Investor Presentation Investor Presentation Exhibit 99.1 |
Safe Harbor 2 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. |
Case for Investment 3 Large and Growing Online Market Significant Customer Reach Significant Private Label Offering Reduced Cost Structure Experienced Leadership Team |
4 Sales up 13% for quarter As of 8/5/14, we anticipate to have double digit comps in the back half of the year Adjusted EBITDA was $2.2M up from $1.1M in Q2-13 Adjusted EBITDA less CAPEX was $0.7M up from ($1.1M) in Q2-13 Highlights from Q2-14 Earnings Call |
At 9.7% online market penetration, auto parts still lags industry average in the teens. US Auto Parts is the largest pure-play online retailer of auto parts 1 AASA estimates 2 Estimates by US Auto Parts where amounts are not publicly reported & we estimate the total online DIY market to be larger than the $3.8B that is reported in the 2014 AAIA Fact Book 3 Excludes AutoAnything which is wholly owned by AutoZone Do It Yourself (DIY) Market Size Company 2013 Est. Rev % of total Marketplaces (in million) eBay Motors $2,200 47.6% Amazon $600 13.0% Sub Total $2,800 60.6% Wholesale Online Tire Rack (online) $440 9.5% Other Tire Companies $190 4.1% Sub Total $630 13.6% Pure Play US Auto Parts $250 5.4% Rock Auto $180 3.9% Summit $170 3.7% Auto Anything (AutoZone) $120 2.6% JEGS $70 1.5% CarID $60 1.3% All Other Pure Play $90 1.9% Sub Total $940 20.3% Brick & Mortar Retailers AutoZone (w/o AA) 3 $110 2.4% Advance $80 1.7% Pep $30 0.6% O'Reilly $20 0.4% NAPA $10 0.2% Sub Total $250 5.4% Total 4,620 100.0% Total DIY Market Size for 2013 of 47.2B $42.6B 90.3% $4.6B 9.7% 2 5 1 |
Booz & Co. estimates by 2018 that Online DIY could reach 17% of the total DIY market 6 Online Market is Vibrant and Growing Aftermarket e-Commerce Overview DIY Online Penetration Mean Light Vehicle age Source: R.L. Polk and BB&TCM Source: Booz & Co. The average age of a light vehicle on the road continues to increase each year since 1997 8.3 8.4 8.8 8.9 8.9 9.6 9.7 9.8 9.8 9.9 10.0 10.1 10.3 10.6 10.9 11.1 11.3 0 2 4 6 8 10 12 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 2012 2013 2014 2015 2016 2017 2018 |
Offline $42.6 $43.5 $44.2 $44.8 $45.3 $45.5 Online 4.6 5.5 6.6 8.0 9.5 11.5 Total $47.2 $49.0 $50.9 $52.8 $54.8 $56.9 % Online 9.8% 11.3% 13.0% 15.1% 17.4% 20.1% 7 Do It Yourself (DIY) Projections 1 1 Projections obtained from AAIA 2014 Digital Automotive Aftermarket Fact Book and March 2014 AASA Digital Disruption: e-tailing in the Automotive Aftermarket Report DIY Projected Revenue (in Billions) 0.0 0.5 1.0 1.5 2.0 2.5 2013 2014 2015 2016 2017 2018 DIY Projected Y/Y Revenue Growth Offline Online Total |
(some overlap of monthly visitors across websites) 8 USAP traffic includes traffic from continued sales channels Competitive sites’ traffic based on Compete March 2014 reports US Auto Parts Dominant Reach- Largest Pure Play Internet Retailer 0 2,000 4,000 6,000 8,000 10,000 Customer Reach is a Competitive Moat • Over 500 man years of hand written unique content • Long domain history to help indexing in search • Multiple website management |
Broad Auto Parts Product Offering Body Parts Engine Parts Performance & Accessories *Represents USAP online mix 36% 48% 16% Revenue* US Auto Parts has one of the largest product offerings with over 1.5 million products across body parts, engine parts, and performance & accessories Broad Auto Parts Product Offering 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 9 |
