TORRANCE, Calif., Nov. 9, 2020 /PRNewswire/
-- CarParts.com, Inc. (NASDAQ: PRTS), one of
the leading e-commerce providers of automotive parts and
accessories, is reporting results for the third quarter ended
September 26, 2020.
Q3 2020 Highlights vs. Q3
2019
- Net sales increased 69% to $117.4
million compared to $69.3
million.
- Gross profit more than doubled to a company record $43.1 million compared to $21.1 million.
- Gross margin expanded 620 basis points to a company record
36.7% compared to 30.5%.
- Net income improved significantly to $1.4 million or $0.03 per diluted share, compared to a net loss
of $(1.4) million or $(0.04) per share.
- Adjusted EBITDA increased almost 4x to $5.1 million compared to $1.3 million.
- Successfully completed a public equity offering of $60.5 million in net proceeds, which closed on
August 18, 2020 and was 3 times
oversubscribed.
Management Commentary
"The investments we made in our technology, marketing and supply
chain starting in 2019 enabled us to return to growth and margin
expansion beginning in the first quarter of this year and
continuing through the third quarter, driving exceptional growth
across our business," said Lev
Peker, CEO of CarParts.com. "In fact, gross profit and gross
margin reached record highs, and we have continued to generate
significant year-over-year increases to our bottom line thanks to
our focus on positive unit economics, even on the first purchase.
Our team has done an incredible job of maintaining our strong
performance while addressing the elevated and evolving e-commerce
demand.
"Currently there are 3 major consumer behavior changes that are
helping to propel our growth: a shift from Do It For Me to DIY, a
secular shift from offline to online, and more recently, a shift
away from public transportation which is combined with the oldest
car fleet the country has ever seen. To capitalize on these
improvements, we are continuously investing in our business.
"Across our organization, we have made exceptional progress in
establishing CarParts.com as a modern and scalable e-commerce
company. As we look to the fourth quarter and our trajectory into
2021, we will work to further optimize both our back-end and our
customer-facing operations. We will continue to focus on expanding
our inventory and fulfillment network capabilities, and remain
financially disciplined when deploying capital to the areas of our
business that generate the strongest returns. We are proud of the
strong foundation we have built and will remain focused on building
a long-lasting, exceptional company."
Third Quarter 2020 Financial Results
Net sales in the third quarter increased 69% to $117.4 million compared to $69.3 million in the year-ago quarter. The
increase was primarily driven by triple-digit revenue growth from
CarParts.com, the company's primary sales channel.
Gross profit in the third quarter more than doubled to a record
$43.1 million compared to
$21.1 million in the third
quarter of last year, with gross margin up 620 basis points to
36.7% compared to 30.5%. These increases were mainly driven by
favorable product and channel mix, as well as efficiencies in
logistics operations.
Net income in the third quarter improved significantly to
$1.4 million or $0.03 per diluted share, compared to a net loss
of $(1.4) million or $(0.04) per share in the third quarter of last
year.
Adjusted EBITDA in the third quarter increased significantly to
$5.1 million compared to $1.3 million in the year-ago quarter. The
increase was driven by the significant net sales growth and
continued benefit of long-term operational improvements implemented
across all areas of the business.
On September 26, 2020, the
company's cash balance increased significantly to $59.0 million compared to a $2.3 million cash balance at December 28, 2019. The increase was primarily
driven by the company's successful completion of its underwritten
public equity offering of $60.5
million in net proceeds, which closed on August 18, 2020 and was 3x oversubscribed. The
company also paid down $12.0 million
of liabilities tied to our credit facility and has the ability to
flex its facility with JP Morgan Chase up to $40.0 million. These initiatives significantly
expand the company's available liquidity.
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, November 9, 2020
Time: 11:00 a.m. Eastern time
(8:00 a.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 1029999. A telephone replay will also be
available on the same day through November
23, 2020 at 855-859-2056 (domestic) or 404-537-3406
(international) using access code 1029999.
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 continental
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 the employee transitions. A
reconciliation of Adjusted EBITDA to net income (loss) is provided
below.
