditions for
use of certain non-GAAP financial information. We provide "Adjusted
EBITDA" in this earnings release and on today's scheduled
conference call, which are non-GAAP financial measures. Adjusted
EBITDA consist of net (loss) income before (a) interest
(income) expense, net; (b) income tax provision;
(c) depreciation and amortization expense;
(d) amortization of intangible assets; (e) share-based
compensation expense; (f) workforce transition costs; and (g)
distribution center costs. A reconciliation of Adjusted EBITDA to
net (loss) income is provided below.
The Company believes that these non-GAAP financial measures
provide important supplemental information to management and
investors. These non-GAAP financial measures reflect an additional
way of viewing aspects of the Company's operations that, when
viewed with the GAAP results and the accompanying reconciliations
to corresponding GAAP financial measures, provides a more complete
understanding of factors and trends affecting the Company's
business and results of operations.
Management uses Adjusted EBITDA as measures of the Company's
operating performance because it assists in comparing the Company's
operating performance on a consistent basis by removing the impact
of stock compensation expense as well as other items that we do not
believe are representative of our ongoing operating performance.
Internally, these non-GAAP measures are also used by management for
planning purposes, including the preparation of internal budgets;
for allocating resources to enhance financial performance; and for
evaluating the effectiveness of operational strategies. The Company
also believes that analysts and investors use these non-GAAP
measures as supplemental measures to evaluate the ongoing
operations of companies in our industry.
These non-GAAP financial measures are used in addition to and in
conjunction with results presented in accordance with GAAP and
should not be relied upon to the exclusion of GAAP financial
measures. Management strongly encourages investors to review the
Company's consolidated financial statements in their entirety and
to not rely on any single financial measure. Because non-GAAP
financial measures are not standardized, it may not be possible to
compare these financial measures with other companies' non-GAAP
financial measures having the same or similar names. In addition,
the Company expects to continue to incur expenses similar to the
non-GAAP adjustments described above, and exclusion of these items
from the Company's non-GAAP measures should not be construed as an
inference that these costs are all unusual, infrequent or
non-recurring.
Safe Harbor Statement
This press release contains statements which are based
on management's current expectations, estimates and projections
about the Company's business and its industry, as well as certain
assumptions made by the Company. These statements are forward
looking statements for the purposes of the safe harbor provided by
Section 21E of the Securities Exchange Act of 1934, as amended
and Section 27A of the Securities Act of 1933, as amended.
Words such as "anticipates," "could," "expects," "intends,"
"plans," "potential," "believes," "predicts," "projects," "seeks,"
"estimates," "may," "will," "would," "will likely continue" and
variations of these words or similar expressions are intended to
identify forward-looking statements. These statements include,
but are not limited to, statements regarding our
future operating results and financial condition, our
potential growth, our ability to innovate, our ability to gain
market share, and our ability to expand and improve our product
offerings. We undertake no obligation to revise or update publicly
any forward-looking statements for any reason. These statements are
not guarantees of future performance and are subject to certain
risks, uncertainties and assumptions that are difficult to
predict. Therefore, our actual results could differ materially
and adversely from those expressed in any forward-looking
statements as a result of various factors.
Important factors that may cause such a difference include,
but are not limited to, competitive pressures, our dependence on
search engines to attract customers, demand for the Company's
products, the online market and channel mix for aftermarket auto
parts, the economy in general, increases in commodity and component
pricing that would increase the Company's product costs, the
operating restrictions in its credit agreement, the weather and any
other factors discussed in the Company's filings with the
Securities and Exchange Commission (the "SEC"), including the Risk
Factors contained in the Company's Annual Report on Form 10–K
and Quarterly Reports on Form 10–Q, which are available
at www.carparts.com/investor and the SEC's website
at www.sec.gov. You are urged to consider these factors
carefully in evaluating the forward-looking statements in this
release and are cautioned not to place undue reliance on such
forward-looking statements, which are qualified in their entirety
by this cautionary statement. Unless otherwise required by
law, the Company expressly disclaims any obligation to update
publicly any forward-looking statements, whether as result of new
information, future events or otherwise.
