Investor
Presentation Exhibit 99.1 |
Safe
Harbor 2
This presentation may contain certain forward-looking statements and
management may make additional forward-looking statements in response to
your questions. These statements do not guarantee future performance and
speak only as of the date hereof, and qualify for 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. We refer all of you to the risk factors contained in
US Auto Parts Annual Report on Form 10-K and quarterly reports on Form 10-Q
filed with the Securities and Exchange Commission, for more detailed discussion
on the factors that can cause actual results to differ materially from those
projected in any forward-looking statements. |
3
Company Overview
A leading online retailer of aftermarket auto parts and accessories
Operates
in
multiple
online
channels
focused
on
the
DIY
customer
(operates
a
small
wholesale
DIFM
channel)
Offers over 1.5mm SKUs across a diverse assortment of high quality private label
and branded products Reaches over 10mm online customers per month with well
established brands (JC Whitney 100 Year
Anniversary)
Channel Sales Mix
Offline
Online
Marketplaces
Ecommerce
Product Sales Mix
Performance
& Accessories
Collision
Engine
50%
25%
25%
68%
23%
9% |
4
Company Snapshot
US Auto Parts is a value leader in the
aftermarket car parts category
Operates online sites, marketplaces and
wholesale channels
Headquartered in Carson, CA
Traded on NASDAQ since 2007: PRTS
Revenue of $284M in FY-14
Track record of growth in sales and traffic
CAGR 11.3% |
Launched first internet site selling
automotive Collision Line
Launches a network of sites catered to
various consumer segments
Company begins significantly
expanding its private label engine line
JC Whitney completely
integrated
1995
2000
2010
2005
2006
2011
Launches AutoMD /
Acquires JC Whitney
Adds Accessories Line
USAP founded to serve local
collision shops in Los Angeles
IPO (NASDAQ: PRTS)
2007
2008
Acquires PartsBin
Adds Engine Line
5
Launched
AutoMD IQ /
Consolidated websites
to focus on Flagship
sites
2013
Company History
Spun off 36% of AutoMD /
Returned to double digit
sales growth & positive
FCF
2014
Investing in LTV and
GMROI / JC Whitney
turns 100 years old
2015 |
6
Total revenue $76.3M
Sales up 12% for the quarter
Adjusted EBITDA excluding AutoMD was $2.9M
Hired new CFO Neil Watanabe
Financial Highlights from Q1-15
Earnings Call |
7
Four consecutive positive, double digit comp growth
Positive Quarterly Comp Sales
Trend
* Includes
an
extra
week
would have been 12% on a normalized basis.
*
4%
13%
10%
18%
12%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
Q1-14
Q2-14
Q3-14
Q4-14
Q5-15 |
8
Q1 Financial Performance
(excluding AutoMD)
$55.0
$60.0
$65.0
$70.0
$75.0
$80.0
Q1-13
Q1-14
Q1-15
Net Sales
0.0%
10.0%
20.0%
30.0%
40.0%
Q1-13
Q1-14
Q1-15
Operating Expenses as a % of net sales
($4.0)
($3.0)
($2.0)
($1.0)
$0.0
$1.0
Q1-13
Q1-14
Q1-15
Operating Income (Loss)
$-
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
Q1-13
Q1-14
Q1-15
Adjusted EBITDA |
Case
for Investment 9
Improving Financial Performance
Large and Growing Online Market
Significant Customer Reach
Significant Private Label Offering
Experienced Leadership Team |
10
At
11%
online
market
penetration,
auto
parts
still
lags
industry
average
in
the
teens.
