CarParts.com (PRTS) 8-K Regulation FD Disclosure

1

U.S. Auto Parts Network, Inc.

Leading online source for automotive aftermarket parts and repair information

Investor Presentation

January 10, 2014

Exhibit 99.1

Safe Harbor

This presentation may contain certain forward-looking statements and

management may make additional forward-looking statements in response to

your questions.  These statements do not guarantee future performance and

speak only as of the date hereof, and qualify for 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.  We refer all of you to the risk factors

contained in US Auto Parts Annual Report on Form 10-K and quarterly reports

on Form 10-Q filed with the Securities and Exchange Commission, for more

detailed

discussion

on

the

factors

that

can

cause

actual

results

to

differ

materially from those projected in any forward-looking statements.

2

3

Broad Auto Parts Product Offering

Body Parts

Engine Parts

Performance & Accessories

*Represents  USAP online mix,   **Source; AAIA Factbook Research

21%

40%

39%

$15B

$15B

Revenue*

Overall Market**

$50B

Brake Discs

Catalytic

Converters

Radiators

Headers

Oxygen

Sensors

Alternators

Exhaust

Driveshaft

Fuel Injection /

Delivery

Lamps

Mirrors

Bumpers

Hoods

Tailgates

Doors

Grills

Wheels

Window

Regulators

Seat Covers

Car Covers

Floor Mats /

Carpeting

Cold Air

Intakes

Vent Visors

Tonneau

Covers

Nerf Bars

Bug Shields

Car Bras

4

Online sales of automotive parts and accessories continue to grow

Google has experienced a 6 year compound annual growth rate (“CAGR”) of 16% in queries for automotive parts

Mobile year over year queries increased 50% and 80% for cellphones and tablets, respectively, for September 2013 YTD

Online Market is Vibrant and Growing

Aftermarket e-Commerce Overview

Source: Google

eBay Parts Sales Continue to Increase

Source: eBay filings, press releases

Google Queries for Parts Growing

5

Online penetration for auto parts has trailed penetration rates of other consumer product categories for two reasons:

1)

Auto parts are traditionally bought by demographics that have lower internet access rates

We believe consumer buying will shift from offline to online as mobile device penetration increases for these demographics

2)

Shopping for auto parts online can be difficult for consumers

The complexity required to buy an auto part online increases consumers concerns it will not fit their vehicle

Online

retailers

continue

to

make

improvements

to

online

shopping,

reducing

concerns

and

increasing

conversion

Size and Penetration of Online Automotive Parts

Aftermarket e-Commerce Overview

Low Automotive Online Sales Penetration

Automotive Aftermarket by Segment

Source: Morgan Stanley and Forrester Research

Source: AAIA

Estimate based on AAAI Fact book -

$85B in parts, $70B in labor

* Excludes eBay

Desire to Repair

High

Low

$155B

Do-It-For-Me

$45B

Do-It-Yourself

(USAP Target Market)

$3.1B-$4.0B

Online Sales*

High

Online penetration rates for

most consumer products

categories range from 4% to 6%

Online sales of automotive

parts significantly lag other

product categories

45%

27%

24%

24%

21%

19%

19%

18%

13%

12%

11%

10%

10%

9%

9%

8%

6%

5%

4%

3%

1%

6

Changes to Our Business

2012 -

2013

•

Traffic and revenue declined resulting from search

engine changes forcing us to consolidate websites

•

Gross margin compression from increased

competition

•

Cost reductions could not be eliminated fast enough

to keep up with gross profit dollar lost

Go Forward

•

Traffic is stabilizing and revenue from go forward

sales channels has turned slightly positive

•

Larger focus on Private Label business with

healthier margins at competitive prices

•

Cost reductions have now exceeded gross profit

dollars

loss

from

2012

–

2013 

$0

$0

* FCF is defined as Adjusted EBITDA less CAPX

Product Assortment

•

Over 50% of product sales directly sourced from Asia

•

Transition away from lower margin stock ship

branded product while expanding private label mix 

•

Broad assortment

Marketing

•

Over 10 million unique monthly visitors to our websites

•

Unique visitors more than two times higher then any

other auto parts retailer

•

Less than a $8 customer acquisition cost (“CAC”)

USAP has two main competitive advantages

•

Over 40,000 private label SKUs

•

Over 1.5M branded SKUs

Competitive Advantages

8

USAP’s ability to competitively price products while maintaining healthy margins is a function of the

Company’s ability to leverage its robust private label supply chain.

