TORRANCE, Calif., May 6, 2020 /PRNewswire/ -- U.S. Auto Parts
Network, Inc. (NASDAQ: PRTS), one of the largest online
providers of aftermarket automotive parts and accessories, is
reporting results for the first quarter ended March
28, 2020.
Q1 2020 and Current QTD Highlights vs. Year-Ago
Period
- Q1 net sales increased 18% to a company record $87.8 million, with a 42% increase in private
label sales.
- Q1 gross profit increased 48% to $29.8
million, the highest quarterly gross profit in nearly a
decade, with gross margin up 700 basis points to 33.9%.
- Q1 net loss improved to $(1.0)
million or $(0.03) per share,
compared to a net loss of $(3.6)
million or $(0.10) per
share.
- Q1 adjusted EBITDA increased significantly to $4.3 million compared to $(0.1) million.
- Net sales through the first five weeks of Q2 were up more than
40%.
Management Commentary
"The momentum from last year has carried into 2020, as reflected
by our record sales in the first quarter and by nearly achieving
the same amount of adjusted EBITDA as we did for all of 2019," said
Lev Peker, CEO of U.S. Auto Parts.
"Our turnaround strategy is working, and the actions we took last
year to create a lean and efficient operating model have
dramatically improved profitability, even amid the new COVID-19
environment.
"Since the outset of the pandemic, our top priority has been to
ensure the health and safety of our employees and the continuity of
operations for our customers. Our three distribution centers are
operational as they have been deemed an essential service, and our
corporate teams are working from home. We are proud to be operating
at full strength.
"Our data suggests that there has been an influx of auto parts
consumers entering the online market, many of whom are new
hobbyists or customers that previously shopped at brick-and-mortar
stores. We continue to experience significant growth in Q2 despite
the stay at home order and believe we are well-positioned to
operate in this new environment.
"Looking ahead, we are currently on pace to generate strong
sales and adjusted EBITDA growth in the second quarter. Through the
first five weeks of the quarter, even with miles driven down 50%
across the nation, our net sales are up more than 40% and our
higher-margin e-commerce business is significantly outpacing our
marketplace business."
First Quarter 2020 Financial Results
Net sales in the first quarter of 2020 increased 18% to
$87.8 million compared to
$74.7 million in the year-ago
quarter. The increase was driven by a 42% increase in private label
sales which accounted for approximately 91% of sales in
the first quarter of 2020 compared to 75% in the year ago
period.
Gross profit in the first quarter increased 48% to $29.8 million compared to $20.1 million in the first quarter of last
year, with gross margin up 700 basis points to 33.9% compared to
26.9%. These improvements were driven by our growth in private
label sales.
Total operating expenses in the first quarter were $30.1 million compared to $23.6 million in the first quarter last year. The
increase was driven by marketing spend and expenses from the new
Las Vegas distribution center that
opened in the third quarter of 2019.
Net loss in the first quarter improved to $(1.0) million or $(0.03) per share, compared to a net loss of
$(3.6) million or $(0.10) per share in the first quarter of last
year.
Adjusted EBITDA in the first quarter increased to $4.3 million compared to $(0.1) million in the year-ago quarter, with the
improvements driven by the increase in higher-margin private label
sales, e-commerce sales and prudent cost and inventory
management.
On March 28, 2020, the company had
no revolver debt and a cash balance of $14.1
million compared to no debt and a $2.3 million cash balance at December 28, 2019. The increase in cash was
driven by improved net cash from operations, which benefitted from
temporary favorable terms granted by the company's top vendors.
The March 28, 2020 cash balance
does not include the $4.1 million
loan proceeds received and subsequently returned from the federal
government's Payment Protection Program (PPP). The company believed
it was prudent to enhance liquidity as a precautionary measure to
the COVID-19 pandemic. However, following stabilization and
outsized growth in April, the company returned the PPP loan so that
the proceeds could be reallocated to other companies in need.
Conference Call
U.S. Auto Parts CEO Lev Peker and
CFO/COO David Meniane will host a
conference call today, followed by a question and answer
period.
Date: Wednesday, May 6, 2020
Time: 5:00 p.m. Eastern time
(2:00 p.m. Pacific time)
Toll-free dial-in number: 800-458-4148
International dial-in number: 929-477-0324
Conference ID: 8480069
Please call the conference telephone number 5-10 minutes prior
to the start time. An operator will register your name and
organization. If you have any difficulty connecting with the
conference call, please contact Gateway Investor Relations at
949-574-3860.