US Auto Parts is estimated to be the largest pure-play online retailer of auto
parts 1
Digital Auto Care fact book estimates
2
Estimates by US Auto Parts where amounts are not publicly reported
3
Only
includes
estimated
mail
delivered
business
does
not
include
store
pick
ups
4
Excludes AutoAnything which is wholly owned by AutoZone
Do It Yourself (DIY) Market Size
Company
2014 Est. Rev
% of total
Marketplaces
(in million)
eBay Motors
$2,560
46.1%
Amazon
$720
13.0%
Sub Total
$3,280
59.1%
Wholesale Online
Tire Rack (online)
$530
9.6%
Other Tire Companies
$230
4.1%
Sub Total
$760
13.7%
Pure Play
US Auto Parts
$280
5.0%
Rock Auto
$260
4.7%
Summit
$200
3.6%
Auto Anything
(AutoZone)
$140
2.5%
JEGS
$80
1.4%
CarID
$70
1.3%
All Other Pure Play
$180
3.2%
Sub Total
$1,210
21.8%
Brick & Mortar Retailers
AutoZone (w/o AA)
4
$140
2.5%
Advance
$90
1.6%
Pep
$40
0.7%
O'Reilly
$20
0.4%
NAPA
$10
0.2%
Sub Total
$300
5.4%
Total
$5,550
100.0%
Total DIY Market Size for 2014 of $49B
$5.5B
11%
$43.5B
89%
1
3
2 |
Booz & Co. estimates by 2018 that Online DIY
could reach 17% of the total DIY market
11
Online Market is Vibrant and
Growing
DIY Online Penetration
Mean Light Vehicle age
Source: R.L. Polk and BB&TCM
Source: Booz & Co.
The average age of a light vehicle on the road
continues to increase each year since 1997
1
1
2014
is
estimated
by
IHS
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
2012
2013
2014
2015
2016
2017
2018
8.9
8.9
9.6
9.7
9.8
9.8
9.9
10.0
10.1
10.3
10.6
10.9
11.1
11.3
11.4
0
2
4
6
8
10
12 |
Offline
$42.6
$43.5
$44.2
$44.8
$45.3
$45.5
Online*
4.6
5.5
6.6
8.0
9.5
11.5
Total**
$47.2
$49.0
$50.8
$52.8
$54.8
$57.0
% Online
9.8%
11.3%
13.0%
15.1%
17.4%
20.1%
12
Do It Yourself (DIY) Projections
More of the incremental growth will come online vs. offline
*Projections for industry from USAP estimates and applied to Booz & Co
**Projections obtained from 2015 Digital Auto Care fact book
DIY Projected Revenue (in Billions)
0.0
0.5
1.0
1.5
2.0
2.5
2013
2014
2015
2016
2017
2018
DIY Projected Y/Y Revenue Growth
Offline
Online
Total |
(some overlap of
monthly visitors across websites) 13
Customer Reach is a Competitive Moat
US Auto Parts Has Dominant Reach
0
2,000
4,000
6,000
8,000
10,000
Over 500 man years of hand written unique content
Long domain history to help indexing in search
Multiple website management
Competitor sites traffic based on Compete March 2015 reports
|
Year over Year
Conversion Comp Year over Year Traffic Comp
14
Historical Traffic & Conversion Growth
*Q2-15 based on April trend
Consolidated websites and turned
off about $80mm of revenue
Increased competition created
pricing pressure in the market
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
Q1-07
Q2-07
Q3-07
Q4-07
Q1-08
Q2-08
Q3-08
Q4-08
Q1-09
Q2-09
Q3-09
Q4-09
Q1-10
Q2-10
Q3-10
Q4-10
Q1-11
Q2-11
Q3-11
Q4-11
Q1-12
Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
Q3-14
Q4-14
Q1-15
Q2-15*
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
Q1-07
Q2-07
Q3-07
Q4-07
Q1-08
Q2-08
Q3-08
Q4-08
Q1-09
Q2-09
Q3-09
Q4-09
Q1-10
Q2-10
Q3-10
Q4-10
Q1-11
Q2-11
Q3-11
Q4-11
Q1-12
Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
Q3-14
Q4-14
Q1-15
Q2-15* |
15
Strategies For Increasing Customer Life Time Value
The 2015 strategy is to increase Customer Life Time Value
Gross Profit per
Transaction
Average Order
Size
Repeat Purchase
Conversion
Increased Traffic
Efficient sourcing
strategy
Private label sourcing
Price optimization
Efficient operations
Sell the job
Cross-sell
Warranty options
Easy to do business
Improved service
levels
Reduced returns
Reduced no-fills
Easy to find Product
Speed of website
In-stock rate
Quality of data
Relevant SKUs
We anticipate
increasing traffic will
be directly related to
our ability to improve
our strategic
objectives allowing
for more available
dollars to spend on
marketing.