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, statements regarding our
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
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
|
|
Thirty-Nine Weeks
Ended
|
|
|
|
September 26, 2020
|
|
September 28, 2019
|
|
September 26, 2020
|
|
September 28, 2019
|
|
Net sales
|
|
$
|
117.41
|
|
$
|
69.27
|
|
$
|
324.15
|
|
$
|
217.70
|
|
Gross
profit
|
|
$
|
43.12
|
|
$
|
21.14
|
|
$
|
113.73
|
|
$
|
63.04
|
|
|
|
|
36.7
|
%
|
|
30.5
|
%
|
|
35.1
|
%
|
|
29.0
|
%
|
Operating
expenses
|
|
$
|
41.39
|
|
$
|
22.60
|
|
$
|
110.17
|
|
$
|
69.14
|
|
|
|
|
35.3
|
%
|
|
32.6
|
%
|
|
34.0
|
%
|
|
31.8
|
%
|
Net income
(loss)
|
|
$
|
1.38
|
|
$
|
(1.42)
|
|
$
|
1.97
|
|
$
|
(6.46)
|
|
|
|
|
1.2
|
%
|
|
(2.1)
|
%
|
|
0.6
|
%
|
|
(3.0)
|
%
|
Adjusted
EBITDA
|
|
$
|
5.13
|
|
$
|
1.32
|
|
$
|
14.99
|
|
$
|
2.65
|
|
|
|
|
4.4
|
%
|
|
1.9
|
%
|
|
4.6
|
%
|
|
1.2
|
%
|
The table below
reconciles net income (loss) to Adjusted EBITDA for the periods
presented (in thousands):
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks
Ended
|
|
Thirty-Nine Weeks
Ended
|
|
|
September 26, 2020
|
|
September 28, 2019
|
|
September 26, 2020
|
|
September 28, 2019
|
Net income
(loss)
|
|
$
|
1,385
|
|
$
|
(1,424)
|
|
$
|
1,975
|
|
$
|
(6,461)
|
Depreciation & amortization
|
|
|
1,766
|
|
|
1,531
|
|
|
5,298
|
|
|
4,572
|
Amortization of
intangible assets
|
|
|
25
|
|
|
25
|
|
|
75
|
|
|
75
|
Interest expense,
net
|
|
|
304
|
|
|
516
|
|
|
1,453
|
|
|
1,410
|
Taxes
|
|
|
45
|
|
|
(552)
|
|
|
199
|
|
|
(1,018)
|
EBITDA
|
|
$
|
3,525
|
|
$
|
96
|
|
$
|
9,000
|
|
$
|
(1,422)
|
Stock compensation
expense
|
|
$
|
1,606
|
|
$
|
792
|
|
$
|
5,991
|
|
$
|
1,955
|
Employee transition
costs(1)
|
|
|
—
|
|
|
425
|
|
|
—
|
|
|
1,695
|
Customs
costs(2)
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
418
|
Adjusted
EBITDA
|
|
$
|
5,131
|
|
$
|
1,316
|
|
$
|
14,991
|
|
$
|
2,646
|
_______________________
|
(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
|
|
Thirty-Nine Weeks
Ended
|
|
|
|
September 26,
|
|
September 28,
|
|
September 26,
|
|
September 28,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Net sales
|
|
$
|
117,406
|
|
$
|
69,273
|
|
$
|
324,154
|
|
$
|
217,698
|
|
Cost of sales
(1)
|
|
|
74,285
|
|
|
48,130
|
|
|
210,425
|
|
|
154,663
|
|
Gross
profit
|
|
|
43,121
|
|
|
21,143
|
|
|
113,729
|
|
|
63,035
|
|
Operating
expense
|
|
|
41,389
|
|
|
22,601
|
|
|
110,174
|
|
|
69,144
|
|
Income (loss) from
operations
|
|
|
1,732
|
|
|
(1,458)
|
|
|
3,555
|
|
|
(6,109)
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other, net
|
|
|
6
|
|
|
(1)
|
|
|
80
|
|
|
41
|
|
Interest
expense
|
|
|
(308)
|
|
|
(517)
|
|
|
(1,461)
|
|
|
(1,411)
|
|
Total other expense,
net
|
|
|
(302)
|
|
|
(518)
|
|
|
(1,381)
|
|
|
(1,370)
|
|
Income (loss) before
income taxes
|
|
|
1,430
|
|
|
(1,976)
|
|
|
2,174
|
|
|
(7,479)
|
|
Income tax provision
(benefit)
|
|
|
45
|
|
|
(552)
|
|
|
199
|
|
|
(1,018)
|
|
Net income
(loss)
|
|
|
1,385
|
|
|
(1,424)
|
|
|
1,975
|
|
|
(6,461)
|
|
Other comprehensive