– Currently over 40,000 Private Label Products. – Adding 4,000 – 5,000 Private Label SKUs this year – The Company sources product directly from over 200 factories in Asia 10 Margin % In-Stock Private Label (Asia Sourced) Branded (U.S. Sourced) 30% - 60% 15% - 30% 5% - 20% Drop Shipped Current Mix Current Mix The breath of our Private Label products provides a significant competitive moat USAP’s Supply Chain Creates Pricing Advantage 68% 32% 55% 45% 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. |
Revenue 100% Gross Margins 27% - 29% Variable OPEX Costs 15% Fixed Cost 0% Incremental Flow 12% - 14% Incremental Flow Thru Growth and Profitability We anticipate to have double digit comps in the back half of the year 11 |
12 *Excludes non-cash D&A, stock based comp and restructuring Over $19M of costs have been reduced over a two year period USAP has significantly reduced operating cost OPEX (in thousands) Q1-14 % of rev Q1-13 % of rev $ Change % of rev change Fulfillment* 3,935 5.8% 3,994 6.1% (59) (30 bps) Marketing* 8,691 12.8% 8,967 13.7% (276) (90 bps) Technology* 1,129 1.7% 1,395 2.1% (266) (40 bps) General & Administrative* 3,620 5.3% 3,873 5.9% (252) (60 bps) Subtotal 17,376 25.5% 18,229 27.9% (853) (240 bps) D&A and Stock Based Comp 2,829 4.2% 4,153 6.3% (1,324) (210 bps) Restructuring - 0.0% 498 0.8% (498) (80 bps) Total OPEX 20,205 29.7% 22,880 35.0% (2,675) 530 bps) Fixed Cost 7,206 10.6% 8,253 12.6% (1,047) (200 bps) Variable 10,170 14.9% 9,976 15.3% 193 40 bps D&A & Stock Based Comp 2,829 4.2% 4,153 6.3% (1,324) (210 bps) Restructuring - 0.0% 498 0.8% (498) (80 bps) Total 20,205 29.7% 22,880 35.0% (2,675) (530 bps CAPEX 1,558 2.3% 2,623 4.0% (1,065) (170 bps) Total OPEX & CAPEX 21,763 32.0% 25,503 39.0% (3,740) (700 bps) Annualized 87,053 102,012 (14,959) |
13 Our business model has significant cost leverage as revenues grow 1. 2013 Revenue was $255M 2. Excludes stock based compensation, depreciation and amortization 3. For every incremental year required to achieve growth levels, fixed expenses increase $1.0M or 3% Financial Sensitivity Base 8% 18% 27% 37% Revenue $255 $275 $300 $325 $350 Gross Margin % 27.0% – 29.0% 27.0% – 29.0% 27.0% – 29.0% 27.0% – 29.0% 27.0% – 29.0% Variable: Fulfillment 3.4% 3.4% 3.4% 3.4% 3.4% Marketing 9.2% 9.2% 9.2% 9.2% 9.2% Technology 0.6% 0.6% 0.6% 0.6% 0.6% G&A 1.7% 1.7% 1.7% 1.7% 1.7% Total Variable 14.9% 14.9% 14.9% 14.9% 14.9% Fixed: Fulfillment 2.5% 2.3% 2.1% 2.0% 1.8% Marketing 3.8% 3.5% 3.2% 3.0% 2.8% Technology 1.1% 1.1% 1.0% 0.9% 0.8% G&A 3.8% 3.5% 3.2% 3.0% 2.8% Total Fixed 11.2% 10.4% 9.5% 8.8% 8.2% Adjusted EBITDA % 0.9% – 2.9% 1.7% – 3.7% 2.5% – 4.5% 3.3% – 5.3% 3.9% – 5.9% Adjusted EBITDA $ $2 – $7 $5 – $10 $8 – $14 $11 – $17 $14 – $21 |
14 AutoMD – Addressing the DIFM Market |
Case for Investment 15 Large and Growing Online Market Significant Customer Reach Significant Private Label Offering Reduced Cost Structure Experienced Leadership Team |
