PRTS - Earnings call transcript Q2 2022

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Operator

Good afternoon and welcome to [technical difficulty] Second 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. [technical difficulty] Tina Mirfarsi, Vice President of Communications and Culture. ahead. go Please

Tina Mirfarsi

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

due prepared these Chief Joining materially in me Executive Officer. your Lockwood, Chief under contain to differ certain federal David are associated uncertainties forward-looking responses forward-looking implied to business. The questions or Financial statements could today from may risks Officer; securities contained the and laws. from company results remarks statements those to and and by business related the Meniane, the Ryan Actual with

a can other as please XX-Qs of could found Relations Investor be on For refer discussion factors results, and which the XX-K filed material on the with report and affect annual Form important website. risks the to SEC, CarParts.com the of that both

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

David Meniane

Tina and good you, everyone. afternoon, Thank

JPMorgan achieved As team QX We're represents EBITDA five-year a also $X.X XXth revenue our $XXX year-over-year facility This today's announce for of new of stack. growth XX% quarter sales million, and credit double-digit XXXX, consecutive release increase of our million. million, our a and adjusted XX% Chase. our at in year-over-year two-year $XXX reported up record partners on excited to with

innovation. service, one, continued service. excellence, has outstanding the Our leadership and outstanding areas executing on Number operational focus; four financial discipline, of customer customer

repeat our come customers. over reminder, of one-third from a revenues As e-commerce

and on to we allocation, increase customer-centric and initiatives. As our we about capital see a think significant opportunity efforts focus resource

company the vehicle to operational an ourselves is with excellence. two, simplifying by Our customer-oriented unparalleled company parts and committed redefining entire to first digital Number stress a fully experience. from removing from a care team

inefficiencies our with year-to-date and to results for our and on focusing performance improving for removing driving results continues as to teams our evolve, [technical centers financial we process, is of bar ability the distribution improve which two with needs our Number As our of and is evidenced by ear this and We're grow collaborate open raising DNA. date part discipline. to environment. systematically to the aligning difficulty] business the and people, customers, key see and always simultaneously strategy in opportunities us, three

last years, we the have in a Over leveraging. we which now and half scalable a building are invested three foundation,

growth and allocation and market Our energy be management of team resilience than strongly cash will we in flow ever generation more key are times financial uncertainty. that and Profitable will discipline our capital it's our focus free success believes to where and resources. important

we Our dollar to and being prudent team remains deploy. intentional committed every with

create shareholders Our This customer help for four, our unit innovation. after business own in fulfillment and will economics, exceptional model for long-term. acquisition. the to company is even rooted positive an number And

been the an think option With future, to our customers customer newly a we spirit full we book have of find built a outside website, our to directly of to we report our expanding choice recently opportunity their some CarParts.com the installation test we launched markets. do-it-for the the and The functionality, our the customers In of that care, with new complete stress local a to on experience their certified which of with appointment mechanic successful job. of trusted is repeat addressable in to who live And excited is We customers. of about on market growing to assist help and already price. As more our mechanic me with bookings. on turning this relies into to are transparency the repair simplifying from we're for hundreds customers working have certain to repair. or offering completed vehicle have ability the maintenance removing include our on committed

now our operational results updates. will discuss a Ryan quick and financial Now,

Ryan Lockwood

revenue up stacked, by increased QX, the On million, In entire period, David. a generated Thanks XX% our of we revenue resulting $XXX team. XX%. the from two-year from prior great execution year

free recall, improved of XXXX of continues benefited to If to the versus basis from gross XX.X% Gross QX same record purchasing and spending. increased in in $X.X period. in $X.X the science and pandemic-related versus you'll supply million and to of was distribution an improving for the resulting impact QX stimulus points up profit expenses. XX% federal inflow EBITDA in year with this rent last chain XX% year, self-funding, quarter our gross the Net $X.X of driven margins for margin XXXX center, was was new startup year data savings flat our and a quarter reflect million The adjusted reflecting consumer XXX million, the Jacksonville million by funds, $XX including teams. being income QX