(loss) income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments
|
|
|
(38)
|
|
|
19
|
|
|
(73)
|
|
|
(19)
|
|
Unrealized gain (loss)
on deferred compensation trust
assets
|
|
|
35
|
|
|
—
|
|
|
(2)
|
|
|
—
|
|
Total other
comprehensive (loss) income
|
|
|
(3)
|
|
|
19
|
|
|
(75)
|
|
|
(19)
|
|
Comprehensive income
(loss)
|
|
$
|
1,382
|
|
$
|
(1,405)
|
|
$
|
1,900
|
|
$
|
(6,480)
|
|
Net income (loss) per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income
(loss) per share
|
|
$
|
0.03
|
|
$
|
(0.04)
|
|
$
|
0.05
|
|
$
|
(0.18)
|
|
Diluted net income
(loss) per share
|
|
$
|
0.03
|
|
$
|
(0.04)
|
|
$
|
0.04
|
|
$
|
(0.18)
|
|
Weighted-average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in
computation of basis net income (loss) per
share
|
|
|
44,686
|
|
|
35,856
|
|
|
40,314
|
|
|
35,623
|
|
Shares used in
computation of diluted net income (loss) per
share
|
|
|
53,573
|
|
|
35,856
|
|
|
50,386
|
|
|
35,623
|
|
_____________________
|
(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)
|
|
|
|
|
|
|
|
|
|
September 26,
|
|
December 28,
|
|
|
2020
|
|
2019
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
58,971
|
|
$
|
2,273
|
Accounts receivable,
net
|
|
|
6,975
|
|
|
2,669
|
Inventory
|
|
|
76,729
|
|
|
52,500
|
Other current
assets
|
|
|
6,882
|
|
|
4,931
|
Total current
assets
|
|
|
149,557
|
|
|
62,373
|
Property and
equipment, net
|
|
|
12,645
|
|
|
9,650
|
Right-of-use - assets
- operating leases, net
|
|
|
18,256
|
|
|
4,544
|
Right-of-use - assets
- financing leases, net
|
|
|
10,053
|
|
|
9,011
|
Other non-current
assets
|
|
|
2,329
|
|
|
2,368
|
Total
assets
|
|
$
|
192,840
|
|
$
|
87,946
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
49,448
|
|
$
|
44,433
|
Accrued
expenses
|
|
|
22,630
|
|
|
9,519
|
Customer
deposits
|
|
|
456
|
|
|
652
|
Notes payable,
current
|
|
|
—
|
|
|
729
|
Right-of-use -
obligation - operating, current
|
|
|
2,285
|
|
|
1,368
|
Right-of-use -
obligation - finance, current
|
|
|
893
|
|
|
640
|
Other current
liabilities
|
|
|
3,182
|
|
|
2,605
|
Total current
liabilities
|
|
|
78,894
|
|
|
59,946
|
Notes payable,
non-current
|
|
|
—
|
|
|
1,060
|
Right-of-use -
obligation - operating, non-current
|
|
|
16,764
|
|
|
3,419
|
Right-of-use -
obligation - finance, non-current
|
|
|
9,697
|
|
|
8,627
|
Other non-current
liabilities
|
|
|
2,918
|
|
|
2,514
|
Total
liabilities
|
|
|
108,273
|
|
|
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
September 26, 2020 and December 28, 2019
|
|
|
0
|
|
|
3
|
Common stock, $0.001
par value; 100,000 shares authorized; 47,772 and 36,167 shares
issued
and outstanding at September 26, 2020 and
December 28, 2019 (of which 2,525 are treasury
stock)
|
|
|
50
|
|
|
38
|
Treasury
stock
|
|
|
(7,146)
|
|
|
(7,146)
|
Additional paid-in
capital
|
|
|
257,497
|
|
|
187,147
|
Accumulated other
comprehensive income
|
|
|
139
|
|
|
214
|
Accumulated
deficit
|
|
|
(165,973)
|
|
|
(167,876)
|
Total stockholders'
equity
|
|
|
84,567
|
|
|
12,380
|
Total liabilities and
stockholders' equity
|
|
$
|
192,840
|
|
$
|
87,946
|
CARPARTS.COM, INC. AND
SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited, In
Thousands)
|
|
|
|
|
|
|
|
|
|
Thirty-Nine Weeks
Ended
|
|
|
September 26,
|
|
September 28,
|
|
|
2020
|
|
2019
|
Operating
activities
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
1,975
|
|
$
|
(6,461)
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
Depreciation and
amortization expense
|
|
|
5,298
|
|
|
4,572
|
Amortization of
intangible assets
|
|
|
75
|
|
|
75
|
Deferred income
taxes
|
|
|
—
|
|
|
(1,176)
|
Share-based
compensation expense
|
|
|
5,991
|
|
|
1,955
|
Stock awards issued for
non-employee director service
|
|
|
18
|
|
|
13
|
Loss from disposition
of assets
|
|
|
1
|
|
|
—
|
Amortization of
deferred financing costs
|
|
|
14
|
|
|
2
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(4,306)
|
|
|
(622)
|
Inventory
|
|
|
(24,229)
|
|
|
1,927
|
Other current
assets
|
|
|
(1,927)
|
|
|
(731)
|
Other non-current
assets
|
|
|
(622)
|
|
|
775
|
Accounts payable and
accrued expenses
|
|
|
18,062
|
|
|
3,874
|
Other current
liabilities
|
|
|
380
|
|
|
(280)
|
Right-of-Use Obligation
- Operating Leases - Current
|
|
|
902
|
|
|
1,573
|
Right-of-Use Obligation
- Operating Leases - Long-term
|
|
|
(354)
|
|
|
(1,332)
|
Other non-current
liabilities
|
|
|
332
|
|
|
163
|
Net cash provided by
operating activities
|
|
|
1,610
|
|
|
4,327
|
Investing
activities
|
|
|
|
|
|
|
Additions to property
and equipment
|
|
|
(6,936)
|
|
|
(4,686)
|
Net cash used in
investing activities
|
|
|
(6,936)
|
|
|
(4,686)
|
Financing
activities
|
|
|
|
|
|
|
Borrowings from
revolving loan payable
|
|
|
1,394
|
|
|
11,514
|
Payments made on
revolving loan payable
|
|
|
(1,394)
|
|
|
(11,514)
|
Proceeds from notes
payable
|
|
|
4,107
|
|
|
162
|
Payments of notes
payable
|
|
|
(5,333)
|
|
|
—
|
Payments on finance
leases
|
|
|
(560)
|
|
|
(453)
|
Net proceeds from
issuance of common stock
|
|
|
60,531
|
|
|
—
|
Statutory tax
withholding payment for share-based compensation
|
|
|
(91)
|
|
|
(290)
|
Proceeds from
exercise of stock options
|
|
|
3,398
|
|
|
99
|
Preferred stock
dividends paid
|
|
|
(33)
|
|
|
(80)
|
Net cash provided by
(used in) financing activities
|
|
|
62,019
|
|
|
(562)
|
Effect of exchange
rate changes on cash
|
|
|
5
|
|
|
(2)
|
Net change in cash
and cash equivalents
|
|
|
56,698
|
|
|
(923)
|
Cash and cash
equivalents, beginning of period
|
|
|
2,273
|
|
|
2,031
|
Cash and cash
equivalents, end of period
|
|
$
|
58,971
|
|
$
|
1,108
|
Supplemental
disclosure of non-cash investing and financing
activities:
|
|
|
|
|
|
|
Right-of-use operating
asset acquired
|
|
$
|
14,785
|
|
$
|
1,684
|
Right-of-use financed
asset acquired
|
|
$
|
1,900
|
|
$
|
749
|
Accrued asset
purchases
|
|
$
|
735
|
|
$
|
1,200
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
Cash paid during the
period for income taxes
|
|
$
|
113
|
|
$
|
85
|
Cash paid during the
period for interest
|
|
$
|
1,603
|
|
$
|
1,385
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/carpartscom-reports-record-third-quarter-2020-results-301168300.html
SOURCE CarParts.com, Inc.