PRTS - Earnings call transcript Q1 2022

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Operator

00:03 Good afternoon, and welcome to CarParts.com First Quarter 2022 Conference Call. At this time, all participants will be in a listen-only mode. After the presentation, there will be a question-and-answer session. Please note, this call is being recorded. 00:19 I would now like to turn the conference over to your host Tina Mirfarsi, Vice President of Communications and Culture. ahead. go Please

Tina Mirfarsi

and to everyone for the joining XX:XX our thank first today discuss quarter call Hello, you XXXX results.

statements to from by Ryan Actual differ contained Officer. to business Joining associated material which For and the Executive results could on contain responses could due may uncertainties on a today and the the these statements as David discussion to questions or are in website. other me Relations related forward-looking that Meniane, to Form Investor Officer; XX:XX your and the and business. report XX-Qs those refer filed risks with prepared federal Lockwood, factors CarParts.com be materially please The Financial under of forward-looking from certain Chief risks affect of implied remarks with and can found company annual XX-K Chief both securities the the laws. the results, important SEC,

GAAP measures issued like today. measures the with the the to turn release is press and financial over On I would CarParts.com that, non-GAAP David. provided non-GAAP call discussed. both will A XX:XX of to financial to call, in GAAP reconciliation now be And

David Meniane

everyone. Thank Tina good and XX:XX you, afternoon,

is an today's CarParts.com growth last stack. XX:XX CarParts.com and nineth adjusted take a revenue in in This have year organization on roles some ago but the there truly humbled into go record consecutive been record our honored such EBITDA a just the year-over-year exceptional XX% the sales period call. increase at a quarter double-digit developments leadership and up will up an our details team. $XXX reported a moment, are with As release to million. at financials Ryan of world-class $X.X and We exciting clearly since million achieved of to from the XX% XXX% two-year to

also Kals Technology Officer. want Chief Subramanian, welcome our We to as

upon will of CEO, earnings him just value and this build moved Chief and me core we established engineering expand on few the take As Sanjiv as deep be has in our our company. over Information have first call to as the our Kals is As focusing the executive great team to to technology to a invest our will years strong Officer to we as better allow let attention. into my continue Gomes foundation, expertise architecture. commitments we discuss where position, which focus well are XX:XX minutes e-commerce

and the last our owners help First disciplined development partners, not our their our tools one, four, in committed they two, vendors, ecosystem feel be we and products an we part need back team least to ensure our on at to business; the support with road shareholders deploy; they customers of integral truly who to: them in like the our to remain and personal last years. invest and foremost, prices; XX and every to communities for the get dollar everyone succeed prudent, to with been have CarParts.com growth but three, competitive safety, quality has

now has stakeholders been will these Turning of unwavering to areas Our always and change. commitment XX:XX to never focus.

on Our is company ground, and both operationally solid financially.

runway small huge have fish in a we pond. still we as of ahead plenty As are growth a

of for the $XXX aftermarket we that a X% less total are and As than market amount. reminder, addressable parts exceeds billion

employees, of of Number we is to XX:XX team. communities, can it's think from made the without our As to you here and of the we outstanding customer shareholders continue mission, our focus areas important but are expect execute customer. up communicate service. on none partners, our one, CarParts.com leadership us

revenues Currently laser-focus core experience of success. long repeat our is over incredible on be customers. to the everything we and to e-commerce has customers and user building secret is from customer serving the do, come one-third lasting Our of at an

is So and we you you from can delight what you a repair satisfy maintenance. one customers. from our from anything, one Number takeaway ability will opportunity [Technical destination team to because call this valued grow. excellence, the as this, on leadership ends everything. number This is to there which with and for the to our see focus our online If solid a operational we to Difficulty] have two, huge customer. become is XX:XX auto we do expect opportunity foundation Long-term, how starts and how do

performance across continues bar leverage on operating with mindset results process and see we an to a needs doubling XX:XX the customers people, focusing continue operational driving discipline. to of us. model grow, our core our principle always for and high opportunity As business Number aligning remain the and three, to winning organization, the a the on excellence, strategy by financial down raising

