CarParts.com Reports Record Fourth Quarter and Full Year 2022 Results

Record Fourth Quarter Sales of $154.5 million, up 12% Year over Year  

Record Fiscal Year Sales of $661.6 million, up 14% Year over Year

12th Consecutive Quarter of Double-Digit Year over Year Sales Growth

TORRANCE, Calif., March 7, 2023 /PRNewswire/ — CarParts.com, Inc. (NASDAQ: PRTS), one of the leading e-commerce providers of automotive parts and accessories, and a one-stop shop for vehicle repair and maintenance needs, is reporting results for the fourth quarter and fiscal year ended December 31, 2022. 

Fiscal Year 2022 Summary vs. Fiscal Year 2021  

  • Net sales increased 14% year over year to a record $661.6 million and increased 45% on a two-year stack.
  • Gross profit increased 17% to $230.9 million, with gross margin increasing 100 basis points to 34.9%.
  • Net loss was ($1.0) million or ($0.02) per diluted share, compared to a net loss of ($10.3) million or ($0.20) per diluted share.
  • Adjusted EBITDA increased to $26.1 million vs. $16.8 million, up 56% year over year.

Fourth Quarter 2022 Summary vs. Year-Ago Quarter  

  • Net sales increased 12% year over year to $154.5 million and increased 27% on a two-year stack.
  • Gross profit increased 9% to $51.6 million, with gross margin of 33.4%.
  • Net loss was ($6.2) million or ($0.11) per diluted share, compared to a net loss of ($5.0) million or ($0.10) per diluted share.
  • Adjusted EBITDA of $2.1 million vs. $2.6 million.

Management Commentary

“2022 was a record-breaking year for us, marking our third consecutive year of double-digit revenue growth. Since 2019, we have more than doubled our revenues and returned the company to profitability by leveraging our positive unit economics. I’m also excited to announce we’ve built up a robust balance sheet which reinforces our confidence that we can continue to self-fund our future growth without reliance on outside capital,” said David Meniane, CEO of CarParts.com. 

“For 2023 and beyond, we continue to put our customers and team members at the center of our strategy and feel prepared to tackle the future with intention, focus, and discipline as we gain market share. We are in a strong position to thrive and continue delivering profitable growth amid whatever changes the market brings us. We believe that doing this will benefit our shareholders in the years to come and grow the intrinsic value of our company.”

Fiscal Year 2022 Financial Results

Net sales in fiscal year 2022 were $661.6 million up 14% from $582.4 million in fiscal year 2021.  For the first eight weeks of fiscal year 2023, we produced high single digit year-over-year revenue growth combined with sequential gross margin expansion and continue to balance growth with profitability and free cash flow generation. 

Gross profit increased 17% to $230.9 million in fiscal year 2022 compared to $197.3 million in fiscal year 2021. Gross margin increased 100 basis points to 34.9% in fiscal year 2022 compared to 33.9% in fiscal year 2021. The increase in gross margin was primarily driven by favorable freight costs in 2022.

Total operating expenses in fiscal year 2022 were $230.2 million compared to $206.4 million in fiscal year 2021, mainly due to an increase in sales and investments in the business.

Net loss in fiscal year 2022 was ($1.0) million compared to a net loss of ($10.3) million in fiscal year 2021, both predominantly driven by non-cash charges.

Adjusted EBITDA in fiscal year 2022 was $26.1 million compared to $16.8 million in the fiscal year 2021.

On December 31, 2022, the Company had a cash balance of $18.8 million, no revolver debt and no outstanding trade letters of credit (“LCs”), compared to no revolver debt, no outstanding trade LCs and a $18.1 million cash balance at prior fiscal year-end January 1, 2022. 

Fourth Quarter 2022 Financial Results

Net sales in the fourth quarter of 2022 were $154.5 million, up 12% from the year-ago quarter.  

Gross profit in the fourth quarter increased 9% to $51.6 million compared to $47.4 million in the year-ago quarter, with gross margin decreasing 90 basis points to 33.4%, driven by seasonal freight charges which were higher and started earlier than the prior year.

Total operating expenses in the fourth quarter were $57.1 million compared to $52.0 million in the year-ago quarter, mainly due to an increase in sales and investments in the business.

Net loss in the fourth quarter was ($6.2) million compared to a net loss of ($5.0) million in the year-ago quarter, both predominantly driven by non-cash charges.

Adjusted EBITDA in the fourth quarter was $2.1 million compared to $2.6 million in the year-ago quarter.