Investor Relations:
Ryan Lockwood, CFA
IR@carparts.com
Summarized information for the periods presented is as follows
(in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen
Weeks
Ended
|
|
Thirteen
Weeks
Ended
|
|
Twenty-Six
Weeks
Ended
|
|
Twenty-Six
Weeks
Ended
|
|
|
|
June 29, 2024
|
|
July 1, 2023
|
|
June 29, 2024
|
|
July 1, 2023
|
|
|
Net sales
|
|
$
|
144.27
|
|
$
|
176.98
|
|
$
|
310.56
|
|
$
|
352.47
|
|
|
Gross profit
|
|
$
|
48.39
|
|
$
|
60.44
|
|
$
|
102.31
|
|
$
|
122.99
|
|
|
|
|
33.5
|
%
|
|
34.2
|
%
|
|
32.9
|
%
|
|
34.9
|
%
|
|
Operating
expense
|
|
$
|
57.12
|
|
$
|
61.29
|
|
$
|
117.56
|
|
$
|
123.20
|
|
|
|
|
39.6
|
%
|
|
34.6
|
%
|
|
37.9
|
%
|
|
35.0
|
%
|
|
Net (loss)
income
|
|
$
|
(8.69)
|
|
$
|
(0.67)
|
|
$
|
(15.17)
|
|
$
|
0.38
|
|
|
|
|
(6.0)
|
%
|
|
(0.4)
|
%
|
|
(4.9)
|
%
|
|
0.1
|
%
|
|
Adjusted
EBITDA
|
|
$
|
(0.12)
|
|
$
|
6.30
|
|
$
|
0.93
|
|
$
|
15.67
|
|
|
|
|
(0.1)
|
%
|
|
3.6
|
%
|
|
0.3
|
%
|
|
4.4
|
%
|
The table below reconciles net (loss) income to Adjusted EBITDA
for the periods presented (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen
Weeks
Ended
|
|
Thirteen
Weeks
Ended
|
|
Twenty-Six
Weeks
Ended
|
|
Twenty-Six
Weeks
Ended
|
|
|
June 29, 2024
|
|
July 1, 2023
|
|
June 29, 2024
|
|
July 1, 2023
|
|
Net (loss)
income
|
|
$
|
(8,687)
|
|
$
|
(671)
|
|
$
|
(15,165)
|
|
$
|
380
|
|
Depreciation &
amortization
|
|
|
4,455
|
|
|
4,247
|
|
|
8,480
|
|
|
8,166
|
|
Amortization of
intangible assets
|
|
|
13
|
|
|
9
|
|
|
21
|
|
|
20
|
|
Interest (income)
expense, net
|
|
|
(68)
|
|
|
(221)
|
|
|
(205)
|
|
|
126
|
|
Income tax
provision
|
|
|
27
|
|
|
141
|
|
|
125
|
|
|
282
|
|
EBITDA
|
|
$
|
(4,260)
|
|
$
|
3,505
|
|
$
|
(6,744)
|
|
$
|
8,974
|
|
Stock compensation
expense
|
|
$
|
3,328
|
|
$
|
2,797
|
|
$
|
5,910
|
|
$
|
6,696
|
|
Workforce transition
costs(1)
|
|
|
108
|
|
|
—
|
|
|
591
|
|
|
—
|
|
Distribution center
costs(2)
|
|
|
706
|
|
|
—
|
|
|
1,177
|
|
|
—
|
|
Adjusted
EBITDA
|
|
$
|
(118)
|
|
$
|
6,302
|
|
$
|
934
|
|
$
|
15,670
|
|
|
|
|
|
|
|
|
|
|
(1)
|
We incurred workforce
transition costs, primarily related to severance, as part of our
recent workforce reductions.
|
|
(2)
|
We incurred certain
non-recurring costs, primarily overlapping rent expense,
attributable to moving to our new Las Vegas, Nevada distribution
center.