last the profitable off. heavily paying are investments we Over and those several have invested years, for growth

timeless in will of We it serve is we success, we will like these, being pricing website. into the we as financial make resilience We're where flow continue market. progress installation customers offer as and uncertainty, the last innovation good well our know focus our key long foundational early our market turn grow built and innovation. We're In very few what cash proud customers? times with XX:XX our for towards we total to companies as space. made and disruptive encouraged addressable to we four, to years transparent industry disruption. and initiative and future, the well do free that in are Number do-it-for-me as energy right term down positive principles have is, and turn do-it-for-me generation to resources. growth in and the remains in times improvements we more answer have to of over business, invest markets profitable the that on repeat as double market very able and the will The continue How we of on we

progress future throughout calls. look the we of with year rest discuss to expect We as that, we and I'd progress this capabilities on various results. With it over turn to to of out be you discussing our XX:XX Ryan like financial phases to these the to rolled forward

Ryan Lockwood

of David. from we QX, position that to $XXX up continued generated prior distribution On closer revenue from the In you, XX%. period, revenue and gets XX% inventory us our capacity, Thank customer. warehouse the XX:XX our a investment logistics resulting increased into year stack, million, two-year

driven QX nature teams. a chain inflation. of margin business period. face to million supply loss science also of rising year XXX the of you'll million to savings profit XXXX year XX:XX versus of in was to our improved our of up compared gross Adjusted quarter showcases in this XX% in funds, increase record Net from stimulus EBITDA the year benefited quarter gross period. points million record increased $X.X QX consumer or QX X.X% and exceptional reflect of was by continues for margins in or If the in million XX:XX X.X% recall, of federal spending. with $X.X profit the data sales of versus improving in basis pandemic-related resulting million and for freight XX% inflow a $XX the same being Gross in This XXXX. revenues The sequential prior a $X.X was margin to the XX.X% $X.X last purchasing the

record prior can Turning profits. record balance was cash to margins building million on $XXX.X we quarter million. have that focus and higher As levers results a a better calls, discipline, and of increasing number reflecting many in we gross improve were from we our purposely to sheet. have from stated financial pull drove our profitability. we on our end, our flow-through the XX:XX $XX cash the and to At successful inventory position We

are we lead in eight for chain. approximately currently reminder, carrying extra inventory supply million or to times weeks of a As our $XX account longer the

in cash time. we expect From believe self-fund against stimulus. chain an position first-four year converted weeks of [indiscernible] needed can XX:XX the QX, sales. robust to For to all reach supply growth is this over we helping perspective, intermediate As inventory $X our the over initiatives us prior inventory fully normalizes, we term billion

to continue improvement margin see solid we year-over-year. Additionally,

year-over-year year our centers, warehouse new expansion Texas and revenues, project the correlation since cadence we our to end distribution to XXXX opening with of of opening ramping towards For with March net of end a fiscal our strong the continue QX. the double-digit up growth DC Florida

we we ability market believe build on XX:XX in mission. turn share our And David profitable and growth, chain it back our to our to and with supply focus for remarks. to like continue to update execute closing on As I'd that, some

David Meniane

closed indicated, record XX:XX our As we growth. of support period to sales the quarter Ryan with another inventory

customers to doing to excited to XX% to our And of time. outbound one Texas XX% to is Our in almost be we goal fully day now in expansion, stocked which continue with transit deliver our be already shipments. remains able

we are building Jacksonville, also new brand on and inventory. schedule on and is facility, As it far budget up Florida gradually

service part Jacksonville We days performance we to QX another dedication time. day this within within from of the is fully operational and expect all able overseas. our one the as the be When been in to later for well to our not record U.S. XX% as our QX. XX% functional, here transit This incredible teams company. would customers X facility expect was XX:XX of possible without have be in

evolution an forward of look humbled of to working such I be people. and the am excited I next our group to As company, amazing honored, with

opportunity profitable by shareholder get growth. all I'll all serve to our XX:XX forward operator. members said, sustainable and to coming stakeholders, grateful CarParts.com have it to long-term that, each vested for crush to turn value this significant building after focusing as a future. over our work I again a myself, our serving you As interest And to it. and have with look it, and to the Thank in I'm ready team to we we customers on day,

Operator

line first of from Sigdahl [Operator question Craig-Hallum comes XX:XX Our Capital. the from Instructions] Ryan

now Your is open. line

Ryan Sigdahl

you. XX:XX Great. Thank

David Meniane

afternoon, Good XX:XX guys.