The conference call will be broadcast live and a telephone
replay will be available on the same day through May 20, 2020.
Toll-free replay number: 844-512-2921
International replay number: 412-317-6671
Replay ID: 8480069
About U.S. Auto Parts Network, Inc.
Established in 1995, U.S. Auto Parts is a leading online
provider of automotive aftermarket parts, including collision,
engine, and performance parts and accessories. Through its
flagships websites www.carparts.com and www.jcwhitney.com, U.S.
Auto Parts provides consumers with a broad selection of
competitively priced products, all mapped by a
proprietary database with applications based on vehicle makes,
models and years. The Company's corporate website is
www.usautoparts.com.
U.S. Auto Parts 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," which is a non-GAAP financial measure. Adjusted EBITDA
consists of net loss before (a) interest expense, net;
(b) income tax provision (benefit); (c) depreciation and
amortization expense; (d) amortization of intangible
assets; (e) share-based compensation expense;
(f) costs associated with our customs issue; and
(g) costs associated with the executive transitions.
The Company believes that this non-GAAP financial measure
provides important supplemental information to management and
investors. This non-GAAP financial measure reflects an additional
way of viewing aspects of the Company's operations that, when
viewed with the GAAP results and the accompanying reconciliation 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 one measure 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 and the costs associated with the
customs issue, as well as other items that we do not believe are
representative of our ongoing operating performance. Internally,
this non-GAAP measure is 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 Adjusted EBITDA as a
supplemental measure to evaluate the ongoing operations of
companies in our industry.
This non-GAAP financial measure is 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, its future operating results and
financial condition, the impact of changes in our key operating
metrics, and our potential growth and our liquidity requirements.
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, the
impact of the customs issues 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.usautoparts.com 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:
Sean Mansouri, CFA or
Cody Slach
Gateway Investor Relations
949‑574‑3860
PRTS@gatewayir.com
Summarized
information for our operations for the periods presented is as
follows (in millions):
|
|
|
|
Thirteen Weeks
Ended
|
|
|
|
March 28, 2020
|
|
March 30, 2019
|
|
Net sales
|
|
$
|
87.82
|
|
$
|
74.74
|
|
Gross
profit
|
|
$
|
29.78
|
|
$
|
20.13
|
|
|
|
|
33.9
|
%
|
|
26.9
|
%
|
Operating
expenses
|
|
$
|
30.13
|
|
$
|
23.58
|
|
|
|
|
34.3
|
%
|
|
31.5
|
%
|
Net loss
|
|
$
|
(0.98)
|
|
$
|
(3.58)
|
|
|
|
|
(1.1)
|
%
|
|
(4.8)
|
%
|
Adjusted
EBITDA
|
|
$
|
4.30
|
|
$
|
(0.10)
|
|
|
|
|
4.9
|
%
|
|
(0.1)
|
%
|
The table below
reconciles net loss to Adjusted EBITDA for the periods presented
(in thousands):
|
|
|
|
Thirteen Weeks
Ended
|
|
|
March 28, 2020
|
|
March 30, 2019
|
Net loss
|
|
|
(978)
|
|
|
(3,581)
|
Depreciation & amortization
|
|
|
1,898
|
|
|
1,529
|
Amortization of
intangible assets
|
|
|
25
|
|
|
25
|
Interest expense,
net
|
|
|
659
|
|
|
407
|
Taxes
|
|
|
36
|
|
|
(280)
|
EBITDA
|
|
$
|
1,640
|
|
$
|
(1,900)
|
Stock comp
expense
|
|
|
2,663
|
|
|
550
|
Employee transition
costs(1)
|
|
|
—
|
|
|
986
|
Customs
costs(2)
|
|
|
—
|
|
|
266
|
Adjusted
EBITDA
|
|
$
|
4,303
|
|
$
|
(98)
|
|
_________________________
|
(1)
|
We incurred costs
related to the transition of executive management related to
severance, recruiting, hiring bonuses, and relocation
costs.
|
(2)
|
We incurred port and
carrier fees and legal costs associated with our customs related
issues.
