TORRANCE, Calif., Aug. 10, 2020 /PRNewswire/ -- CarParts.com,
Inc. (NASDAQ: PRTS), one of the leading e-commerce providers
of automotive parts and accessories, is reporting results for the
second quarter ended June 27, 2020.
Q2 2020 Highlights vs. Year-Ago
Period
- Q2 net sales increased 61% to a company record $118.9 million vs. $73.7
million.
- Q2 gross profit increased 88% to a company record $40.8 million vs. $21.8
million.
- Q2 gross margin increased 480 basis points to 34.3% vs.
29.5%.
- Q2 net income improved significantly to $1.6 million or $0.03 per diluted share, compared to a net loss
of $(1.5) million or $(0.04) per basic and diluted share.
- Q2 Adjusted EBITDA increased 4x to $5.6
million compared to $1.4
million.
- Net sales in July were up more than 60% compared to the same
prior year period.
Management Commentary
"This quarter marked another period of significant growth for
our company as we reported record-breaking sales and gross profit,"
said Lev Peker, CEO of CarParts.com.
"In addition to our strong top-line momentum, we drove exceptional
year-over-year bottom-line improvements in both net income and
Adjusted EBITDA.
"Despite the ongoing pandemic and an uncertain market
environment, our accelerated momentum points to the continued
success of our strategy and resilience of our business. Overall
e-commerce penetration for total U.S. retail sales reached 28% for
Q2 while auto parts remains in the mid-single digits. We believe
that the industry will continue to experience the shift to online
and we are well-positioned to take advantage of this new demand
over the long term.
"Following our strong growth and inclusion in the Russell 2000®
Index this quarter, we decided that we needed a new name that
better reflected the tech-forward company we have become. In late
July we rebranded to CarParts.com, marking the culmination of our
efforts to consolidate our websites over the past several quarters.
In conjunction with the rebrand, we completed our site
consolidation and are now officially down to one flagship website,
CarParts.com. Being one brand with one site allows us to optimize
our position in the market while being more efficient with our
marketing and improving brand presence both online and offline.
"Our work over the past 18 months to optimize our supply chain,
marketing and technology capabilities is paying off, however we
still have plenty of work in these areas to take CarParts.com to
the next level. We will remain prudent stewards of capital while
continuing to drive further improvements in our business. We want
to thank our warehouse associates for their hard work, as well as
all of our team members for their support and commitment to the new
CarParts.com."
Second Quarter 2020 Financial Results
Net sales in the second quarter of 2020 increased 61% to a
record $118.9 million compared to
$73.7 million in the year-ago
quarter. The increase was primarily driven by significant revenue
growth from our flagship website, CarParts.com, which was up triple
digits over the prior year quarter.
Gross profit in the second quarter increased 88% to a record
$40.8 million compared to
$21.8 million in the second
quarter of last year, with gross margin up 480 basis points to
34.3% compared to 29.5%. These increases were primarily driven by
improved product mix and supply chain optimizations. This was the
Company's sixth consecutive quarter of gross margin expansion.
Total operating expenses in the second quarter were $38.7 million compared to $23.0 million in the second quarter last year.
The increase was driven by increased marketing and fulfillment
expenses.
Net income in the second quarter improved significantly to
$1.6 million or $0.03 per diluted share, compared to a net loss
of $(1.5) million or $(0.04) per basic and diluted share in the second
quarter of last year.
Adjusted EBITDA in the second quarter increased significantly to
$5.6 million compared to $1.4 million in the year-ago quarter, with the
improvement driven by the benefit of operational investments made
in all areas of the business over the past 18 months.
On June 27, 2020, the company had
a cash balance of $24.9 million
compared to $2.3 million on
December 28, 2019. The increase in
cash was primarily driven by higher net cash from operations and
improved working capital.
Conference Call
CarParts.com CEO Lev Peker and
CFO/COO David Meniane will host a
conference call today, followed by a question and answer
period.
Date: Monday, August 10, 2020
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 at least 5-10 minutes prior to the start time to
register your name and organization. The audio webcast will be
archived on the Company's website at www.carparts.com/investor.
If you are unable to join via the webcast, you may dial in to
the call at 833-649-1138 (domestic) or 918-922-3112 (international)
using access code 9326289. A telephone replay will also be
available on the same day through August 17,
2020 at 855-859-2056 (domestic) or 404-537-3406
(international) using access code 9326289.
About CarParts.com
For over 20 years, CarParts.com has been a leader in the
e-commerce automotive aftermarket, providing collision, engine, and
performance parts and accessories. With over 50 million parts
delivered, we've helped everyday drivers across the contiguous
United States find the right parts
to keep their vehicles on the road.