Ryan Sigdahl

think initiatives year-over-year, in was quarter, margin rate have? of guys XXX but of nicely afternoon, level margin Hey. anything unique you gross there sustainable don't the run or also, do a the or with kind going in up think Good I record was think gross is I bps basically you Ryan. XX:XX one-time quarter that Curious think forward I you mentioned, the

David Meniane

at at Yeah. the asked. When we look really and we really glad full look I look since margin, would several it. XX:XX over quarters I'm is this at how year you

maximize marketing So after dollars profit for gross fulfillment. first, spend we

profit these which is have it's focus and noise, they profitability. amazing into really, freight who levels. the takes on So but this and science post of for inbound obviously, service a an account add outbound, team lot secondly, gross optimize dollars market points overall, in competitiveness And to data data can the then and we important and

Ryan Sigdahl

maybe, that EBITDA margin statement is you're XX:XX then Ryan just gross that year-over-year? clarify on QX, margins margins improving and referring And to your to

Ryan Lockwood

margins remarks think – question year-over-year, gross improving XX:XX prepared on I year-over-year the From my for

Ryan Sigdahl

too? referring margin XX:XX you're solid improvement Is what that QX? Just in curious year-over-year location

Ryan Lockwood

both was [indiscernible] EBITDA and Yes, GP. XX:XX Yes.

Ryan Sigdahl

lockdowns And XX:XX increasingly then challenging chain, China detail, well export port guys the it. Got you sounds of of out market seeing going you congestion, in inventory et are sounds and COVID I supply guys quarter, to that? you cetera. more guys et what are given you navigating cetera., the guess like what doing with lot it like mitigate elaborate just Can specifically on are a results but kind and

David Meniane

said obviously XX:XX we've a a two of It's We've with the mean in a around supply Hey, trade Ryan. built lot really we've and of for considering world. inbound compliance. David. years, team what's the something capabilities over I dedicated happening demand couple times, last planning amazing question. chain Yeah. Good accomplished logistics it

about an parts to it's all and inventory-driven it's us, customer. business For availability and speed

that highlight is What part right able location, the really were we're in in-house So is the in from quantities focusing other built getting up players. the online some environment. the really inventory this capability that right on build in what us having separates right to the and is, we of

Ryan Sigdahl

that Ryan impact back the about mindset focus then on XX% long-term revenue XX% in the you Does and change profits. CAGAR you to guys said you, And past? to XX:XX increasing talked cash have in maybe

Ryan Lockwood

Yes. XX:XX

we're still So that XX% CAGAR. in is a always to not, on the correlation capacity a does you're revenue up space XX% two-year XX%. and a again, between And warehouse going see stack, to

to in profitable of run thoughtful be So growth. balance it's the going the long

Ryan Sigdahl

it. back to one, XX:XX Last Got David, you. maybe,

So about newly the you transitioning way, anything to CEO, of strategic do the over think plan roadmap several differently to kind years? or as next you congratulations the by prioritize

David Meniane

Yeah. question. Good XX:XX

a uncertainty. environment, this is in of think lot I there

financial I overall it and resilience think cash profitable critical. and discipline think I mentioned are generation, Ryan growth flow free

is do. the table think, The having thing to on customer customer. It's I other the the that I the bring laser of center at everything really focus we

plan and problems their So everything top building on customer. a needs the it's about on the really around it really addressing strategy way, and we the is financial focusing solving but of think their and that,

Ryan Sigdahl

it luck. guys. be XX:XX others. Great. over Good to Thanks Turn

David Meniane

Thanks. XX:XX

Ryan Lockwood

Ryan. Thanks, XX:XX

Operator

you. Thank XX:XX

next Ryan from Lake comes Meyers Our Capital. from the Street line of question

is line Your now open.