=
We believe increased customer LTV will result in a greater mix of traffic from both direct to
website and paid channels resulting in less dependence and impact from organic
search |
16
Broad Auto Parts Product Offering
Brake
Discs
Catalytic
Converters
Radiators
Headers
Oxygen
Sensors
Alternators
Exhaust
Driveshaft
Fuel Injection /
Delivery
Lamps
Mirrors
Bumpers
Hoods
Tailgates
Doors
Grills
Wheels
Window
Regulators
Seat Covers
Car Covers
Floor Mats /
Carpeting
Cold Air
Intakes
Vent Visors
Tonneau
Covers
Nerf Bars
Bug Shields
Car Bras
Collision Parts
Engine Parts
Performance & Accessories
25%
50%
25%
Revenue
US Auto Parts has one of the largest product offerings with over
1.5 million
products across collision parts, engine parts, and performance &
accessories
Broad Auto Parts Product Offering |
USAPs ability to competitively price products while maintaining healthy
margins is a function of leveraging its robust private label supply
chain:
Currently over 40,000 Private Label Products.
Adding
5,000
7,000
Private
Label
SKUs
this
year
The
Company
sources
product
directly
from
over
200+
factories
in
Asia
17
Margin %
In-Stock
Private Label
(Asia Sourced)
Branded
(U.S. Sourced)
30% -
60%
15% -
30%
5% -
20%
Drop Shipped
Current Mix
58%
42%
Current Mix
67%
33%
The breadth of our Private Label products provides a significant competitive
advantage Supply Chain Creates Pricing Advantage
2015 Expected
60%
40% |
18
Historical Product Sales Mix
US
Auto
Parts
has
transitioned
to
Private
Label
products
to
be
a
low
cost leader with high quality products in the marketplace
43.5%
43.7%
42.4%
45%
52%
58%
60%
56.5%
56.3%
57.6%
55%
48%
42%
40%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
2009
2010
2011
2012
2013
2014
2015 Expected
Private Label
Branded |
19
GMROI Focused Strategy
Utilize our automated price optimization tool to tailor our pricing strategies
for all online channels
Take action on slow moving inventory to minimize margin erosion
Leverage
our
proprietary
inventory
management
systems
to
improve
in-
stock levels and reduce unnecessary weeks of supply
Determine private label vs. branded in-stock vs. drop ship partners mix
|
Revenue
Gross Margins
Variable OPEX Costs
Fixed Cost
20
Incremental Flow Thru
Growth and Profitability
27% -
29%
0%
100%
15%
12% -
14%
Incremental Flow |
21
Our business model has significant cost leverage as revenues grow
1.
Excludes stock based compensation, depreciation and amortization
2.
For every incremental year required to achieve growth levels, fixed expenses
increase $1.0M or 3% Financial Sensitivity
Base
10%
20%
30%
40%
50%
Revenue
$284
$312
$341
$369
$398
$426
Gross Margin %
27.0%
29.0%
27.0%
29.0%
27.0%
29.0%
27.0%
29.0%
27.0%
29.0%
27.0%
29.0%
Variable:
Fulfillment
3.4%
3.4%
3.4%
3.4%
3.4%
3.4%
Marketing
9.4%
9.4%
9.4%
9.4%
9.4%
9.4%
Technology
0.5%
0.5%
0.5%
0.5%
0.5%
0.5%
G&A
1.8%
1.8%
1.8%
1.8%
1.8%
1.8%
Total Variable
15.1%
15.1%
15.1%
15.1%
15.1%
15.1%
Fixed:
Fulfillment
2.0%
1.8%
1.7%
1.6%
1.4%
1.4%
Marketing
3.8%
3.5%
3.2%
2.9%
2.7%
2.6%
Technology
1.0%
0.9%
0.8%
0.7%
0.7%
0.6%
G&A
3.6%
3.3%
3.0%
2.8%
2.6%
2.4%
Total Fixed
10.4%
9.5%
8.7%
8.0%
7.4%
6.9%
Adjusted EBITDA %
1.4%
3.4%
2.4%
4.4%
3.2%
5.2%
3.9%
5.9%
4.4%
6.4%
4.9%
6.9%
Adjusted EBITDA $
$4
$10
$7
$14
$11
$18
$14
$22
$18
$26
$21
$29 |
22
AutoMD
Repair Lead Generation Site
Overview
Repair lead generation site addresses
the DIFM market
Recent Strategic Investment
$12.5M pre-money valuation
Raised $7.0M in capital
Fed Mogul: $3.0M
Cox Automotive: $2.0M
Insiders: $2.0M
Post-funding valuation of $19.5M
USAP in control with 64% of the
business
There are approximately 2,250 shops
on the program currently with a goal to
double by the end of the year between
3,250
4,500. |
23
In Summary
US Auto Parts
A leading e-Commerce company
That is growing with positive FCF
In a $5B industry that is expected to double in the next 5-7 years
We have two significant competitive advantages
Our customer reach is over 10mm visitors monthly
Our supply chain sources over 40,000 Private Label products
We have an experienced management team with a mix of e-commerce and
automotive expertise |
24
APPENDIX |
25
Leadership Team
Over 10 years experience leading internet businesses
Senior Vice President and General Manager of Blockbuster Online
Vice President of Strategic Planning for Blockbuster Inc.