16 Shane Evangelist - Chief Executive Officer Chief Executive Officer since October 2007 with over 10 years of leading internet businesses Senior Vice President and General Manager of Blockbuster Online Vice President of Strategic Planning for Blockbuster Inc. B.A. degree in Business Administration from the University of New Mexico and a M.B.A. from Southern Methodist University David Robson - Chief Financial Officer Chief Financial Officer since January 2012 Over 20 years of finance, accounting, and operational experience and has held senior positions with both public and private companies Executive Vice President and Chief Administrative Officer at Mervyns' LLC, SVP of Finance and Principal Accounting Officer for Guitar Center, Inc. B.S. degree in Accounting from University of Southern California; certified public accountant Aaron E. Coleman - Chief Operating Officer Chief Operating Officer since September 2010, and was Executive Vice President of Operations and CIO from April 2008 until September 2010 with over 18 years of e-commerce experience Senior Vice President – Online Systems at Blockbuster Inc. Multiple positions with internet and technology companies including American Airlines, Travelweb (Priceline), Baan B.A. degree in Business Administration from Gonzaga University Leadership Team Charles Fischer - Senior Vice President of Global Procurement Senior Vice President of Global Sourcing and Procurement since May 2008 with over 30 years of global sourcing experience Vice President, Supply Chain Management for Keystone Automotive Industries Director, Business Development for Modern Engineering Multiple leadership positions with multiple companies in the automotive aftermarket industry |
17 Over $19M of costs have been reduced over a two year period Adjusted EBITDA (Non-GAAP Financial Measure – in thousands) Thirteen Weeks Ended Twenty-Six Weeks Ended June 28 June 29 June 28 June 29 2014 2013 2014 2013 Net loss (2,180) $ (9,567) $ (1,979) $ (12,910) $ Interest expense, net 238 228 497 415 Income tax provision 21 69 53 90 Amortization of intangible assets 126 107 210 213 Depreciation and amortization expense 2,252 3,626 4,620 7,264 EBITDA 457 (5,537) 3,401 (4,928) Share-based compensation expense 629 341 1,005 750 Impairment loss on property and equipment - 4,832 - 4,832 Impairment loss on intangible assets - 1,245 - 1,245 Inventory write-down related to Carson closure 478 - 478 - Restructuring costs 625 225 625 723 Adjusted EBITDA 2,189 $ 1,106 $ 5,509 $ 2,622 $ |
18 Consolidated Statements of Comprehensive Operations (Unaudited, in Thousands, Except Per Share Data) Thirteen Weeks Ended Twenty-Six Weeks Ended June 28 June 29 June 28 June 29 2014 2013 2014 2013 Net sales 76,947 $ 67,889 $ 144,975 $ 133,294 $ Cost of sales (1) 56,527 48,876 103,854 94,543 Gross profit 20,420 19,013 41,121 38,751 Operating expenses: Marketing 10,963 11,186 21,078 22,377 General and administrative 4,623 4,678 8,770 9,365 Fulfillment 5,383 4,991 10,095 10,372 Technology 1,264 1,316 2,412 2,831 Impairment loss on property and equipment - 4,832 - 4,832 Impairment loss on intangible assets - 1,245 - 1,245 Amortization of intangible assets 126 107 210 213 Total operating expenses 22,359 28,355 42,565 51,235 Loss from operations (1,939) (9,342) (1,444) (12,484) Other income (expense): Other income, net 18 72 15 79 Interest expense (238) (228) (497) (415) Total other expense, net (220) (156) (482) (336) Loss before income tax provision (2,159) (9,498) (1,926) (12,820) Income tax provision 21 69 53 90 Net loss (2,180) (9,567) (1,979) (12,910) Other comprehensive income (loss), net of tax: Foreign currency translation adjustments (12) 31 (4) �� 25 Net unrealized losses on derivative instrument (22) - (22) - Unrealized gains on investments - 2 - 2 Total other comprehensive income (loss) (34) 33 (26) 27 Comprehensive loss (2,214) $ (9,534) $ (2,005) $ (12,883) $ Basic and diluted net loss per share (0.07) $ (0.29) $ (0.06) $ (0.40) $ Shares used in computation of basic and diluted net loss per share 33,460 33,119 33,422 32,130 (1) Excludes depreciation and amortization expense which is included in marketing, general and administrative and fulfillment expense. |
