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CarParts.com Reports Highest Fiscal Year Sales in Company History 

 Record Fiscal Year Sales of $676 million

TORRANCE, Calif.  March 7th, 2024  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 fourth quarter and fiscal year ended December 30, 2023. 

Fiscal Year 2023 Summary vs. Fiscal Year 2022  

Net sales increased to a record $675.7 million, up 2% and up 16% on a two-year stack.
Gross profit of $229.4 million vs. $230.9 million, with gross margin of 33.9%.
Net loss was ($8.2) million, or ($0.15) per share, compared to a net loss of ($1.0) million, or ($0.02) per share.
Adjusted EBITDA of $19.7 million vs. $26.1 million.
Cash of $51.0 million and no revolver debt.
Repurchased approximately 1.2 million shares for $4.3 million during the year.

Fourth Quarter 2023 Summary vs. Year-Ago Quarter  

Net sales increased to $156.4 million, up 1% year-over-year and up 13% on a two-year stack.
Gross profit remained flat at $51.6 million, with gross margin of 33.0%.
Net loss was ($6.1) million, or ($0.11) per share, compared to a net loss of ($6.2) million, or ($0.11) per share.
Adjusted EBITDA of $1.0 million vs. $2.1 million.

Management Commentary

“We continued to see strong unit growth of approximately 8% in the fourth quarter. We believe we are taking share from other online players and as consumer confidence rebounds, we are well positioned to support the $389 billion automotive aftermarket and deliver long-term growth.” said David Meniane, CEO.  “In fiscal year 2023, our team surpassed several company records and reached significant achievements. However, we experienced a slow start to 2024 and we continue to experience a difficult macro environment. 

 

In light of these challenges, we have made the tough decision to significantly reduce our cost structure including the elimination of 150 global roles. These decisions are not made lightly but we want to stay agile, protect shareholder value, and realign to the reality of the environment. 

 

We continue to believe the strategic priorities and areas of the business we are focused on will lead to long-term shareholder value.  We have proven in the past that we can grow and execute change management


through difficult environments and now is no different.  In addition, we are supported by the strength of our balance sheet with ample cash and inventory as well as an undrawn facility with no long-term debt.” 

Fiscal Year 2023 Financial Results

Net sales in fiscal year 2023 were $675.7 million, up 2% from $661.6 million in fiscal year 2022. 

Gross profit decreased slightly to $229.4 million in fiscal year 2023 compared to $230.9 million in fiscal year 2022. Gross margin decreased 100 basis points to 33.9% in fiscal year 2023 compared to 34.9% in fiscal year 2022. The decrease in gross margin was primarily driven by higher outbound transportation costs and a shift in product mix.

Total operating expenses in fiscal year 2023 were $239.3 million compared to $230.2 million in fiscal year 2022. The increase was primarily driven by investments in our business, combined with higher advertising expense, partially offset by a decrease in fulfillment expense primarily due to an improvement in distribution center fulfillment costs.

Net loss in fiscal year 2023 was ($8.2) million compared to a net loss of ($1.0) million in fiscal year 2022.

Adjusted EBITDA in fiscal year 2023 was $19.7 million compared to $26.1 million in the fiscal year 2022.

On December 30, 2023, the Company had a cash balance of $51.0 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. 

Fourth Quarter 2023 Financial Results

Net sales in the fourth quarter of 2023 were $156.4 million, up 1% from the year-ago quarter.  

Gross profit in the fourth quarter remained flat at $51.6 million, with gross margin decreasing 40 basis points to 33.0%. The decrease in gross margin was primarily driven by higher outbound transportation costs and a shift in product mix.

Total operating expenses in the fourth quarter were $58.4 million compared to $57.1 million in the year-ago.

Net loss in the fourth quarter was ($6.1) million compared to a net loss of ($6.2) million in the year-ago quarter.

Adjusted EBITDA in the fourth quarter was $1.0 million compared to $2.1 million in the year-ago quarter.

2024 Outlook

For the full year, the Company expects comparable net sales in a range from negative two percent to positive two percent. With gross margin in the range of 30% to 32%.