Ryan Meyers

Thanks for guys. Hey, taking questions. XX:XX my

be are was and uncertainty, the First or there inflation one us an of purchasing kind about I think you you me. demand products end demand? your your see macro kind give sort still if we that from in customers, guys environment overall could end update just just wondering, still you see pretty of solid on whether it'd out pressures of macro lot seeing of a customer some

David Meniane

XX:XX inventory bringing the of quantities. Ultimately, it's and SKU that elasticity. SKU we billion it's really It's than has it's just a a answer the cover and right less and David. always location and short the a Hey, is on keep Ryan. level so category $XXX different Remember, market. Yeah. forward right at The business, long and X% pushing tail every yes. focus every in and We

I need unique so is that wants. in at and sell makes what our not we business think

they of school cars parts go work. keep or So on to the majority to our our need to road customers, kids their to to their take longer the

So external but the need environment, from you're have live your your some life. you to pressure if car to always going ultimately

think very a parts alternative great high we at we're because prices. offer I quality competitive

Ryan Meyers

XX:XX makes sense. Right. That

Next of business kind quarter of the contribution then me. mechanical during one was that And parts is and track how the in? from what

David Meniane

XX:XX Yeah.

XX the was So XX balance quarter hard and performance was replacement parts parts the was and for about and accessories.

from QX a year, hard bps, in about it mix QX of XX% on up last XXX so grew XX% actually it's was mix basis parts year. this of So year-over-year by

Ryan Meyers

did And quarter. contribution to the that all Okay. hard contribute at higher XX:XX strong margin gross from parts during the

David Meniane

XX:XX Yeah.

bit of see always increase that's you'll into we we've to gross us our I of as carry long-term think drivers, a profitability. that contributor parts a for one hard as does a mix gross mentioned was margin, margin it base the higher for it,

Ryan Meyers

me, Okay. do-it-for-me update Good of on And market? to how XX:XX just the know. an tracking right one kind that's then for and (ph) online on last the offering

David Meniane

initiatives. XX:XX Yes, do-it-for-me David. We're very the excited about

for us opportunity it's number reach. think of expand we the that I can customers the really to significantly

maintenance and term, that and do-it-yourself For for now, do-it-for-me. go-to-platform is auto Right big stop repair to me, and well weekly. back-end partner. end front what we're working give making a opportunity destination both we're lot have one the and progress really as color, of on the and you long integrations our really To and build become is progress for seeing we're the information additional the with features really as

bigger year. really you this as is this the of Now should become everyone show top side line, Our is hope contribution to over a next bottom our going evolution time, be or year, impact the as the number that the to of minimal see line far the XX:XX portion business. this to but

Now basically from build we're existing our to a resource standpoint, resources that using capability. out

low, relatively spend massive. So but is incremental the again, is the opportunity

Ryan Meyers

XX:XX Great. Thanks guys.

David Meniane

Thank you. XX:XX

Operator

you. Thank XX:XX

Forte the Our Davidson. from next Thomas line from of comes question

open. now is line Your

Thomas Forte

for my Thanks questions. Great. taking XX:XX

follow-up. So first one question and one

your business, off, allocation investing of CEO. in being buyback, including M&A? congratulations discuss priorities So Can named you the capital first David

David Meniane

Yeah. question. Great XX:XX

right now, it's flow again, it's with this much generation. current profitable think all the road volatility, market focus It's I cash this free on map, growth. in

it's is question, that is XX:XX let remarks as in I us my prepared think the that. cash are long generate called number at whether customer, financial flexibility. buyback obviously why thrown gives best the I As the on is them. you it Ryan term that I'll additional but companies focused significant number one is see positioned whatever what out the that answer far two, That's discipline free to that flow

Ryan Lockwood

XX:XX Sure. Yeah.

think terms level. this is of the undervalued stock very buybacks, I at we think in

are programs Board as you know, to subject approval. buyback However, all

Thomas Forte

wanted in XX:XX asked line? how, all, And your collar question, my the then labor collar for installation know two but pricing before by about follow-up about think how you I inflation, then to we Great. if white areas particular, blue been impacted we've should at at and And power?

