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CarParts.com Reports Highest Quarterly Sales in Company History 

 2nd Quarter Sales of $177 million, up Slightly Year over Year  

14th Consecutive Quarter of Year over Year Sales Growth

TORRANCE, Calif.  August 1st, 2023  CarParts.com, Inc. (NASDAQ: PRTS), one of the leading eCommerce providers of automotive parts and accessories, and a one-stop shop for vehicle repair and maintenance needs, is reporting results for the second quarter ended July 1, 2023. 

Second Quarter 2023 Summary vs. Year-Ago Quarter  

Net sales increased to $177.0 million, up slightly year-over-year and up 12% on a two-year stack.
Gross profit decreased 2% to $60.4 million, with gross margin of 34.2%.
Net loss was ($0.7) million, compared to net income of $4.1 million.
Adjusted EBITDA of $6.3 million vs. $8.3 million.
Cash of $79.2 million and no revolver debt.
Repurchased 250,000 shares for $1.05 million during the quarter.
Launched mobile app on both iOS and Android.

Management Commentary

Q2 2023 marks our 14th consecutive quarter of year-over-year growth and the highest sales level for any quarter in our company’s history. The $79 million in cash on our balance sheet at the end of the quarter is a testament to the strong unit economics and cash generation capabilities of our business.” said David Meniane, CEO of CarParts.com.  “For the remainder of the year, we will be executing on six key strategic pillars: eCommerce fundamentals, digital transformation, assortment and catalog, marketing and customer experience, supply chain and logistics, and innovation.”

“CarParts.com has never been better positioned than it is today. As we continue to build a world class organization, focused on our strategic pillars, we believe we are creating a foundation that is making our company significantly more valuable and will benefit our stakeholders for years to come.”   

Second Quarter 2023 Financial Results

Net sales in the second quarter of 2023 were $177.0 million, up slightly from the year-ago quarter.

Gross profit in the second quarter decreased 2% to $60.4 million compared to $61.9 million in the year-ago quarter, with gross margin decreasing 90 basis points to 34.2%, primarily driven by higher outbound transportation costs and product mix.


Total operating expenses in the second quarter were $61.3 million compared to $57.6 million in the year-ago quarter. The increase was primarily driven by investments in our business, in addition to the absence of a prior period reversal in stock compensation expense from the departure of a key executive, combined with higher advertising expense, partially offset by a decrease in fulfillment expense primarily due to an improvement in distribution center costs. 

Net loss in the second quarter was ($0.7) million compared to net income of $4.1 million in the year-ago quarter.

Adjusted EBITDA in the second quarter was $6.3 million compared to $8.3 million in the year-ago quarter.

On July 1, 2023, the Company had a cash balance of $79.2 million and no revolver debt, compared to no revolver debt and a $18.8 million cash balance at prior fiscal year-end December 31, 2022. 

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, August 1, 2023

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 is the leading destination for vehicle care, maintenance, and accessories. Our easy-to-use, mobile-friendly website and app allow drivers to access quality parts and services without the guesswork typically associated with car repair or the added expense of brick-and-mortar stores. Our company-operated fulfillment network allows us to quickly deliver the quality parts from top brands to our customers nationwide. At CarParts.com, our global team is dedicated to removing the friction from our customers’ vehicle care and 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; and (e) share-based compensation expense. 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

 

    

July 1, 2023

    

July 2, 2022

    

July 1, 2023

    

July 2, 2022

 

Net sales

$

176.98

$

176.22

$

352.47

$

342.27

Gross profit

$

60.44

$

61.94

$

122.99

$

123.10

 

34.2

%  

 

35.1

%  

 

34.9

%  

 

36.0

%

Operating expense

$

61.29

$

57.64

$

123.20

$

116.42

 

34.6

%  

 

32.7

%  

 

35.0

%  

 

34.0

%

Net (loss) income

$

(0.67)

$

4.12

$

0.38

$

6.22

 

(0.4)

%  

 

2.3

%  

 

0.1

%  

 

1.8

%

Adjusted EBITDA

$

6.30

$

8.32

$

15.67

$

17.74

 

3.6

%  

 

4.7

%  

 

4.4

%  

 

5.2

%

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

    

July 1, 2023

        

July 2, 2022

            

July 1, 2023

            

July 2, 2022

Net (loss) income

$

(671)

$

4,118

$

380

$

6,221

Depreciation & amortization

4,247

3,308

 

8,166

6,265

Amortization of intangible assets

9

27

 

20

55

Interest (income) expense, net

(221)

342

 

126

633

Taxes

141

17

 

282

69

EBITDA

$

3,505

$

7,812

$

8,974

$

13,243

Stock compensation expense

$

2,797

$

506

6,696

4,498

Adjusted EBITDA

$

6,302

$

8,318

$

15,670

$

17,741


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

July 1,

July 2,

July 1,

July 2,

    

2023

    

2022

    

2023

    

2022

Net sales

$

176,978

$

176,220

$

352,470

$

342,273

Cost of sales (1)

 

116,536

 

114,285

 

229,477

 

219,176

Gross profit

 

60,442

 

61,935

 

122,993

 

123,097

Operating expense

 

61,286

 

57,644

 

123,201

 

116,415

(Loss) income from operations

 

(844)

 

4,291

 

(208)

 

6,682

Other income (expense):

 

Other income, net

 

639

 

190

 

1,553

 

246

Interest expense

 

(325)

 

(346)

 

(683)

 

(638)

Total other income (expense), net

 

314

 

(156)

 

870

 

(392)

(Loss) income before income taxes

 

(530)

 

4,135

 