|
U.S. AUTO PARTS
NETWORK, INC. AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE OPERATIONS
|
(Unaudited, in
Thousands, Except Per Share Data)
|
|
|
|
Thirteen Weeks
Ended
|
|
|
March 28,
|
|
March 30,
|
|
|
2020
|
|
2019
|
Net sales
|
|
$
|
87,818
|
|
$
|
74,739
|
Cost of sales
(1)
|
|
|
58,039
|
|
|
54,610
|
Gross
profit
|
|
|
29,779
|
|
|
20,129
|
Operating
expense
|
|
|
30,132
|
|
|
23,575
|
Loss from
operations
|
|
|
(353)
|
|
|
(3,446)
|
Other income
(expense):
|
|
|
|
|
|
|
Other, net
|
|
|
71
|
|
|
(3)
|
Interest
expense
|
|
|
(660)
|
|
|
(412)
|
Total other expense,
net
|
|
|
(589)
|
|
|
(415)
|
Loss before income
taxes
|
|
|
(942)
|
|
|
(3,861)
|
Income tax provision
(benefit)
|
|
|
36
|
|
|
(280)
|
Net loss
|
|
|
(978)
|
|
|
(3,581)
|
Other comprehensive
loss:
|
|
|
|
|
|
|
Foreign currency
translation adjustments
|
|
|
(6)
|
|
|
(5)
|
Unrealized loss on
deferred compensation trust assets
|
|
|
(95)
|
|
|
—
|
Total other
comprehensive loss
|
|
|
(101)
|
|
|
(5)
|
Comprehensive
loss
|
|
$
|
(1,079)
|
|
$
|
(3,586)
|
Loss per
share:
|
|
|
|
|
|
|
Basic and diluted net
loss per share
|
|
$
|
(0.03)
|
|
$
|
(0.10)
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
Shares used in
computation of basic and diluted net loss per share
|
|
|
36,871
|
|
|
35,365
|
______________________
|
(1)
|
Excludes depreciation
and amortization expense which is included in operating
expense.
|
U.S. AUTO PARTS
NETWORK, INC. AND SUBSIDIARIES
|
|
CONSOLIDATED
BALANCE SHEETS
|
(Unaudited, In
Thousands, Except Par and Liquidation Value)
|
|
|
|
March 28,
|
|
December 28,
|
|
|
2020
|
|
2019
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
14,148
|
|
$
|
2,273
|
Accounts receivable,
net
|
|
|
5,031
|
|
|
2,669
|
Inventory
|
|
|
57,360
|
|
|
52,500
|
Other current
assets
|
|
|
5,661
|
|
|
4,931
|
Total current
assets
|
|
|
82,200
|
|
|
62,373
|
Deferred income
taxes
|
|
|
22
|
|
|
—
|
Property and
equipment, net
|
|
|
10,194
|
|
|
9,650
|
Right-of-use - assets
- operating leases, net
|
|
|
9,452
|
|
|
4,544
|
Right-of-use - assets
- financing leases, net
|
|
|
8,847
|
|
|
9,011
|
Other non-current
assets
|
|
|
1,859
|
|
|
2,368
|
Total
assets
|
|
$
|
112,574
|
|
$
|
87,946
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
57,749
|
|
$
|
44,433
|
Accrued
expenses
|
|
|
14,166
|
|
|
9,519
|
Customer
deposits
|
|
|
405
|
|
|
652
|
Notes payable,
current
|
|
|
—
|
|
|
729
|
Right-of-use -
obligation - operating, current
|
|
|
1,601
|
|
|
1,368
|
Right-of-use -
obligation - finance, current
|
|
|
582
|
|
|
640
|
Other current
liabilities
|
|
|
3,661
|
|
|
2,605
|
Total current
liabilities
|
|
|
78,164
|
|
|
59,946
|
Notes payable,
non-current
|
|
|
—
|
|
|
1,060
|
Right-of-use -
obligation - operating, non-current
|
|
|
8,097
|
|
|
3,419
|
Right-of-use -
obligation - finance, non-current
|
|
|
8,638
|
|
|
8,627
|
Other non-current
liabilities
|
|
|
2,514
|
|
|
2,514
|
Total
liabilities
|
|
|
97,413
|
|
|
75,566
|
Commitments and
contingencies
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
Series A
convertible preferred stock, $0.001 par value; $1.45 per share
liquidation value or aggregate of $6,017; 4,150 shares authorized;
2,621 and 2,771 shares issued and outstanding at
March 28, 2020 and December 28, 2019
|
|
|
3
|
|
|
3
|
Common stock, $0.001
par value; 100,000 shares authorized; 38,672 and 36,167 shares
issued and outstanding at March 28, 2020 and
