PR Newswire | Nov 2, 2021 04:02PM EDT

11/02 15:01 CDT

CarParts.com Reports Record Third Quarter 2021 ResultsRecord Third Quarter Sales of $141.8 million, up 21%7th Consecutive Quarter of Year over Year Sales GrowthGrew Inventory to a Record $131.8 million TORRANCE, Calif., Nov. 2, 2021

TORRANCE, Calif., Nov. 2, 2021 /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 October 2,?2021.

Third Quarter 2021?Summary vs.?Year-Ago Quarter

* Net sales increased 21% year over year to $141.8 million and increased 90% on a 2-year stack. * Gross profit increased 10% to $47.3 million, with gross margin of 33.4%. * Net loss was ($4.7) million or ($0.09) per diluted share, compared to net income of $1.4 million or $0.03 per diluted share. * Adjusted EBITDA of $2.3 million vs. $5.1 million. * Grew inventory to record $131.8 million. * Management reiterates long term targets of 20-25% compounded revenue growth and 8-10% EBITDA margin.

Management Commentary

"We saw another quarter of strong year over year growth," said Lev Peker, CEO of CarParts.com. "We also maintained EBITDA profitability while investing heavily into the business. We believe these investments are foundational and that they will be resilient for several years which will spring load our growth and operating leverage over the long run."

"We are very proud of the work of our international sourcing and supply chain team. In a challenging environment, we were able to grow inventory to record levels. Given our proven track record of sourcing, strong inventory position, and distribution center expansions, we believe we are both able and ready to serve our customers through 2021 and 2022."

Third Quarter2021Financial Results

Net sales in the third quarter of 2021 were $141.8 million compared to $117.4 million in the year-ago quarter. The increase was primarily driven by continued strong demand and the expanded capacity from our Grand Prairie distribution center ("DC").

Gross profit in the third quarter increased 10% to $47.3 million compared to $43.1 million in the third quarter last year, with gross margin of 33.4%.

Total operating expenses in the third quarter were $51.7 million compared to $41.4 million in the third quarter last year due to an increase in sales and investments in the business.

Net loss in the third quarter was ($4.7) million compared to net income of $1.4 million in the third quarter last year. The net loss was driven primarily by an increase in non-cash charges.

Adjusted EBITDA in the third quarter decreased to $2.3 million compared to $5.1 million in the year-ago quarter. The decrease was driven primarily from foundational investments in technology, supply chain, and category management.

On October 2, 2021, the Company had no revolver debt, no outstanding trade letters of credit ("LCs") and a cash balance of $20.7 million, compared to no revolver debt, no outstanding trade LCs and?a $35.8 million cash balance at prior fiscal year-end January 2, 2021.

Conference Call

CarParts.com CEO Lev Peker and CFO/COO David Meniane will host a conference call today via an audio webcast on the Company's website per the link below, followed by a question and answer period.

Date: Tuesday, November 2, 2021Time: 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 2096365. A telephone replay will also be available on the same day through November 16, 2021 at 855-859-2056 (domestic) or 404-537-3406 (international) using access code 2096365.

About CarParts.com, Inc.

With over 25 years of experience, and more than 50 million parts delivered, we've streamlined our website and sourcing network to better serve the way drivers get the parts they need. Utilizing the latest technologies and design principles, we've created an easy-to-use, mobile-friendly shopping experience that, alongside our own nationwide distribution network, cuts out the brick-and-mortar supply chain costs and provides quality parts at a budget-friendly price.

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) income before (a) interest expense, net; (b) income tax 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) income 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 statementswhich 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, and repurchases by us of outstanding shares of our common stock. 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, CFAIR@carparts.com

Summarized information for the periods presented is as follows (in millions):



Thirteen Thirteen Thirty-Nine Thirty-Nine Weeks Ended Weeks Ended Weeks Ended Weeks Ended

October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020

Net sales $ 141.85 $ 117.41 $ 444.18 $ 324.15

Gross profit $ 47.33 $ 43.12 $ 149.86 $ 113.73

33.4 % 36.7 % 33.7 % 35.1 %

Operating expense$ 51.67 $ 41.39 $ 154.35 $ 110.17

36.4 % 35.3 % 34.7 % 34.0 %

Net (loss) income$ (4.66) $ 1.39 $ (5.31) $ 1.98

(3.3) % 1.2 % (1.2) % 0.6 %

Adjusted EBITDA $ 2.29 $ 5.13 $ 14.20 $ 14.99

1.6 % 4.4 % 3.2 % 4.6 %

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



Thirteen Thirteen Thirty-Nine Thirty-Nine Weeks Ended Weeks Ended Weeks Ended Weeks Ended

October 2, 2021September 26, 2020October 2, 2021September 26, 2020

Net (loss) income $ (4,659) $ 1,385 $ (5,309) $ 1,975

Depreciation & amortization 2,573 1,766 7,123 5,298

Amortization of intangible assets 28 25 83 75

Interest expense, net 309 304 821 1,453

Taxes 39 45 207 199

EBITDA $ (1,710) $ 3,525 $ 2,925 $ 9,000

Stock compensation expense $ 4,005 $ 1,606 11,277 5,991

Adjusted EBITDA $ 2,295 $ 5,131 $ 14,202 $ 14,991

CARPARTS.COM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS (Unaudited, in Thousands, Except Per Share Data)