Conference Call

CarParts.com CEO David Meniane, CFO Ryan Lockwood and COO Michael Huffaker will host a conference call today to discuss the results, followed by a question and answer period.

Date: Tuesday, March 7, 2023

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. A replay of the audio webcast will be archived on the Company’s website at www.carparts.com/investor.  

About CarParts.com, Inc.

CarParts.com is the go-to eCommerce platform for auto care and maintenance. We offer drivers quality parts at competitive prices and allow customers to schedule an appointment with a trusted mechanic directly from our website. We use world-class design principles and the latest technologies to deliver a fast, easy-to-use, and mobile-intuitive website. And with our company-owned national distribution network, we bring the best brands and manufacturers directly to consumers, cutting out the costs associated with brick-and-mortar retailers. Our team members around the globe are dedicated to Empowering Drivers Along Their Journey.

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; and (e) share-based compensation expense. 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 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, our ability to innovate, our ability to gain market share, 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 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

[email protected]

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




Thirteen Weeks

Ended


Thirteen Weeks

Ended


Fifty-Two Weeks

Ended


Fifty-Two

Weeks Ended




December 31, 2022


January 1, 2022


December 31, 2022


January 1, 2022


Net sales


$

154.52


$

138.26


$

661.60


$

582.44


Gross profit


$

51.65


$

47.43


$

230.89


$

197.28





33.4

%


34.3

%


34.9

%


33.9

%

Operating expense


$

57.10


$

52.01


$

230.24


$

206.39





36.9

%


37.6

%


34.8

%


35.4

%

Net loss


$

(6.22)


$

(5.03)


$

(0.95)


$

(10.34)





(4.0)

%


(3.6)

%


(0.1)

%


(1.8)

%

Adjusted EBITDA


$

2.12


$

2.59


$

26.11


$

16.79





1.4

%


1.9

%


3.9

%


2.9

%

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




Thirteen Weeks

Ended


Thirteen Weeks

Ended


Fifty-Two Weeks

Ended


Fifty-Two

Weeks Ended



December 31, 2022


January 1, 2022


December 31, 2022


January 1, 2022

Net loss


$

(6,224)


$

(5,030)


$

(951)


$

(10,339)

Depreciation & amortization



3,936



2,772



13,607



9,895

Amortization of intangible assets



27



28



108



110

Interest expense, net



355



268



1,421



1,089

Taxes



514



144



632



351

EBITDA


$

(1,392)


$

(1,818)


$

14,817


$

1,106

Stock compensation expense


$

3,510


$

4,408



11,296



15,685

Adjusted EBITDA


$

2,118


$

2,590


$

26,113


$

16,791

CARPARTS.COM, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE OPERATIONS
(In Thousands, Except Per Share Data)




Fiscal Year Ended



December 31,


January 1,


January 2,



2022


2022


2021

Net sales


$

661,604


$

582,440


$

443,884

Cost of sales (1)



430,714



385,157



288,518

Gross profit



230,890



197,283



155,366

Operating expense



230,239



206,394



155,071

Income (loss) from operations



651



(9,111)



295

Other income (expense):










Other, net



467



238



213

Interest expense



(1,437)



(1,115)



(1,714)

Total other expense, net



(970)



(877)



(1,501)

Loss before income taxes



(319)



(9,988)



(1,206)

Income tax provision



632



351



307

Net loss



(951)



(10,339)



(1,513)

Other comprehensive gain (loss):










Foreign currency translation adjustments



127



93



(86)

Actuarial gain (loss) on defined benefit plan



872



307



(400)

Unrealized (loss) gain on deferred compensation trust assets



(147)



89



57

Total other comprehensive gain (loss)



852



489



(429)

Comprehensive loss


$

(99)


$

(9,850)


$

(1,942)

Net loss per share:










Basic and diluted net loss per share


$

(0.02)


$

(0.20)


$

(0.04)

Weighted-average common shares outstanding:










Shares used in computation of basic and diluted net loss per share



54,137



51,381



42,333

________________________

(1)  Excludes depreciation and amortization expense which is included in operating expense.