B.A. degree in Business Administration from the University of New Mexico and a
M.B.A. from Southern Methodist University
Over
30
years
of
finance,
accounting
&
retail
experience
in
both
private
&
public
companies
Chief Operating Officer of National Stores
EVP
&
Chief
Financial
Officer
Anna
Linens
EVP
&
Chief
Financial
Officer
Pet
Smart
EVP
&
Chief
Financial
Officer
Elizabeth
Arden
Red
Door
Spas
B.A.
degree
in
Social
Sciences
from
the
University
of
California,
Los
Angeles
and
obtained
CPA
certification
in
Illinois
Former
Executive
Vice
President
of
Operations
and
CIO
from
April
2008
-
September
2010
Over 18 years of e-commerce experience
Senior
Vice
President
Online
Systems
at
Blockbuster
Inc.
Multiple positions with internet and technology companies including American
Airlines, Travelweb (Priceline), Baan
B.A. degree in Business Administration from Gonzaga University
Over 30 years of global sourcing experience
Vice President, Supply Chain Management for Keystone Automotive Industries
Director, Business Development for Modern Engineering
Multiple leadership positions with multiple companies in the automotive aftermarket
industry Charles Fischer - Senior Vice President of Global Procurement since May 2008 Aaron E. Coleman - Chief Operating
Officer since September 2010
Neil Watanabe - Chief Financial Officer since March 2015 Shane Evangelist - Chief Executive
Officer since October 2007 |
Sales
&
Adjusted
EBITDA
1
26
Consolidated
Sales
2
($ In Millions)
1.
Excludes AMD starting in Q4-14 which is funded through capital raised
2.
JC
Whitney
was
acquired
in
Aug
2010
adding
revenue
of
$39.1M
in
2010
and
$83.4M
in
2011.
Amounts
not
separately
disclosed
after
2011.
3.
Non-GAAP financial measure EBITDA consists of net income before (a) interest
expense, net; (b) income tax provisions; (c) amortization of intangible assets; (d) depreciation and
amortization.
Adjusted
EBITDA
excludes
Stock
based
compensation
of
$2.9M,
$3.3M,
$2.7M,
$2.6M,
$1.7M
,
$1.3M
,
$2.4M
and
$0.5M
in
2008,
2009,
2010,
2011,
2012,
2013,
2014
and
Q1-
15, respectively and restructuring costs and other one time charges of $23.4M,
$0.4M, $5.8M, $12.9M, $27.5M, $6.8M, and $2.4 in 2008, 2009, 2010, 2011, 2012, 2013, and 2014 respectively.