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: Thursday, March 7, 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 improving the way drivers shop for the parts they need. Operating 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. Offering a seamless shopping experience, we aim to eliminate the uncertainty and stress often associated with vehicle repair and 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 before (a) interest (income) expense, net; (b) income tax (benefit) 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 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

Fifty-Two Weeks Ended

Fifty-Two Weeks Ended

 

    

December 30, 2023

    

December 31, 2022

    

December 30, 2023

    

December 31, 2022

 

Net sales

$

156.40

$

154.52

$

675.73

$

661.60

Gross profit

$

51.60

$

51.65

$

229.41

$

230.89

 

33.0

%  

 

33.4

%  

 

33.9

%  

 

34.9

%

Operating expense

$

58.35

$

57.10

$

239.29

$

230.24

 

37.3

%  

 

36.9

%  

 

35.4

%  

 

34.8

%

Net loss

$

(6.09)

$

(6.22)

$

(8.22)

$

(0.95)

 

(3.9)

%  

 

(4.0)

%  

 

(1.2)

%  

 

(0.1)

%

Adjusted EBITDA

$

0.97

$

2.12

$

19.69

$

26.11

 

0.6

%  

 

1.4

%  

 

2.9

%  

 

3.9

%

The table below reconciles net loss to Adjusted EBITDA for the periods presented (in thousands):

Thirteen Weeks Ended

Thirteen Weeks Ended

Fifty-Two Weeks Ended

Fifty-Two Weeks Ended

    

December 30, 2023

        

December 31, 2022

            

December 30, 2023

            

December 31, 2022

Net loss

$

(6,086)

$

(6,224)

$

(8,223)

$

(951)

Depreciation & amortization

4,094

3,936

 

16,690

13,607

Amortization of intangible assets

8

27

 

36

108

Interest (income) expense, net

(313)

355

 

(636)

1,421

Income tax (benefit) provision

(251)

514

 

145

632

EBITDA

$

(2,548)

$

(1,392)

$

8,012

$

14,817

Stock compensation expense

$

3,517

$

3,510

$

11,675

$

11,296

Adjusted EBITDA

$

969

$

2,118

$

19,687

$

26,113


CARPARTS.COM, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE OPERATIONS

(In Thousands, Except Per Share Data)

Fiscal Year Ended

December 30,

December 31,

January 1,

    

2023

    

2022

    

2022

Net sales

$

675,729

$

661,604

$

582,440

Cost of sales (1)

 

446,323

 

430,714

 

385,157

Gross profit

 

229,406

 

230,890

 

197,283

Operating expense

 

239,287

 

230,239

 

206,394

(Loss) income from operations

 

(9,881)

 

651

 

(9,111)

Other income (expense):

Other income, net

 

3,197

 

467

 

238

Interest expense

 

(1,394)

 

(1,437)

 

(1,115)

Total other income (expense), net

 

1,803

 

(970)

 

(877)

Loss before income taxes

 

(8,078)

 

(319)

 

(9,988)

Income tax provision

 

145

 

632

 

351

Net loss

 

(8,223)

 

(951)

 

(10,339)

Other comprehensive (loss) gain:

 

  

 

  

 

  

Foreign currency translation adjustments

 

 

127

 

93

Actuarial (loss) gain on defined benefit plan

 

(305)

 

872

 

307

Unrealized (loss) gain on deferred compensation trust assets

 

(38)

 

(147)

 

89

Total other comprehensive (loss) gain

 

(343)

 

852

 

489

Comprehensive loss

$

(8,566)

$

(99)

$

(9,850)

Net loss per share:

Basic and diluted net loss per share

$

(0.15)

$

(0.02)

$

(0.20)

Weighted-average common shares outstanding:

 

  

 

  

 

  

Shares used in computation of basic net loss per share

 

56,570

 

54,137

 

51,381


(1)Excludes depreciation and amortization expense which is included in operating expense.


CARPARTS.COM, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Par Value Data)

December 30,

December 31,

    

2023

    

2022

ASSETS

 

  

 

  

Current assets:

 

  

 

  

Cash and cash equivalents

$

50,951

$

18,767

Accounts receivable, net

 

7,365

 

6,406

Inventory, net

 

128,901

 

136,026

Other current assets

 

6,121

 

6,672

Total current assets

 

193,338

 

167,871

Property and equipment, net

 

26,389

 

24,290

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

19,542

23,951

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

15,255

19,750

Other non-current assets

 

3,331

 

2,537

Total assets

$

257,855

$

238,399

LIABILITIES AND STOCKHOLDERS' EQUITY

 

  

 

  

Current liabilities:

 

Accounts payable

$

77,851

$

57,616

Accrued expenses

 