With a focus on the end-to-end customer experience, we've
designed our website and sourcing network to simplify the way
drivers get the parts they need. Our vehicle selector and
easy-to-navigate, mobile-friendly website offer customers
guaranteed fitment and a convenient online shopping experience. And
with our own wide distribution network, we bring the very best
brands and manufacturers directly to consumer hands, cutting out
all the brick-and-mortar supply chain costs to provide quality
parts at a discount for our loyal customers. Combined with our
90-day return policy and satisfaction guarantee, CarParts.com makes
it simple for customers to get parts delivered straight to their
door.
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," which is a non-GAAP financial measure. Adjusted EBITDA
consists of net income (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; and in
2019, (f) costs associated with our customs issue; and
(g) costs associated with employee 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.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:
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
|
|
Twenty-six Weeks
Ended
|
|
|
|
June 27, 2020
|
|
June 29, 2019
|
|
June 27, 2020
|
|
June 29, 2019
|
|
Net sales
|
|
$
|
118.93
|
|
$
|
73.69
|
|
$
|
206.75
|
|
$
|
148.43
|
|
Gross
profit
|
|
$
|
40.83
|
|
$
|
21.76
|
|
$
|
70.61
|
|
$
|
41.89
|
|
|
|
|
34.3
|
%
|
|
29.5
|
%
|
|
34.2
|
%
|
|
28.2
|
%
|
Operating
expenses
|
|
$
|
38.65
|
|
$
|
22.97
|
|
$
|
68.79
|
|
$
|
46.54
|
|
|
|
|
32.5
|
%
|
|
31.2
|
%
|
|
33.3
|
%
|
|
31.4
|
%
|
Net income
(loss)
|
|
$
|
1.57
|
|
$
|
(1.46)
|
|
$
|
0.59
|
|
$
|
(5.04)
|
|
|
|
|
1.3
|
%
|
|
(2.0)
|
%
|
|
0.3
|
%
|
|
(3.4)
|
%
|
Adjusted
EBITDA
|
|
$
|
5.56
|
|
$
|
1.43
|
|
$
|
9.86
|
|
$
|
1.33
|
|
|
|
|
4.7
|
%
|
|
1.9
|
%
|
|
4.8
|
%
|
|
0.9
|
%
|
The table below reconciles net income (loss) to Adjusted EBITDA
for the periods presented (in thousands):
|
|
Thirteen Weeks
Ended
|
|
Twenty-six Weeks
Ended
|
|
|
June 27, 2020
|
|
June 29, 2019
|
|
June 27, 2020
|
|
June 29, 2019
|
Net income
(loss)
|
|
|
1,568
|
|
|
(1,457)
|
|
|
590
|
|
|
(5,038)
|
Depreciation & amortization
|
|
|
1,634
|
|
|
1,511
|
|
|
3,532
|
|
|
3,040
|
Amortization of
intangible assets
|
|
|
25
|
|
|
25
|
|
|
50
|
|
|
50
|
Interest expense,
net
|
|
|
490
|
|
|
487
|
|
|
1,149
|
|
|
894
|
Taxes
|
|
|
118
|
|
|
(186)
|
|
|
154
|
|
|
(465)
|
EBITDA
|
|
$
|
3,835
|
|
$
|
380
|
|
$
|
5,475
|
|
$
|
(1,519)
|
Stock comp
expense
|
|
|
1,722
|
|
|
613
|
|
|
4,385
|
|
|
1,163
|
Employee transition
costs(1)
|
|
|
—
|
|
|
283
|
|
|
—
|
|
|
1,269
|
Customs
costs(2)
|
|
|
—
|
|
|
149
|
|
|
—
|
|
|
415
|
Adjusted
EBITDA
|
|
$
|
5,557
|
|
$
|
1,425
|
|
$
|
9,860
|
|
$
|
1,328
|
_________________________
|
(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.