19 Consolidated Balance Sheet (Unaudited, in Thousands, Except Par and Per Share Liquidation value) June 28 December 28 ASSETS 2014 2013 Current assets: Cash and cash equivalents 1,675 $ 818 $ Short-term investments 786 47 Accounts receivable, net of allowances of $295 and $213 at June 28, 2014 and December 28, 2013, respectively 3,731 5,029 Inventory 35,178 36,986 Other current assets 3,000 3,234 Total current assets 44,370 46,114 Property and equipment, net 17,936 19,663 Intangible assets, net 1,828 1,601 Other non-current assets 1,355 1,804 Total assets 65,489 $ 69,182 $ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable 21,784 $ 19,669 $ Accrued expenses 7,439 5,959 Revolving loan payable - 6,774 Current portion of capital leases payable 256 269 Other current liabilities 4,180 3,682 Total current liabilities 33,659 36,353 Capital leases payable, net of current portion 9,387 9,502 Deferred income taxes 387 335 Other non-current liabilities 1,895 2,126 Total liabilities 45,328 48,316 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 shares issued and outstanding at June 28, 2014 and December 28, 2013, respectively 4 4 Common stock, $0.001 par value; 100,000 shares authorized; 33,506 shares and 33,352 shares issued and outstanding at June 28, 2014 and December 28, 2013, respectively 34 33 Additional paid-in capital 170,111 168,693 Common stock dividend distributable 60 60 Accumulated other comprehensive income 420 446 Accumulated deficit (150,468) (148,370) Total stockholders' equity 20,161 20,866 Total liabilities and equity 65,489 $ 69,182 $ |
Sales & Adjusted EBITDA 20 Consolidated Sales ($ In Millions) Consolidated Adjusted EBITDA ($ In Millions) Adj. EBITDA Margin 3% 5% 8% 7% 3% 2% 3% 5% 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. 2. 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 Stock based compensation of $2.9M, $3.3M, $2.7M, $2.6M, $1.7M , $1.3M , $0.4M and $0.6M in 2008, 2009, 2010, 2011, 2012, 2013, Q1-14 and Q2-14, respectively and restructuring costs and other one time charges of $23.4M, $0.4M, $5.8M, $12.9M, $27.5M, $6.8M, and $1.1 in 2008, 2009, 2010, 2011, 2012, 2013 and Q2-14, respectively. There were no restructuring or one time charges in Q1-14. $153.4 $176.3 $262.3 $327.1 $304.0 $254.8 $68.0 $76.9 2008 2009 2011 2011 2012 2013 Q1-14 Q2-14 $5.2 $13.5 $19.5 $16.3 $9.4 $6.0 $3.3 $2.2 2008 2009 2011 2011 2012 2013 Q1-14 Q2-14 1 2 |
Source: Google eBay Parts Sales Continue to Increase Source: eBay filings, press releases Google Queries for Parts Growing Online Market is Vibrant and Growing Aftermarket e-Commerce Overview Online sales of automotive parts and accessories have grown in the high teens and are expected to grow at 20% going forward $1.0 $1.1 $1.2 $1.3 $1.4 $1.5 $1.6 $1.7 $1.8 $1.9 $2.0 $2.1 $2.2 $2.3 $1.3 $1.3 $1.2 $1.3 $1.5 $1.6 $1.5 $1.5 $1.8 $1.8 $1.9 $1.9 $2.0 $2.2 $2.1 $2.1 21 |