CarParts.com Reports Record Fourth Quarter and Full Year 2020 Results
CarParts.com (NASDAQ: PRTS) reported a strong performance for Q4 and fiscal year 2020. Net sales soared 90% YoY to $119.7 million in Q4 and 58% to $443.9 million for the year. Gross profit increased 97% to $41.6 million for Q4 and 84% to $155.4 million for the year, with gross margins improving significantly. Despite a net loss of $3.5 million for Q4, an improvement from a loss of $25.1 million last year, the company had no debt and a cash balance of $35.8 million at year-end. Management remains optimistic about future opportunities in the automotive parts market.
- Net sales increased 90% YoY in Q4 to $119.7 million.
- Gross profit rose 97% in Q4 to $41.6 million, improving gross margin to 34.8%.
- Fiscal year net sales increased 58% to $443.9 million.
- Gross profit for the fiscal year grew 84% to $155.4 million with a gross margin improvement to 35.0%.
- Net loss for Q4 improved to ($3.5) million from ($25.1) million YoY.
- Cash balance at fiscal year-end was $35.8 million, with no debt.
- Adjusted EBITDA decreased to $1.0 million in Q4 from $1.7 million YoY.
- Increased operating expenses in Q4, totaling $44.9 million, primarily due to Texas DC startup costs.
TORRANCE, Calif., March 8, 2021 /PRNewswire/ -- CarParts.com, Inc. (NASDAQ: PRTS), one of the leading e-commerce providers of automotive parts and accessories, is reporting results for the fourth quarter and fiscal year ended January 2, 2021.
Fourth Quarter 2020 Summary vs. Year-Ago Quarter
- Net sales increased
90% year over year to$119.7 million (includes one extra week).
- Gross profit increased
97% to$41.6 million , with gross margin up 110 basis points to34.8% .
- Net loss was (
$3.5) million or ($0.07) per share, compared to a net loss of ($25.1) million or ($0.70) per share. Q4 2019 net loss included a ($23.0) million non-cash deferred tax valuation allowance.
- Adjusted EBITDA decreased to
$1.0 million vs.$1.7 million in the year ago quarter. The decline was partially due to approximately$1 million in additional expenses associated with the opening of our Texas Distribution Center ("DC") as well as increased receiving across the network.
Fiscal Year 2020 Summary vs. 2019
- Net sales increased
58% year over year to$443.9 million (includes one extra week).
- Gross profit increased
84% to$155.4 million , with gross margin up 500 basis points to35.0% .
- Net loss was (
$1.5) million or ($0.04) per share, compared to a net loss of ($31.5) million or ($0.89) per share. 2019 net loss included a ($23.0) million non-cash deferred tax valuation allowance.
- Adjusted EBITDA was
$16.0 million vs.$4.5 million .
Management Commentary
"The significant investments we made in 2019 laid the foundation for the success we experienced in 2020." said Lev Peker, CEO of CarParts.com. "Our strategy of Right Part, Right Place, Right Time is helping us transform and disrupt an industry with a superior value proposition that keeps our customers at the center of everything we do."
"While we are very proud of our work over the last 2 years and the improvements we have made, we still believe that there is significant market opportunity ahead of us. Our plan is to continue to get closer to the customer, provide an expanding selection of both mechanical and EV/Hybrid replacement parts, and help customers get parts installed with increased convenience and transparency."
"We're laser focused on providing a fast and convenient shopping experience that builds trust, brand awareness and drives repeat purchasing. CarParts.com continues to demonstrate strong forward momentum and our team is executing well on multiple strategic objectives."
Fourth Quarter 2020 Financial Results
Net sales in the fourth quarter of 2020 were
Gross profit in the fourth quarter increased
Total operating expenses in the fourth quarter were
Net loss in the fourth quarter decreased to (
Adjusted EBITDA in the fourth quarter decreased to
At fiscal year-end January 2, 2021, the company had no revolver debt, no outstanding trade letters of credit ("LCs") and a cash balance of
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, March 8, 2021
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 6047338. A telephone replay will also be available on the same day through March 22, 2021 at 855-859-2056 (domestic) or 404-537-3406 (international) using access code 6047338.
A copy of an investor presentation for the 2020 fiscal year will also be made available on the investor relations section of the Company's website at www.carparts.com/investor.
About CarParts.com, Inc.