Adj. EBITDA Margin
Consolidated
Adjusted
EBITDA
3
($ In Millions)
$153.4
$176.3
$262.3
$327.1
$304.0
$254.8
$283.4
$76.3
2008
2009
2010
2011
2012
2013
2014
Q1-15
$5.2
$13.5
$19.5
$16.3
$9.4
$6.0
$8.1
$2.9
Q1-15
3%
5%
8%
7%
3%
2%
3%
3%
2008
2009
2010
2011
2012
2013
2014 |
27
Over $19M of costs have been reduced over a two year period
Adjusted EBITDA
(Non-GAAP Financial Measure
in thousands)
Thirteen Weeks Ended April 4, 2015
Thirteen Weeks Ended March 29, 2014
Base
Base
(in thousands)
USAP
AutoMD
Consolidated
USAP
AutoMD
Consolidated
Net loss
187
$
(503)
$
(316)
$
683
$
(482)
$
201
$
Interest expense, net
373
-
373
259
-
259
Income tax provision
158
(210)
(52)
32
-
32
Amortization
of
intangible
assets
107
8
115
84
-
84
Depreciation
and
amortization
expense
1,549
385
1,934
1,934
434
2,368
EBITDA
2,374
(320)
2,054
2,992
(48)
2,944
Share-based
compensation
expense
477
33
510
376
-
376
Adjusted EBITDA
2,851
$
(287)
$
2,564
$
3,368
$
(48)
$
3,320
$ |
28
Consolidated
Statements
of
Comprehensive
Operations
(Unaudited, in Thousands, Except Per Share Data)
(1)
Excludes
depreciation
and
amortization
expense
which
is
included
in
marketing,
general
and
administrative
and
fulfillment
expense.
Thirteen Weeks Ended
April 4, 2015
March 29, 2014
Net sales
76,388
$
68,028
$
Cost of sales
(1)
54,910
47,327
Gross profit
21,478
20,701
Operating expenses:
Marketing
10,852
10,115
General and administrative
4,181
4,147
Fulfillment
5,060
4,712
Technology
1,288
1,148
Amortization of intangible assets
115
84
Total operating expenses
21,496
20,206
Loss from operations
(18)
495
Other income (expense):
Other income, net
23
(3)
Interest expense
(373)
(259)
Total other expense, net
(350)
(262)
Loss before income taxes
(368)
233
Income tax (benefit) provision
(52)
32
Net loss including noncontrolling interests
(316)
201
Net Loss attributable to non-controlling interests
256
-
Net loss attributable to U.S. Auto Parts
(60)
201
Other
comprehensive
income
attributable
to
U.S.
Auto
Parts,
net
of
tax:
Foreign currency translation adjustments
(10)
8
Total
other
comprehensive
income
attributable
to
U.S.
Auto
Parts
(10)
8
Comprehensive loss attributable to U.S. Auto Parts
(70)
$
209
$
Basic net income (loss) per
share 0.00
$
0.00
$
Diluted net income (loss) per
share 0.00
$
0.00
$
Shares
used
in
computation
of
basic
and
diluted
net
loss
per
share
33,720
33,384
Shares
used
in
computation
of
basic
and
diluted
net
loss
per
share
33,720
34,158 |
29
Consolidated Balance Sheet
(Unaudited, in Thousands, Except Par and Per Share Liquidation value)
April 4
January 3
ASSETS
2015
2015
Current assets:
Cash and cash equivalents
7,917
$
7,653
$
Short-term investments
66
62
Accounts receivable, net of allowances of $38 and $41 at April 4, 2015
and January 3, 2015, respectively
4,209
3,804
Inventory
48,347
48,362
Other current assets
3,321
2,669
Total current assets
63,860
62,550
Property and equipment, net
16,690
16,966
Intangible assets, net
1,617
1,707
Other non-current assets
1,672
1,684
Total assets
83,839
$
82,907
$
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
26,591
$
25,362
$
Accrued expenses
8,498
7,747
Revolving loan payable
9,485
11,022
Current portion of capital leases payable
276
269
Other current liabilities
4,560
3,505
Total current liabilities
49,410
47,905
Capital leases payable, net of current portion
9,197
9,270
Deferred income taxes
1,550
1,618
Other non-current liabilities
1,661
1,891
Total liabilities
61,818
60,684
Stockholders' equity:
Series A convertible preferred stock, $0.001 par value; $1.45
liquidation value or aggregate
of
$6,017;
4,150
shares
authorized;
4,150
and
0
sharesissued
and
outstanding at April 4, 2015 and at January 3, 2015,
respectively 4
4
Common stock, $0.001 par value; 100,000 shares authorized; 33,949 and
33,624 shares issued and outstanding at April 4, 2015 and
January 3, 2015, respectively 34
33
Additional paid-in capital
174,552
174,369
Accumulated other comprehensive income
350
360
Accumulated deficit
(155,609)
(155,489)
Total stockholders' equity
19,331
19,277
Noncontrolling interest
2,690
2,946
Total stockholders' equity
22,021
22,223
Total liabilities and equity
83,839
$
82,907
$ |