20,770

 

16,466

Right-of-use - obligation - operating, current

4,749

4,571

Right-of-use - obligation - finance, current

4,308

4,753

Other current liabilities

 

5,308

 

4,622

Total current liabilities

 

112,986

 

88,028

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

16,742

21,412

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

12,327

15,916

Other non-current liabilities

 

2,969

 

2,971

Total liabilities

 

145,024

 

128,327

Commitments and contingencies

 

Stockholders’ equity:

 

Common stock, $0.001 par value; 100,000 shares authorized; 57,564 and 54,693 shares issued and outstanding as of December 30, 2023 and December 31, 2022 (of which 3,786 and 2,565 are treasury stock, respectively)

 

60

 

57

Treasury stock

 

(11,912)

 

(7,625)

Additional paid-in capital

 

312,874

 

297,265

Accumulated other comprehensive income

 

783

 

1,126

Accumulated deficit

 

(188,974)

 

(180,751)

Total stockholders’ equity

 

112,831

 

110,072

Total liabilities and stockholders' equity

$

257,855

$

238,399


CARPARTS.COM, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

Fiscal Year Ended

December 30,

December 31,

January 1,

    

2023

    

2022

    

2022

Operating activities

Net loss

$

(8,223)

$

(951)

 

$

(10,339)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization expense

 

16,690

 

13,607

 

9,895

Amortization of intangible assets

 

36

 

108

 

110

Share-based compensation expense

 

11,675

 

11,296

 

15,685

Stock awards issued for non-employee director service

 

23

 

22

 

23

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

26

(Gain) loss from disposition of assets

 

(78)

 

(41)

 

52

Amortization of deferred financing costs

 

65

 

53

 

18

Changes in operating assets and liabilities:

Accounts receivable

 

(1,101)

 

(1,424)

 

1,303

Inventory

 

6,681

 

2,825

 

(49,535)

Other current assets

 

549

 

(141)

 

1,340

Other non-current assets

 

(248)

 

(636)

 

551

Accounts payable and accrued expenses

 

23,696

 

(9,629)

 

22,436

Other current liabilities

 

686

 

(129)

 

374

Right-of-use obligation - operating leases - current

631

402

1,696

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

(714)

(200)

(836)

Other non-current liabilities

 

(367)

 

180

 

239

Net cash provided by (used in) operating activities

 

50,001

 

15,368

 

(6,988)

Investing activities

Additions to property and equipment

 

(11,879)

 

(12,585)

 

(11,578)

Cash paid for intangible assets

 

(108)

 

 

Proceeds from sale of property and equipment

 

86

 

68

 

27

Net cash used in investing activities

 

(11,901)

 

(12,517)

 

(11,551)

Financing activities

Borrowings from revolving loan payable

 

244

 

10,417

 

131

Payments made on revolving loan payable

 

(244)

 

(10,417)

 

(131)

Repurchase of treasury stock

(4,311)

(524)

Payments on finance leases

 

(4,738)

 

(4,232)

 

(2,164)

Net proceeds from issuance of common stock for ESPP

483

795

Statutory tax withholding payment for share-based compensation

 

 

 

(3)

Proceeds from exercise of stock options

 

2,650

 

1,284

 

3,661

Payment of registration costs of common stock

 

 

 

(68)

Net cash (used in) provided by financing activities

 

(5,916)

 

(2,153)

 

902

Effect of exchange rate changes on cash

 

 

(75)

 

(21)

Net change in cash and cash equivalents

 

32,184

 

623

 

(17,658)

Cash and cash equivalents, beginning of period

 

18,767

 

18,144

 

35,802

Cash and cash equivalents, end of period

$

50,951

$

18,767

 

$

18,144

Supplemental disclosure of non-cash investing and financing activities:

Right-of-use operating asset acquired

$

$

$

15,000

Right-of-use finance asset acquired

$

784

$

9,206

$

4,975

Accrued asset purchases

$

1,499

$

624

 

$

1,764

Share-based compensation expense capitalized in property and equipment

$

804

$

1,180

$

2,159

Stock issued for services

$

$

81

$

778

Supplemental disclosure of cash flow information:

Cash paid during the period for income taxes

$

210

$

649

 

$

88

Cash paid during the period for interest

$

1,394

$

1,437

$

1,115

Cash received during the period for interest

$

2,030

$

16

$

26