662

 

6,290

Income tax provision

 

141

 

17

 

282

 

69

Net (loss) income

 

(671)

 

4,118

 

380

 

6,221

Other comprehensive gain (loss):

 

 

 

 

  

Foreign currency translation adjustments

 

 

104

 

 

124

Unrealized gain (loss) on deferred compensation trust assets

 

24

 

(100)

 

48

 

(134)

Total other comprehensive gain (loss)

 

24

 

4

 

48

 

(10)

Comprehensive (loss) income

$

(647)

$

4,122

$

428

$

6,211

Net (loss) income per share:

Basic net (loss) income per share

$

(0.01)

$

0.08

$

0.01

$

0.12

Diluted net (loss) income per share

$

(0.01)

$

0.07

$

0.01

$

0.11

Weighted-average common shares outstanding:

 

  

 

  

 

  

 

  

Shares used in computation of basic net (loss) income per share

 

56,532

 

54,210

 

55,789

 

53,744

Shares used in computation of diluted net (loss) income per share

 

56,532

 

57,210

 

58,028

 

57,315


(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)

July 1,

December 31,

    

2023

    

2022

ASSETS

 

  

 

  

Current assets:

 

  

 

  

Cash and cash equivalents

$

79,213

$

18,767

Accounts receivable, net

 

7,483

 

6,406

Inventory, net

 

113,739

 

136,026

Other current assets

 

6,675

 

6,672

Total current assets

 

207,110

 

167,871

Property and equipment, net

 

23,620

 

24,290

Right-of-use - assets - operating leases, net

21,737

23,951

Right-of-use - assets - finance leases, net

17,110

19,750

Other non-current assets

 

2,472

 

2,537

Total assets

$

272,049

$

238,399

LIABILITIES AND STOCKHOLDERS' EQUITY

 

  

 

  

Current liabilities:

 

Accounts payable

$

82,998

$

57,616

Accrued expenses

 

19,482

 

16,466

Right-of-use - obligation - operating, current

4,726

4,571

Right-of-use - obligation - finance, current

4,432

4,753

Other current liabilities

 

5,546

 

4,622

Total current liabilities

 

117,184

 

88,028

Right-of-use - obligation - operating, non-current

19,024

21,412

Right-of-use - obligation - finance, non-current

13,771

15,916

Other non-current liabilities

 

3,312

 

2,971

Total liabilities

 

153,291

 

128,327

Commitments and contingencies

 

Stockholders’ equity:

 

Common stock, $0.001 par value; 100,000 shares authorized; 56,914 and 54,693 shares issued and outstanding as of July 1, 2023 and December 31, 2022 (of which 2,815 and 2,565 are treasury stock, respectively)

 

59

 

57

Treasury stock

 

(8,672)

 

(7,625)

Additional paid-in capital

 

306,568

 

297,265

Accumulated other comprehensive income

 

1,174

 

1,126

Accumulated deficit

 

(180,371)

 

(180,751)

Total stockholders’ equity

 

118,758

 

110,072

Total liabilities and stockholders' equity

$

272,049

$

238,399


CARPARTS.COM, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, In Thousands)

Twenty-Six Weeks Ended

July 1,

July 2,

    

2023

    

2022

Operating activities

Net income

$

380

$

6,221

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization expense

 

8,166

 

6,265

Amortization of intangible assets

 

20

 

55

Share-based compensation expense

 

6,696

 

4,498

Stock awards issued for non-employee director service

 

11

 

11

Stock awards related to officers and directors stock purchase plan from payroll deferral

27

Gain from disposition of assets

 

(75)

 

(17)

Amortization of deferred financing costs

 

32

 

21

Changes in operating assets and liabilities:

Accounts receivable

 

(1,090)

 

(2,070)

Inventory

 

22,286

 

(24,165)

Other current assets

 

(4)

 

(1,739)

Other non-current assets

 

60

 

(741)

Accounts payable and accrued expenses

 

28,630

 

17,466

Other current liabilities

 

925

 

(109)

Right-of-use obligation - operating leases - current

380

(105)

Right-of-use obligation - operating leases - long-term

(398)

(20)

Other non-current liabilities

 

342

 

(139)

Net cash provided by operating activities

 

66,361

 

5,459

Investing activities

Additions to property and equipment

 

(4,669)

 

(7,797)

Proceeds from sale of property and equipment

 

83

 

44

Net cash used in investing activities

 

(4,586)

 

(7,753)

Financing activities

Borrowings from revolving loan payable

 

117

 

5,296

Payments made on revolving loan payable

 

(117)

 

(5,296)

Payments on finance leases

 

(2,467)

 

(1,966)

Repurchase of treasury stock

 

(1,052)

 

Net proceeds from issuance of common stock for ESPP

221

432

Proceeds from exercise of stock options

 

1,969

 

929

Net cash used in financing activities

 

(1,329)

 

(605)

Effect of exchange rate changes on cash

 

 

(21)

Net change in cash and cash equivalents

 

60,446

 

(2,920)

Cash and cash equivalents, beginning of period

 

18,767

 

18,144

Cash and cash equivalents, end of period

$

79,213

$

15,224

Supplemental disclosure of non-cash investing and financing activities:

Right-of-use finance asset acquired

$

$

7,235

Accrued asset purchases

$

408

$

1,060

Share-based compensation expense capitalized in property and equipment

$

411

$

579

Stock issued for services

$

$

81

Supplemental disclosure of cash flow information:

Cash paid during the period for income taxes

$

155

$

148

Cash (received) paid during the period for interest (income) expense, net

$

(32)

$

653