Thirteen Weeks Ended Thirty-Nine Weeks Ended

October 2,September 26,October 2,September 26,

2021 2020 2021 2020

Net sales $ 141,846$ 117,406 $ 444,184$ 324,154

Cost of sales ^(1) 94,513 74,285 294,328 210,425

Gross profit 47,333 43,121 149,856 113,729

Operating expense 51,668 41,389 154,353 110,174

(Loss) income from operations (4,335) 1,732 (4,497) 3,555

Other income (expense):

Other, net 24 6 221 80

Interest expense (309) (308) (826) (1,461)

Total other expense, net (285) (302) (605) (1,381)

(Loss) income before income taxes (4,620) 1,430 (5,102) 2,174

Income tax provision 39 45 207 199

Net (loss) income (4,659) 1,385 (5,309) 1,975

Other comprehensive gain (loss):

Foreign currency translation adjustments 60 (38) 90 (73)

Unrealized (loss) gain on deferred compensation trust assets (5) 35 68 (2)

Total other comprehensive gain (loss) 55 (3) 158 (75)

Comprehensive (loss) income $ (4,604)$ 1,382 $ (5,151)$ 1,900

Net (loss) income per share:

Basic net (loss) income per share $ (0.09) $ 0.03 $ (0.10) $ 0.05

Diluted net (loss) income per share $ (0.09) $ 0.03 $ (0.10) $ 0.04

Weighted-average common shares outstanding:

Shares used in computation of basic net (loss) income per share 52,264 44,686 50,903 40,314

Shares used in computation of diluted net (loss) income per share 52,264 53,573 50,903 50,386

(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)



October 2, January 2,

2021 2021

ASSETS

Current assets:

Cash and cash equivalents $20,680 $35,802

Accounts receivable, net 8,055 6,318

Inventory, net 131,768 89,316

Other current assets 6,351 7,939

Total current assets 166,854 139,375

Property and equipment, net 19,069 14,742

Right-of-use - assets - operating leases, net 18,856 17,507

Right-of-use - assets - finance leases, net 14,813 12,457

Other non-current assets 2,217 2,892

Total assets $221,809 $186,973

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable $59,430 $45,302

Accrued expenses 23,446 18,190

Customer deposits 708 630

Right-of-use - obligation - operating, current 3,467 2,527

Right-of-use - obligation - finance, current 2,484 1,583

Other current liabilities 3,935 3,747

Total current liabilities 93,470 71,979

Right-of-use - obligation - operating, non-current 17,077 16,046

Right-of-use - obligation - finance, non-current 12,836 11,428

Other non-current liabilities 3,956 4,031

Total liabilities 127,339 103,484

Commitments and contingencies

Stockholders' equity:

Common stock, $0.001 par value; 100,000 shares authorized; 52,415 and 48,091 shares issued 55 51 and outstanding as of October 2, 2021 and January 2, 2021 (of which 2,525 are treasury stock)

Treasury stock (7,146) (7,146)

Additional paid-in capital 276,388 260,260

Accumulated other comprehensive loss (57) (215)

Accumulated deficit (174,770) (169,461)

Total stockholders' equity 94,470 83,489

Total liabilities and stockholders' equity $221,809 $186,973

CARPARTS.COM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, In Thousands)





Thirty-Nine Weeks Ended

October 2,September 26,

2021 2020

Operating activities

Net (loss) income $(5,309) $1,975

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

Depreciation and amortization expense 7,123 5,298

Amortization of intangible assets 83 75

Share-based compensation expense 11,277 5,991

Stock awards issued for non-employee director service 17 18

Loss from disposition of assets 15 1

Amortization of deferred financing costs 13 14

Changes in operating assets and liabilities:

Accounts receivable (1,737) (4,306)

Inventory (42,453) (24,229)

Other current assets 1,580 (1,927)

Other non-current assets 556 (622)

Accounts payable and accrued expenses 19,477 18,062

Other current liabilities 266 380

Right-of-use obligation - operating leases - current 960 902

Right-of-use obligation - operating leases - long-term (331) (354)

Other non-current liabilities 114 332

Net cash (used) provided by operating activities (8,349) 1,610

Investing activities

Additions to property and equipment (8,434) (6,936)

Proceeds from sale of property and equipment 27 -

Net cash used in investing activities (8,407) (6,936)

Financing activities

Borrowings from revolving loan payable 105 1,394

Payments made on revolving loan payable (105) (1,394)

Proceeds from notes payable - 4,107

Payments of notes payable - (5,333)

Payments on finance leases (1,566) (560)

Net proceeds from issuance of common stock - 60,531

Statutory tax withholding payment for share-based compensation (3) (91)

Proceeds from exercise of stock options 3,230 3,398

Preferred stock dividends paid - (33)

Net cash provided by financing activities 1,661 62,019

Effect of exchange rate changes on cash (27) 5

Net change in cash and cash equivalents (15,122) 56,698

Cash and cash equivalents, beginning of period 35,802 2,273

Cash and cash equivalents, end of period $20,680 $58,971

Supplemental disclosure of non-cash investing and financing activities:

Right-of-use operating asset acquired $4,075 $14,785

Right-of-use finance asset acquired $4,257 $1,900

Accrued asset purchases $1,727 $735

Share-based compensation expense capitalized in property and equipment $1,610 $475

Stock issued for services $622 $-

Supplemental disclosure of cash flow information:

Cash paid during the period for income taxes $77 $113

Cash paid during the period for interest $811 $1,603

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SOURCE CarParts.com, Inc.