December 28, 2019 (of which 2,525 are treasury
stock)
|
|
|
41
|
|
|
38
|
Treasury
stock
|
|
|
(7,146)
|
|
|
(7,146)
|
Additional paid-in
capital
|
|
|
191,043
|
|
|
187,147
|
Accumulated other
comprehensive income
|
|
|
113
|
|
|
214
|
Accumulated
deficit
|
|
|
(168,893)
|
|
|
(167,876)
|
Total stockholders'
equity
|
|
|
15,161
|
|
|
12,380
|
Total liabilities and
stockholders' equity
|
|
$
|
112,574
|
|
$
|
87,946
|
U.S. AUTO PARTS
NETWORK, INC. AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Unaudited, In
Thousands)
|
|
|
|
Thirteen Weeks
Ended
|
|
|
March 28,
|
|
March 30,
|
|
|
2020
|
|
2019
|
Operating
activities
|
|
|
|
|
|
|
Net loss
|
|
$
|
(978)
|
|
$
|
(3,581)
|
Adjustments to
reconcile net loss to net cash provided by operating
activities:
|
|
|
|
|
|
|
Depreciation and
amortization expense
|
|
|
1,898
|
|
|
1,529
|
Amortization of
intangible assets
|
|
|
25
|
|
|
25
|
Deferred income
taxes
|
|
|
(22)
|
|
|
(328)
|
Share-based
compensation expense
|
|
|
2,663
|
|
|
550
|
Stock awards issued for
non-employee director service
|
|
|
6
|
|
|
4
|
Amortization of
deferred financing costs
|
|
|
5
|
|
|
1
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(2,362)
|
|
|
(2,019)
|
Inventory
|
|
|
(4,860)
|
|
|
(2,080)
|
Other current
assets
|
|
|
(713)
|
|
|
(802)
|
Other non-current
assets
|
|
|
(197)
|
|
|
(70)
|
Accounts payable and
accrued expenses
|
|
|
18,022
|
|
|
10,753
|
Other current
liabilities
|
|
|
808
|
|
|
890
|
Right-of-Use Obligation
- Operating Leases - Current
|
|
|
234
|
|
|
983
|
Right-of-Use Obligation
- Operating Leases - Long-term
|
|
|
(231)
|
|
|
(978)
|
Other non-current
liabilities
|
|
|
1
|
|
|
(2)
|
Net cash provided by
operating activities
|
|
|
14,299
|
|
|
4,875
|
Investing
activities
|
|
|
|
|
|
|
Additions to property
and equipment
|
|
|
(2,050)
|
|
|
(1,587)
|
Net cash used in
investing activities
|
|
|
(2,050)
|
|
|
(1,587)
|
Financing
activities
|
|
|
|
|
|
|
Borrowings from
revolving loan payable
|
|
|
1,170
|
|
|
4,096
|
Payments made on
revolving loan payable
|
|
|
(1,170)
|
|
|
(4,096)
|
Payment of notes
payable
|
|
|
(1,226)
|
|
|
—
|
Payments on capital
leases
|
|
|
(178)
|
|
|
(149)
|
Statutory tax
withholding payment for share-based compensation
|
|
|
(84)
|
|
|
(287)
|
Proceeds from
exercise of stock options
|
|
|
1,120
|
|
|
—
|
Preferred stock
dividends paid
|
|
|
—
|
|
|
(41)
|
Net cash used in
financing activities
|
|
|
(368)
|
|
|
(477)
|
Effect of exchange
rate changes on cash
|
|
|
(6)
|
|
|
(7)
|
Net change in cash
and cash equivalents
|
|
|
11,875
|
|
|
2,804
|
Cash and cash
equivalents, beginning of period
|
|
|
2,273
|
|
|
2,031
|
Cash and cash
equivalents, end of period
|
|
$
|
14,148
|
|
$
|
4,835
|
Supplemental
disclosure of non-cash investing and financing
activities:
|
|
|
|
|
|
|
Right-of-use operating
asset acquired
|
|
$
|
5,325
|
|
$
|
—
|
Right-of-use financed
asset acquired
|
|
$
|
130
|
|
$
|
—
|
Accrued asset
purchases
|
|
$
|
662
|
|
$
|
904
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
Cash paid during the
period for income taxes
|
|
$
|
—
|
|
$
|
—
|
Cash paid during the
period for interest
|
|
$
|
433
|
|
$
|
430
|
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multimedia:http://www.prnewswire.com/news-releases/us-auto-parts-reports-record-sales-for-first-quarter-2020-301054229.html
SOURCE U.S. Auto Parts Network, Inc.