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 offers 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 loss before (a) interest expense, net; (b) income tax provision; (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 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, our potential growth, 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, 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:
Ryan Lockwood, CFA
ir@carparts.com
Summarized information for the periods presented is as follows (in millions):
Fourteen | Thirteen Weeks | Fifty-Three | Fifty-Two Weeks | ||||||||||
January 2, 2021 | December 28, 2019 | January 2, 2021 | December 28, 2019 | ||||||||||
Net sales | $ | 119.73 | $ | 62.96 | $ | 443.88 | $ | 280.66 | |||||
Gross profit | $ | 41.64 | $ | 21.19 | $ | 155.37 | $ | 84.22 | |||||
34.8 | % | 33.7 | % | 35.0 | % | 30.0 | % | ||||||
Operating expense | $ | 44.90 | $ | 23.33 | $ | 155.07 | $ | 92.47 | |||||
37.5 | % | 37.1 | % | 34.9 | % | 32.9 | % | ||||||
Net loss | $ | (3.49) | $ | (25.09) | $ | (1.51) | $ | (31.55) | |||||
(2.9) | % | (39.9) | % | (0.3) | % | (11.2) | % | ||||||
Adjusted EBITDA | $ | 1.03 | $ | 1.69 | $ | 16.03 | $ | 4.53 | |||||
0.9 | % | 2.7 | % | 3.6 | % | 1.6 | % | ||||||
The table below reconciles net loss to Adjusted EBITDA for the periods presented (in thousands):
Fourteen Weeks | Thirteen Weeks | Fifty-Three | Fifty-Two Weeks | |||||||||
January 2, 2021 | December 28, 2019 | January 2, 2021 | December 28, 2019 | |||||||||
Net loss | (3,488) | (25,086) | (1,513) | (31,548) | ||||||||
Depreciation & amortization | 2,359 | 1,681 | 7,657 | 6,252 | ||||||||
Amortization of intangible assets | 27 | 25 | 102 | 100 | ||||||||
Interest expense, net | 241 | 487 | 1,694 | 1,897 | ||||||||
Taxes | 108 | 22,455 | 307 | 21,437 | ||||||||
EBITDA | $ | (753) | $ | (438) | $ | 8,247 | $ | (1,862) | ||||
Stock comp expense | 1,787 | 1,701 | 7,778 | 3,656 | ||||||||
Employee transition costs(1) | — | 384 | — | 2,274 | ||||||||
Customs costs(2) | — | 46 | — | 464 | ||||||||
Adjusted EBITDA | $ | 1,034 | $ | 1,693 | $ | 16,025 | $ | 4,532 | ||||
(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) | ||||||
Fiscal Year Ended | ||||||
January 2, | December 28, | |||||
2021 | 2019 | |||||
Net sales | $ | 443,884 | $ | 280,657 | ||
Cost of sales (1) | 288,518 | 196,434 | ||||
Gross profit | 155,366 | 84,223 | ||||
Operating expense | 155,071 | 92,473 | ||||
Income (loss) from operations | 295 | (8,250) | ||||
Other income (expense): | ||||||
Other, net | 213 | 36 | ||||
Interest expense | (1,714) | (1,897) | ||||
Total other expense, net | (1,501) | (1,861) | ||||
Loss before income taxes | (1,206) | (10,111) | ||||
Income tax provision | 307 | 21,437 | ||||
Net loss | (1,513) | (31,548) | ||||
Other comprehensive (loss) gain: | ||||||
Foreign currency translation adjustments | (86) | (52) | ||||
Actuarial loss on defined benefit plan | (400) | (313) | ||||
Unrealized gain on deferred compensation trust assets | 57 | — | ||||
Total other comprehensive loss | (429) | (365) | ||||
Comprehensive loss | $ | (1,942) | $ | (31,913) | ||
Net loss per share: | ||||||
Basic and diluted net loss per share | $ | (0.04) | $ | (0.89) | ||
Weighted-average common shares outstanding: | ||||||
Shares used in computation of basis and diluted net loss per share | 42,333 | 35,720 | ||||
(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) | ||||||
January 2, | December 28, | |||||
2021 | 2019 | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 35,802 | $ | 2,273 | ||
Accounts receivable, net | 6,318 | 2,669 | ||||
Inventory | 89,316 | 52,500 | ||||
Other current assets | 7,939 | 4,931 | ||||
Total current assets | 139,375 | 62,373 | ||||
Property and equipment, net | 14,742 | 9,650 | ||||
Right-of-use - assets - operating leases, net | 17,507 | 4,544 | ||||
Right-of-use - assets - finance leases, net | 12,457 | 9,011 | ||||
Other non-current assets | 2,892 | 2,368 | ||||
Total assets | $ | 186,973 | $ | 87,946 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 45,302 | $ | 44,433 | ||
Accrued expenses | 18,190 | 9,519 | ||||
Customer deposits | 630 | 652 | ||||
Notes payable, current | — | 729 | ||||