The Company is working to increase margins by shifting its product mix toward increased private label

offerings

-

current

margins

range

from

29%

-

31%

The Company sources product directly from over 200 factories in Asia

USAP’s Supply Chain Creates Pricing Advantage

Margin %

In-Stock

Private Label

(Asia Sourced)

Branded

(U.S. Sourced)

40% -

70%

25% -

40%

10% -

25%

Drop Shipped

Current Mix

53%

47%

Current Mix

63%

37%

75%

25%

Goal

70%

30%

Goal

9

US Auto Parts Dominant Reach-

Largest

Pure Play Internet Retailer

(some overlap of monthly visitors across websites)

USAP’s traffic is 2x larger than any

other pure play online auto parts seller

0

2,000

4,000

6,000

8,000

10,000

12,000

USAP traffic includes traffic from USAP continued sales channels and WAG  since the acquisition 

Competitive sites’ traffic based on Compete September 2013 reports

10

Revenue

100%

Gross Margins

29% -

31%

Variable OPEX Costs

15%

Fixed Costs

0%

Incremental Flow Thru

14% -

16%

Growth and Profitability

Incremental Flow Thru

11

Our business model has significant cost leverage as revenues grow

•

Excludes stock based compensation, depreciation and amortization

•

For every incremental year required to achieve growth levels, fixed expenses increase $1.0M or 3%

Financial Sensitivity

Base

10%

20%

30%

40%

Revenue

$250

$275

$300

$325

$350

Gross Margin %

Variable:

Fulfillment

3.2%

3.2%

3.2%

3.2%

3.2%

Marketing

9.3%

9.3%

9.3%

9.3%

9.3%

Technology

0.7%

0.7%

0.7%

0.7%

0.7%

G&A

1.8%

1.8%

1.8%

1.8%

1.8%

Total Variable

14.9%

14.9%

14.9%

14.9%

14.9%

Fixed:

Fulfillment

2.5%

2.2%

2.0%

1.9%

1.8%

Marketing

4.0%

3.6%

3.3%

3.0%

2.8%

Technology

1.2%

1.1%

1.0%

0.9%

0.9%

G&A

4.0%

3.6%

3.3%

3.1%

2.9%

Total Fixed

11.6%

10.6%

9.7%

9.0%

8.3%

Adjusted EBITDA %

Adjusted EBITDA $

$6     –     $11

$10    –    $15

$13    –    $19

$17    –    $23

$20    –    $27

29.0%   –   31.0%

29.0%   –   31.0%

29.0%   –   31.0%

29.0%   –   31.0%

29.0%   –   31.0%

2.4%   –    4.4%

3.5%    –    5.5%

4.4%    –    6.4%

5.1%    –    7.1%

5.8%    –    7.8%

12

AutoMD –

Addressing the DIFM Market

13

$153.4

$176.3

$262.3

$327.1

$304.0

$257.9

2008

2009

2010

2011

2012

TTM Q3-13

$5.2

$13.5

$19.5

$16.3

$9.4

$3.2

2008

2009

2010

2011

2012

TTM Q3-13

Sales & Adjusted EBITDA

Consolidated Sales

1

Consolidated Adjusted EBITDA

2

($ In Millions)

($ In Millions)

1.

2.

Adj. EBITDA Margin

3%

5%

8%

7%

3%

1%

JC Whitney was acquired in Aug 2010 adding revenue of $39.1M in 2010 and $83.4M in 2011.  Amounts not separately disclosed after 2011.

Non-GAAP financial measure EBITDA consists of net income before (a) interest expense, net; (b) income tax provisions; (c) amortization of intangible assets; (d) depreciation and amortization.  Adjusted

EBITDA excludes restructuring costs and other one time charges of $0.4M, $5.8M, $8.0M, $0.7M and $0.8M in 2009, 2010, 2011, 2012 and TTM Q3-13, respectively, stock based compensation of 

$2.9M, $3.3M, $2.7M, $2.6M, $1.7M and $1.3M in 2008, 2009, 2010, 2011, 2012 and  TTM Q3-13 respectively.  There were no restructuring or other one time charges in 2008.