|
CARPARTS.COM, INC. AND
SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE OPERATIONS
(Unaudited, in
Thousands, Except Per Share Data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks
Ended
|
|
Twenty-Six Weeks
Ended
|
|
|
|
June 27,
|
|
June 29,
|
|
June 27,
|
|
June 29,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Net sales
|
|
$
|
118,930
|
|
$
|
73,687
|
|
$
|
206,748
|
|
$
|
148,425
|
|
Cost of sales
(1)
|
|
|
78,101
|
|
|
51,924
|
|
|
136,140
|
|
|
106,533
|
|
Gross
profit
|
|
|
40,829
|
|
|
21,763
|
|
|
70,608
|
|
|
41,892
|
|
Operating
expense
|
|
|
38,653
|
|
|
22,968
|
|
|
68,785
|
|
|
46,543
|
|
Income (loss) from
operations
|
|
|
2,176
|
|
|
(1,205)
|
|
|
1,823
|
|
|
(4,651)
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other, net
|
|
|
3
|
|
|
46
|
|
|
74
|
|
|
43
|
|
Interest
expense
|
|
|
(493)
|
|
|
(484)
|
|
|
(1,153)
|
|
|
(895)
|
|
Total other expense,
net
|
|
|
(490)
|
|
|
(438)
|
|
|
(1,079)
|
|
|
(852)
|
|
Income (loss) before
income taxes
|
|
|
1,686
|
|
|
(1,643)
|
|
|
744
|
|
|
(5,503)
|
|
Income tax provision
(benefit)
|
|
|
118
|
|
|
(186)
|
|
|
154
|
|
|
(465)
|
|
Net income
(loss)
|
|
|
1,568
|
|
|
(1,457)
|
|
|
590
|
|
|
(5,038)
|
|
Other comprehensive
income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments
|
|
|
(29)
|
|
|
(28)
|
|
|
(35)
|
|
|
(33)
|
|
Unrealized gain (loss)
on deferred compensation trust assets
|
|
|
58
|
|
|
—
|
|
|
(37)
|
|
|
—
|
|
Total other
comprehensive income (loss)
|
|
|
29
|
|
|
(28)
|
|
|
(72)
|
|
|
(33)
|
|
Comprehensive income
(loss)
|
|
$
|
1,597
|
|
$
|
(1,485)
|
|
$
|
518
|
|
$
|
(5,071)
|
|
Net income (loss) per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income
(loss) per share
|
|
$
|
0.04
|
|
$
|
(0.04)
|
|
$
|
0.01
|
|
$
|
(0.14)
|
|
Diluted net income
(loss) per share
|
|
$
|
0.03
|
|
$
|
(0.04)
|
|
$
|
0.01
|
|
$
|
(0.14)
|
|
Weighted-average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in
computation of basis net income (loss) per share
|
|
|
39,386
|
|
|
35,632
|
|
|
38,124
|
|
|
35,506
|
|
Shares used in
computation of diluted net income (loss) per share
|
|
|
47,329
|
|
|
35,632
|
|
|
42,058
|
|
|
35,506
|
|
_________________________
|
(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 and Liquidation Value)
|
|
|
|
|
|
|
|
|
|
June 27,
|
|
December 28,
|
|
|
2020
|
|
2019
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
24,860
|
|
$
|
2,273
|
Accounts receivable,
net
|
|
|
5,278
|
|
|
2,669
|
Inventory
|
|
|
65,383
|
|
|
52,500
|
Other current
assets
|
|
|
6,552
|
|
|
4,931
|
Total current
assets
|
|
|
102,073
|
|
|
62,373
|
Property and
equipment, net
|
|
|
10,809
|
|
|
9,650
|
Right-of-use - assets
- operating leases, net
|
|
|
13,238
|
|
|
4,544
|
Right-of-use - assets
- financing leases, net
|
|
|
8,808
|
|
|
9,011
|
Other non-current
assets
|
|
|
1,985
|
|
|
2,368
|
Total
assets
|
|
$
|
136,913
|
|
$
|
87,946
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
68,953
|
|
$
|
44,433
|
Accrued
expenses
|
|
|
17,049
|
|
|
9,519
|
Customer
deposits
|
|
|
759
|
|
|
652
|
Notes payable,
current
|
|
|
—
|
|
|
729
|
Right-of-use -
obligation - operating, current
|
|
|
1,857
|
|
|
1,368
|
Right-of-use -
obligation - finance, current
|
|
|
670
|
|
|
640
|
Other current
liabilities
|
|
|
4,169
|
|
|
2,605
|
Total current
liabilities
|
|
|
93,457
|
|
|
59,946
|
Notes payable,
non-current
|
|
|
—
|
|
|
1,060
|
Right-of-use -
obligation - operating, non-current
|
|
|
11,725
|
|
|
3,419
|
Right-of-use -
obligation - finance, non-current
|
|
|
8,667
|
|
|
8,627
|
Other non-current
liabilities
|
|
|
2,688
|
|
|
2,514
|
Total
liabilities
|
|
|
116,537