Right-of-use - obligation - operating, current | 2,527 | 1,368 | ||||
Right-of-use - obligation - finance, current | 1,583 | 640 | ||||
Other current liabilities | 3,747 | 2,605 | ||||
Total current liabilities | 71,979 | 59,946 | ||||
Notes payable, non-current | — | 1,060 | ||||
Right-of-use - obligation - operating, non-current | 16,046 | 3,419 | ||||
Right-of-use - obligation - finance, non-current | 11,428 | 8,627 | ||||
Other non-current liabilities | 4,031 | 2,514 | ||||
Total liabilities | 103,484 | 75,566 | ||||
Commitments and contingencies | ||||||
Stockholders' equity: | ||||||
Series A convertible preferred stock, | 0 | 3 | ||||
Common stock, | 51 | 38 | ||||
Treasury stock | (7,146) | (7,146) | ||||
Additional paid-in capital | 260,260 | 187,147 | ||||
Accumulated other comprehensive (loss) income | (215) | 214 | ||||
Accumulated deficit | (169,461) | (167,876) | ||||
Total stockholders' equity | 83,489 | 12,380 | ||||
Total liabilities and stockholders' equity | $ | 186,973 | $ | 87,946 | ||
CARPARTS.COM, INC. AND SUBSIDIARIES | ||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
(Unaudited, In Thousands) | ||||||
Fiscal Year Ended | ||||||
January 2, | December 28, | |||||
2021 | 2019 | |||||
Operating activities | ||||||
Net loss | $ | (1,513) | $ | (31,548) | ||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||||||
Depreciation and amortization expense | 7,657 | 6,252 | ||||
Amortization of intangible assets | 102 | 100 | ||||
Deferred income taxes | — | 21,287 | ||||
Share-based compensation expense | 7,778 | 3,656 | ||||
Stock awards issued for non-employee director service | 24 | 19 | ||||
Amortization of deferred financing costs | 18 | 1 | ||||
Changes in operating assets and liabilities: | ||||||
Accounts receivable | (3,650) | 1,058 | ||||
Inventory | (36,815) | (2,874) | ||||
Other current assets | (2,983) | (1,527) | ||||
Other non-current assets | (1,056) | 166 | ||||
Accounts payable and accrued expenses | 8,398 | 9,953 | ||||
Other current liabilities | 1,120 | (99) | ||||
Right-of-use obligation - operating leases - current | 1,143 | 1,364 | ||||
Right-of-use obligation - operating leases - long-term | (321) | (1,121) | ||||
Other non-current liabilities | 1,030 | 190 | ||||
Net cash (used in) provided by operating activities | (19,068) | 6,877 | ||||
Investing activities | ||||||
Additions to property and equipment | (9,657) | (6,160) | ||||
Payment for intangible assets | (101) | — | ||||
Net cash used in investing activities | (9,758) | (6,160) | ||||
Financing activities | ||||||
Borrowings from revolving loan payable | 1,415 | 14,626 | ||||
Payments made on revolving loan payable | (1,415) | (14,626) | ||||
Proceeds from notes payable | 4,107 | 257 | ||||
Payments of notes payable | (5,333) | (130) | ||||
Payments on finance leases | (1,005) | (670) | ||||
Net proceeds from issuance of common stock | 60,461 | — | ||||
Statutory tax withholding payment for share-based compensation | (93) | (302) | ||||
Proceeds from exercise of stock options | 4,257 | 460 | ||||
Preferred stock dividends paid | (33) | (80) | ||||
Net cash provided by (used in) financing activities | 62,361 | (465) | ||||
Effect of exchange rate changes on cash | (6) | (10) | ||||
Net change in cash and cash equivalents | 33,529 | 242 | ||||
Cash and cash equivalents, beginning of period | 2,273 | 2,031 | ||||
Cash and cash equivalents, end of period | $ | 35,802 | $ | 2,273 | ||
Supplemental disclosure of non-cash investing and financing activities: | ||||||
Right-of-use operating asset acquired | $ | 15,508 | $ | 1,098 | ||
Right-of-use finance asset acquired | $ | 4,766 | $ | 947 | ||
Accrued asset purchases | $ | 1,822 | $ | 720 | ||
Share-based compensation expense capitalized in property and equipment | $ | 659 | $ | 55 | ||
Fixed asset purchased through note payable | $ | — | $ | 1,919 | ||
Supplemental disclosure of cash flow information: | ||||||
Cash paid during the period for income taxes | $ | 135 | $ | 95 | ||
Cash paid during the period for interest | $ | 1,834 | $ | 1,896 | ||
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SOURCE CarParts.com, Inc.
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