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Adjusted EBITDA

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

September  28

September 29

September  28

September 29

2013

2012

2013

2012

Net loss

(1,399)

$           

(2,711)

$           

(14,309)

$         

(5,195)

$           

Interest expense, net

285

118

696

500

Income tax provision

1

41

91

293

Amortization of intangible assets

86

331

299

1,012

Depreciation and amortization expense

2,472

3,785

9,736

11,533

EBITDA

1,445

1,564

(3,487)

8,143

Share-based compensation expense

315

450

1,065

1,408

Impairment loss on property and equipment

-

-

4,832

-

Impairment loss on intangible assets

-

-

1,245

-

Loss on debt extinguishment

-

-

-

360

Restructuring costs

-

640

723

640

Adjusted EBITDA

1,760

$             

2,654

$             

4,378

$             

10,551

$          

(Non-GAAP

Financial

Measure

–

in

thousands)

15

Consolidated Statements of Comprehensive Operations

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

September  28

September 29

September  28

September 29

2013

2012

2013

2012

Net sales

61,724

$         

73,014

$         

195,018

$       

241,169

$       

Cost of sales

(1)

43,817

50,121

138,360

167,307

Gross profit

17,907

22,893

56,658

73,862

Operating expenses:

Marketing

9,385

12,909

31,762

39,337

General and administrative

4,261

4,926

13,626

15,510

Fulfillment

4,217

5,685

14,589

17,242

Technology

1,204

1,590

4,035

4,826

Impairment loss on property and equipment

-

-

4,832

-

Impairment loss on intangible assets

-

-

1,245

-

Amortization of intangible assets

86

331

299

1,012

Total operating expenses

19,153

25,441

70,388

77,927

Loss from operations

(1,246)

(2,548)

(13,730)

(4,065)

Other income (expense):

Other income (expense), net

135

(1)

214

34

Interest expense

(287)

(121)

(702)

(511)

Loss on debt extinguishment

-

-

-

(360)

Total other expense, net

(152)

(122)

(488)

(837)

Loss before income tax provision

(1,398)

(2,670)

(14,218)

(4,902)

Income tax provision

1

41

91

293

Net loss

(1,399)

(2,711)

(14,309)

(5,195)

Other comprehensive income, net of tax:

Foreign currency translation adjustments

6

11

31

35

Unrealized gains on investments

2

1

4

30

Total other comprehensive income

8

12

35

65

Comprehensive loss

(1,391)

$          

(2,699)

$          

(14,274)

$        

(5,130)

$          

Basic and diluted net loss per share

(0.04)

$             

(0.09)

$             

(0.44)

$             

(0.17)

$             

Shares used in computation of basic and

diluted net loss per share

33,218

30,854

32,493

30,716

(1)

Excludes depreciation and amortization expense which is included in marketing, general and administrative and fulfillment expense.

(Unaudited, in Thousands, Except Per Share Data)

16

Consolidated Balance Sheets

(Unaudited in Thousands, Except Par and Per Share Liquidation Value)

September  28

December 29

2013

2012

ASSETS

Current assets:

Cash and cash equivalents

1,099

$               

1,030

$             

Short-term investments

93

110

Accounts receivable, net of allowances of $245 and $221

at September 28, 2013 and December 29, 2012, respectively

5,044

7,431

Inventory

40,177

42,727

Deferred income taxes

54

39

Other current assets

3,716

4,176

Total current assets

50,183

55,513

Property and equipment, net

20,408

28,559

Intangible assets, net

1,683

3,227

Other non-current assets

1,472

1,578

Total assets

73,746

$             

88,877

$          

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

20,505

$             

28,025

$       

Accrued expenses

6,820

10,485

Revolving loan payable

8,299

16,222

Current portion of capital leases payable

285

70

Other current liabilities

3,873

4,738

Total current liabilities

39,782

59,540

Capital leases payable, net of current portion

9,558

70

Deferred income taxes

437

314

Other non-current liabilities

2,175

1,309

Total liabilities

51,952

61,233

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; 4,150 and 0 shares issued and outstanding

at September 28, 2013 and December 29, 2012, respectively

4

-

Common stock, $0.001 par value; 100,000 shares authorized;

33,219 shares and 31,128 shares issued and outstanding

at September 28, 2013 and December 29, 2012, respectively

33

31

Additional paid-in capital

168,263

159,781

Common stock dividend distributable

60

-

Accumulated other comprehensive income

419

384

Accumulated deficit

(146,985)

(132,552)

Total stockholders' equity

21,794

27,644

Total liabilities and equity

73,746

$             

88,877

$          

Thank You

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