|
|
|
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;
0 and 2,771 shares issued and outstanding at
June 27, 2020 and December 28, 2019
|
|
|
0
|
|
|
3
|
Common stock, $0.001
par value; 100,000 shares authorized; 42,411 and 36,167 shares
issued and outstanding at June 27, 2020 and
December 28, 2019 (of which 2,525 are treasury
stock)
|
|
|
45
|
|
|
38
|
Treasury
stock
|
|
|
(7,146)
|
|
|
(7,146)
|
Additional paid-in
capital
|
|
|
194,693
|
|
|
187,147
|
Accumulated other
comprehensive income
|
|
|
142
|
|
|
214
|
Accumulated
deficit
|
|
|
(167,358)
|
|
|
(167,876)
|
Total stockholders'
equity
|
|
|
20,376
|
|
|
12,380
|
Total liabilities and
stockholders' equity
|
|
$
|
136,913
|
|
$
|
87,946
|
CARPARTS.COM, INC. AND
SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited, In
Thousands)
|
|
|
|
|
|
|
|
|
|
Twenty-Six Weeks
Ended
|
|
|
June 27,
|
|
June 29,
|
|
|
2020
|
|
2019
|
Operating
activities
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
590
|
|
$
|
(5,038)
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
Depreciation and
amortization expense
|
|
|
3,532
|
|
|
3,040
|
Amortization of
intangible assets
|
|
|
50
|
|
|
50
|
Deferred income
taxes
|
|
|
—
|
|
|
(559)
|
Share-based
compensation expense
|
|
|
4,385
|
|
|
1,163
|
Stock awards issued for
non-employee director service
|
|
|
12
|
|
|
7
|
Loss from disposition
of assets
|
|
|
1
|
|
|
—
|
Amortization of
deferred financing costs
|
|
|
9
|
|
|
2
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(2,609)
|
|
|
(313)
|
Inventory
|
|
|
(12,883)
|
|
|
(2,926)
|
Other current
assets
|
|
|
(1,597)
|
|
|
(1,517)
|
Other non-current
assets
|
|
|
(296)
|
|
|
24
|
Accounts payable and
accrued expenses
|
|
|
32,055
|
|
|
8,473
|
Other current
liabilities
|
|
|
1,671
|
|
|
345
|
Right-of-Use Obligation
- Operating Leases - Current
|
|
|
483
|
|
|
1,595
|
Right-of-Use Obligation
- Operating Leases - Long-term
|
|
|
(383)
|
|
|
(1,530)
|
Other non-current
liabilities
|
|
|
148
|
|
|
134
|
Net cash provided by
operating activities
|
|
|
25,168
|
|
|
2,950
|
Investing
activities
|
|
|
|
|
|
|
Additions to property
and equipment
|
|
|
(3,840)
|
|
|
(3,431)
|
Net cash used in
investing activities
|
|
|
(3,840)
|
|
|
(3,431)
|
Financing
activities
|
|
|
|
|
|
|
Borrowings from
revolving loan payable
|
|
|
1,273
|
|
|
7,641
|
Payments made on
revolving loan payable
|
|
|
(1,273)
|
|
|
(7,641)
|
Proceeds from notes
payable
|
|
|
4,107
|
|
|
—
|
Payment of notes
payable
|
|
|
(5,333)
|
|
|
—
|
Payments on finance
leases
|
|
|
(315)
|
|
|
(299)
|
Statutory tax
withholding payment for share-based compensation
|
|
|
(85)
|
|
|
(289)
|
Proceeds from
exercise of stock options
|
|
|
2,893
|
|
|
—
|
Preferred stock
dividends paid
|
|
|
—
|
|
|
(80)
|
Net cash provided by
(used in) financing activities
|
|
|
1,267
|
|
|
(668)
|
Effect of exchange
rate changes on cash
|
|
|
(8)
|
|
|
1
|
Net change in cash
and cash equivalents
|
|
|
22,587
|
|
|
(1,148)
|
Cash and cash
equivalents, beginning of period
|
|
|
2,273
|
|
|
2,031
|
Cash and cash
equivalents, end of period
|
|
$
|
24,860
|
|
$
|
883
|
Supplemental
disclosure of non-cash investing and financing
activities:
|
|
|
|
|
|
|
Right-of-use operating
asset acquired
|
|
$
|
9,065
|
|
$
|
—
|
Right-of-use financed
asset acquired
|
|
$
|
385
|
|
$
|
—
|
Accrued asset
purchases
|
|
$
|
665
|
|
$
|
825
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
Cash paid during the
period for income taxes
|
|
$
|
90
|
|
$
|
43
|
Cash paid during the
period for interest
|
|
$
|
1,125
|
|
$
|
834
|
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SOURCE CarParts.com, Inc.