CARPARTS.COM, INC. AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Par Value Data)




December 31,


January 1,



2022


2022

ASSETS







Current assets:







Cash and cash equivalents


$

18,767


$

18,144

Accounts receivable, net



6,406



5,015

Inventory, net



136,026



138,851

Other current assets



6,672



6,592

Total current assets



167,871



168,602

Property and equipment, net



24,290



20,736

Right-of-use – assets – operating leases, net



23,951



28,680

Right-of-use – assets – finance leases, net



19,750



15,130

Other non-current assets



2,537



2,188

Total assets


$

238,399


$

235,336

LIABILITIES AND STOCKHOLDERS’ EQUITY







Current liabilities:







Accounts payable


$

57,616


$

67,372

Accrued expenses



16,466



17,517

Right-of-use – obligation – operating, current



4,571



4,201

Right-of-use – obligation – finance, current



4,753



2,953

Other current liabilities



4,622



4,751

Total current liabilities



88,028



96,794

Right-of-use – obligation – operating, non-current



21,412



26,367

Right-of-use – obligation – finance, non-current



15,916



12,868

Other non-current liabilities



2,971



3,739

Total liabilities



128,327



139,768

Commitments and contingencies







Stockholders’ equity:







Common stock, $0.001 par value; 100,000 shares authorized; 54,693 and 52,960 shares issued

and outstanding as of December 31, 2022 and January 1, 2022 (of which 2,565 are treasury

stock)



57



56

Treasury stock



(7,625)



(7,625)

Additional paid-in capital



297,265



282,663

Accumulated other comprehensive income



1,126



274

Accumulated deficit



(180,751)



(179,800)

Total stockholders’ equity



110,072



95,568

Total liabilities and stockholders’ equity


$

238,399


$

235,336

CARPARTS.COM, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)




Fiscal Year Ended



December 31,


January 1,


January 2,



2022


2022


2021

Operating activities










Net loss


$

(951)


$

(10,339)


$

(1,513)

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










Depreciation and amortization expense



13,607



9,895



7,657

Amortization of intangible assets



108



110



102

Share-based compensation expense



11,296



15,685



7,778

Stock awards issued for non-employee director service



22



23



24

Stock awards related to officers and directors stock purchase plan from payroll deferral



26





(Gain) loss from disposition of assets



(41)



52



Amortization of deferred financing costs



53



18



18

Changes in operating assets and liabilities:










Accounts receivable



(1,424)



1,303



(3,650)

Inventory



2,825



(49,535)



(36,815)

Other current assets



(141)



1,340



(2,983)

Other non-current assets



(636)



551



(1,056)

Accounts payable and accrued expenses



(9,629)



22,436



8,398

Other current liabilities



(129)



374



1,120

Right-of-use obligation – operating leases – current



402



1,696



1,143

Right-of-use obligation – operating leases – long-term



(200)



(836)



(321)

Other non-current liabilities



180



239



1,030

Net cash provided by (used in) operating activities



15,368



(6,988)



(19,068)

Investing activities










Additions to property and equipment



(12,585)



(11,578)



(9,657)

Payment for intangible assets







(101)

Proceeds from sale of property and equipment



68



27



Net cash used in investing activities



(12,517)



(11,551)



(9,758)

Financing activities










Borrowings from revolving loan payable



10,417



131



1,415

Payments made on revolving loan payable



(10,417)



(131)



(1,415)

Proceeds from notes payable







4,107

Payments of notes payable







(5,333)

Repurchase of treasury stock





(524)



Payments on finance leases



(4,232)



(2,164)



(1,005)

Net proceeds from issuance of common stock for ESPP



795





Net proceeds from issuance of common stock







60,461

Statutory tax withholding payment for share-based compensation





(3)



(93)

Proceeds from exercise of stock options



1,284



3,661



4,257

Payment of registration costs of common stock





(68)



Preferred stock dividends paid







(33)

Net cash (used in) provided by financing activities



(2,153)



902



62,361

Effect of exchange rate changes on cash



(75)



(21)



(6)

Net change in cash and cash equivalents



623



(17,658)



33,529

Cash and cash equivalents, beginning of period



18,144



35,802



2,273

Cash and cash equivalents, end of period


$

18,767


$

18,144


$

35,802

Supplemental disclosure of non-cash investing and financing activities:










Right-of-use operating asset acquired


$


$

15,000


$

15,508

Right-of-use finance asset acquired


$

9,206


$

4,975


$

4,766

Accrued asset purchases


$

624


$

1,764


$

1,822

Share-based compensation expense capitalized in property and equipment


$

1,180


$

2,159


$

659

Stock issued for services


$

81


$

778


$

Supplemental disclosure of cash flow information:










Cash paid during the period for income taxes


$

649


$

88


$

135

Cash paid during the period for interest


$

1,366


$

1,102


$

1,834

SOURCE CarParts.com, Inc.


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