David Meniane

Yeah. XX:XX

retailer inflationary every facing and a you mentioned I type right think some I now think couple. is pressure of

is, businesses comes we into from I opportunity. you it do how multiple how to internally think What it matters and about like think for angles. an ours, us

supply And is, trying what that and is, and XX:XX the been and the to the pricing. we've factories, we've United dynamically the whether continued connect other out so States invest chain integrated investing to between we've overseas or The aggressively it's thing customer. vertically in dots in done science in data to too tools building adjust

time. pricing channels virtually level, And in across so real today what adjust can is, SKU we we have at

regardless are collar So that it to the mentioned be could inbound freight. you being labor forces our applied of or business, blue

and in of just levels, business inventory is than the We have and we on complex the into saw the that's goods. landscape to QX. highly can is variables. time. reacting system cost our margin is and as of and all to we why and customer variables There Obviously, up cost those the real it in way account built in acquisition flex ability fulfillment able there or and these more take all of That's margin the time depending competitive react cost kind but we're real down what in you

Thomas Forte

XX:XX you, you, Great. Thank David. Ryan. Thank

David Meniane

XX:XX Thanks.

Operator

Thank XX:XX you.

question of from ROTH line Aftahi Capital the Partners. Darren next Our from comes

now open. Your line is

Unidentified Participant

(ph) XX:XX Darren. my Hey, questions. This for for is Don taking Thanks everyone. going

you bit year-over-year probably had of little big quarter sort the of year last sales? of you had talk hard impact Prairie but about First could a QX talked the impact how stimulus this on on that I to one, QX an about know sort quantify, of Grand and

Ryan Lockwood

Yeah. XX:XX

full-year comp also but can a every added getting you for year-over-year over more to year. Without a us the expect great So prior capacity I obviously, think too quarter team. granular, we year, last built and since we've comp

I question. on it the that hope that's way at answers look a more your basis. we longer-term So

Unidentified Participant

metric there to a Is sort for it. Yeah, also mean viable guys? like you sales of XX:XX a that same-store you like look at retailers I like way

Ryan Lockwood

XX:XX Yes. go. Or David you to want

David Meniane

take to Yeah, DC, new so, a same When XX:XX can can comes yeah, we look yes. a I store (ph) historically, it it on basis. that Don at

Now building. within the assortment is a for same It's it's an just expanded. and because same the difficult more roof. But expansion, the the core team same under little really being it's it's

from to kind on towards a side, of on said the turned more of expansion more the quantify. little basis, end the Having QX. a difficult we outbound same-store So it's that,

was there were and this as like you as little, store look for far So way. same at the if February, January it very to

Unidentified Participant

it. in seems that's if you. There year, QX related look we some stable. last is Got Also terms the at number, if in especially That's in Thank this of XX:XX 'XXs, anything OpEx, is, of, in quarter, there helpful. sort? marketing the particular that's it's to pretty XX low

David Meniane

OpEx, but open Prairie mind, be of going Jacksonville XX:XX in up Grand keep through quarter year, So and is be as for and and up in Prairie in and QX as then for we're still the this for working did the the Jacksonville, Grand phase XQ and both will thing going to through Texas rest ramp to well as we open opening QX. a

that's set cost when that's through with getting obviously, they're revenues. running up, So a our offsetting

Unidentified Participant

XX:XX Got me. it it. you. Thank from That's

David Meniane

XX:XX Thanks.

Operator

XX:XX Thank participating. for call. you Thank concludes conference today's you. This

You may now disconnect.

CarParts.com (PRTS) 3 May 222022 Q1 Earnings call transcript