|
|
CARPARTS.COM, INC. AND
SUBSIDIARIES
|
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE
OPERATIONS
(Unaudited, In Thousands, Except Per Share
Data)
|
|
|
|
Thirteen Weeks
Ended
|
|
Twenty-Six Weeks
Ended
|
|
|
June 29,
|
|
July 1,
|
|
June 29,
|
|
July 1,
|
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Net sales
|
|
$
|
144,270
|
|
$
|
176,978
|
|
$
|
310,559
|
|
$
|
352,470
|
|
Cost of sales
(1)
|
|
|
95,877
|
|
|
116,536
|
|
|
208,247
|
|
|
229,477
|
|
Gross profit
|
|
|
48,393
|
|
|
60,442
|
|
|
102,312
|
|
|
122,993
|
|
Operating
expense
|
|
|
57,121
|
|
|
61,286
|
|
|
117,557
|
|
|
123,201
|
|
Loss from
operations
|
|
|
(8,728)
|
|
|
(844)
|
|
|
(15,245)
|
|
|
(208)
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income,
net
|
|
|
354
|
|
|
639
|
|
|
791
|
|
|
1,553
|
|
Interest
expense
|
|
|
(286)
|
|
|
(325)
|
|
|
(586)
|
|
|
(683)
|
|
Total other income,
net
|
|
|
68
|
|
|
314
|
|
|
205
|
|
|
870
|
|
(Loss) income before
income taxes
|
|
|
(8,660)
|
|
|
(530)
|
|
|
(15,040)
|
|
|
662
|
|
Income tax
provision
|
|
|
27
|
|
|
141
|
|
|
125
|
|
|
282
|
|
Net (loss)
income
|
|
|
(8,687)
|
|
|
(671)
|
|
|
(15,165)
|
|
|
380
|
|
Other comprehensive
gain:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
adjustments
|
|
|
—
|
|
|
—
|
|
|
87
|
|
|
—
|
|
Unrealized gain on
deferred compensation trust assets
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
48
|
|
Total other
comprehensive gain
|
|
|
—
|
|
|
24
|
|
|
87
|
|
|
48
|
|
Comprehensive (loss)
income
|
|
$
|
(8,687)
|
|
$
|
(647)
|
|
$
|
(15,078)
|
|
$
|
428
|
|
Net (loss) income per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net (loss) income
per share
|
|
$
|
(0.15)
|
|
$
|
(0.01)
|
|
$
|
(0.27)
|
|
$
|
0.01
|
|
Diluted net (loss)
income per share
|
|
$
|
(0.15)
|
|
$
|
(0.01)
|
|
$
|
(0.27)
|
|
$
|
0.01
|
|
Weighted-average common
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in
computation of basic net (loss) income per share
|
|
|
56,851
|
|
|
56,532
|
|
|
56,677
|
|
|
55,789
|
|
Shares used in
computation of diluted net (loss) income per share
|
|
|
56,851
|
|
|
56,532
|
|
|
56,677
|
|
|
58,028
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Excludes depreciation
and amortization expense which is included in operating
expense.
|
|
CARPARTS.COM, INC. AND
SUBSIDIARIES
|
|
|
CONSOLIDATED BALANCE
SHEETS
(Unaudited, In Thousands, Except Par Value
Data)
|
|
|
|
June 29,
|
|
December 30,
|
|
|
2024
|
|
2023
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
34,065
|
|
$
|
50,951
|
|
Accounts receivable,
net
|
|
|
6,147
|
|
|
7,365
|
|
Inventory,
net
|
|
|
109,289
|
|
|
128,901
|
|
Other current
assets
|
|
|
8,154
|
|
|
6,121
|
|
Total current
assets
|
|
|
157,655
|
|
|
193,338
|
|
Property and equipment,
net
|
|
|
34,622
|
|
|
26,389
|
|
Right-of-use - assets -
operating leases, net
|
|
|
29,530
|
|
|
19,542
|
|
Right-of-use - assets -
finance leases, net
|
|
|
12,929
|
|
|
15,255
|
|
Other non-current
assets
|
|
|
3,303
|
|
|
3,331
|
|
Total
assets
|
|
$
|
238,039
|
|
$
|
257,855
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
62,701
|
|
$
|
77,851
|
|
Accrued
expenses
|
|
|
17,571
|
|
|
20,770
|
|
Right-of-use -
obligation - operating, current
|
|
|
5,692
|
|
|
4,749
|
|
Right-of-use -
obligation - finance, current
|
|
|
3,897
|
|
|
4,308
|
|
Other current
liabilities
|
|
|
4,742
|
|
|
5,308
|
|
Total current
liabilities
|
|
|
94,603
|
|
|
112,986
|
|
Right-of-use -
obligation - operating, non-current
|
|
|
26,166
|
|
|
16,742
|
|
Right-of-use -
obligation - finance, non-current
|
|
|
10,517
|
|
|
12,327
|
|
Other non-current
liabilities
|
|
|
2,863
|
|
|
2,969
|
|
Total
liabilities
|
|
|
134,149
|
|
|
145,024
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
Common stock, $0.001
par value; 100,000 shares authorized; 57,088 and 56,303 shares
issued and outstanding as of June 29, 2024 and
December 30, 2023 (of which 3,786 are treasury
stock)
|
|
|
61
|
|
|
60
|
|
Treasury
stock
|
|
|
(11,912)
|
|
|
(11,912)
|
|
Additional paid-in
capital
|
|
|
319,010
|
|
|
312,874
|
|
Accumulated other
comprehensive income
|
|
|
870
|
|
|
783
|
|
Accumulated
deficit
|
|
|
(204,139)
|
|
|
(188,974)
|
|
Total stockholders'
equity
|
|
|
103,890
|
|
|
112,831
|
|
Total liabilities and
stockholders' equity
|
|
$
|
238,039
|
|
$
|
257,855
|
|
CARPARTS.COM, INC. AND
SUBSIDIARIES
|
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited, In
Thousands)
|
|
|
|
Twenty-Six Weeks
Ended
|
|
|
June 29,
|
|
July 1,
|
|
|
2024
|
|
2023
|
|
Operating
activities
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
$
|
(15,165)
|
|
$
|
380
|
|
Adjustments to
reconcile net (loss) income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization expense
|
|
|
8,480
|
|
|
8,166
|
|
Amortization of
intangible assets
|
|
|
21
|
|
|
20
|
|
Share-based
compensation expense
|
|
|
5,910
|
|
|
6,696
|
|
Stock awards issued for
non-employee director service
|
|
|
19
|
|
|
11
|
|
Stock awards related to
officers and directors stock purchase plan from payroll
deferral
|
|
|
4
|
|
|
—
|
|
Gain from disposition
of assets
|
|
|
—
|
|
|
(75)
|
|
Amortization of
deferred financing costs
|
|
|
32
|
|
|
32
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
1,217
|
|
|
(1,090)
|
|
Inventory
|
|
|
19,613
|
|
|
22,286
|
|
Other current
assets
|
|
|
(2,032)
|
|
|
(4)
|
|
Other non-current
assets
|
|
|
15
|
|
|
60
|
|
Accounts payable and
accrued expenses
|
|
|
(17,802)
|
|
|
28,630
|
|
Other current
liabilities
|
|
|
(566)
|
|
|
925
|
|
Right-of-use obligation
- operating leases - current
|
|
|
1,169
|
|
|
380
|
|
Right-of-use obligation
- operating leases - long-term
|
|
|
(790)
|
|
|
(398)
|
|
Other non-current
liabilities
|
|
|
(107)
|
|
|
342
|
|
Net cash provided by
operating activities
|
|
|
18
|
|
|
66,361
|
|
Investing
activities
|
|
|
|
|
|
|
|
Additions to property
and equipment
|
|
|
(14,567)
|
|
|
(4,669)
|
|
Payments for intangible
assets
|
|
|
(40)
|
|
|
—
|
|
Proceeds from sale of
property and equipment
|
|
|
—
|
|
|
83
|
|
Net cash used in
investing activities
|
|
|
(14,607)
|
|
|
(4,586)
|
|
Financing
activities
|
|
|
|
|
|
|
|
Borrowings from
revolving loan payable
|
|
|
127
|
|
|
117
|
|
Payments made on
revolving loan payable
|
|
|
(127)
|
|
|
(117)
|
|
Payments on finance
leases
|
|
|
(2,157)
|
|
|
(2,467)
|
|
Repurchase of treasury
stock
|
|
|
—
|
|
|
(1,052)
|
|
Net proceeds from
issuance of common stock for ESPP
|
|
|
202
|
|
|
221
|
|
Statutory tax
withholding payment for share-based compensation
|
|
|
(429)
|
|
|
—
|
|
Proceeds from exercise
of stock options
|
|
|
—
|
|
|
1,969
|
|
Net cash used in
financing activities
|
|
|
(2,384)
|
|
|
(1,329)
|
|
Effect of exchange rate
changes on cash
|
|
|
87
|
|
|
—
|
|
Net change in cash and
cash equivalents
|
|
|
(16,886)
|
|
|
60,446
|
|
Cash and cash
equivalents, beginning of period
|
|
|
50,951
|
|
|
18,767
|
|
Cash and cash
equivalents, end of period
|
|
$
|
34,065
|
|
$
|
79,213
|
|
Supplemental disclosure
of non-cash investing and financing activities:
|
|
|
|
|
|
|
|
Right-of-use operating
asset acquired
|
|
$
|
12,857
|
|
$
|
—
|
|
Accrued asset
purchases
|
|
$
|
888
|
|
$
|
408
|
|
Share-based
compensation expense capitalized in property and
equipment
|
|
$
|
431
|
|
$
|
411
|
|
Supplemental disclosure
of cash flow information:
|
|
|
|
|
|
|
|
Cash paid during the
period for income taxes
|
|
$
|
48
|
|
$
|
155
|
|
Cash paid during the
period for interest
|
|
$
|
586
|
|
$
|
683
|
|
Cash received during
the period for interest
|
|
$
|
791
|
|
$
|
557
|
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SOURCE CarParts.com, Inc.