Turning to sheet. our balance

successful million the $XXX liquidity $XXX grow JP our to $XX to with position the facility [ph] enough further to we who attractive ability was of We our to quarter million have credit end, are been at and As of terms that indicated, end million. believe million. tapping David the Morgan building us our inventory markets. was QX, the years. At that in we facility capital Chase, the and undrawn. $XX with accordion appreciate into have our we a support for the without were it entered partners reinforces many At We cash

normalizes, weeks this supply currently converted to reminder, cash. extra be we carrying as back longer a chain. $XX in to for inventory eight approximately to account As million or are lead-times inventory the supply we expect time, the of chain Over

cash that we further stock likely flow and balance will our safety sheet. as of reinforcing focus some down on work We free

of continue be to transit fully remains to is deliver to goal expansion, Our which we one-day in our now able stocked. pleased XX% to XX% to time be and with our Texas customers

the that we continue over technology time new growth of broader and balance Florida in We should opened the tools includes also what Despite recently environment, optimize Jacksonville, efficiencies. our that towards new drive a macro center operational profitability. to brand we're seeing business and distribution best-in-class

comparisons. is us against our helping prior first weeks inventory the robust For year four of position QX,

For net we to year-over-year some like XXXX, revenues double growth. it to I'd David continue the closing And back remarks. digit back project for half turn with to of that, in

David Meniane

a We're you, trusted disruptive where platform and to excited Ryan. maintenance help their Thank repair build and auto solve we customers needs. can our

and one globe. across was have Our goal dedication number would QX the incredible is been performance a to their not possible this become vehicles. without need help record that the our for fixing destination company teams another for the all from customers

at, honored, members to it. questions. such CarParts.com, an for day, amazing next And our be we turn the get of as crush to with after team now over humbled, to I'll to it. forward operator to up to every look we of work people. say evolution our working excited to it coming As open the for and you group ready it again we Thank company, are all

Operator

Instructions] first from [Operator the line D.A. Our question from of James Davidson. Victoria

Thomas Forte

a couple are here questions. Forte, of Thomas

congrats expansion like the gross So, the margin first talk you I can in year? the contributing performance? Looks What quarter. you margin is had question versus had last were factors? about performance the on your gross

Ryan Lockwood

nominally, good Yes, both margins Obviously, sequentially, how out about very thanks, we gross and up Tom. year-over-year. feel turning

think price worse well our basically science competitors, to some optimize We gives leaning in integrated a to have for a on stay ability continue as of leverage stock over to team us. us as who our which vertically supply our to data benefit I compared chain,

Thomas Forte

you're and then me contribute you meaningfully but can expect start efforts? And are Great. talked now in where about your to do-it-for to talk you your remarks, where and a now second you are when -- little we And revenue? can to you prepared that

David Meniane

a to hi. project, my part and its in free. do-it-for And progress. the the and it's me make of Obviously, really experience think very has auto but about been the -- endeavor, think Yes, complex as it's stressful. auto majority And care about we're simple least that. I general, it's the vision if I that of big time at Tom, long-term the David, think is you a stress excited repair big opportunity

importantly, want addressable great customer gives depending what do. market. I But repair thing more to option, think expands it new the on is of type our that they total it the a

Now, call of , like successful bookings. as in done out we've remarks, prepared it hundreds the we of today,

the live have certain website markets. the that experience in on is We now

But Yes, Super think this proud the to we're going. it's time, get last the long topline. focusing a of meaningfully but contribute of company. to for months, in three beginning. game and I Now, we've experience, push team. run, the this customer our to over just I changer efforts the the it especially, made over big is really the a expect on don't

Thomas Forte

Great.

and -- So, taking thanks last my for question. question

XX about think behind seemingly opening square Grand fulfillment the should footage Texas the So, with your additional we how center the of of months? Prairie, plans over expansion next you center Jacksonville, in for fulfillment

David Meniane

good question. Yes,

and growth. really I think environment, this profitable in flow focusing short-term, free we're on cash

most maximum want we're the really and focusing in what of network we're tools, to implementing the that new of have operational before out investing some internally, current we on is we efficiencies the of building. the and network. Jacksonville, leveraging the least and now, Right So, the focus at driving new tools the software in get really in the on out learning

main of we're XX%. as goal and focus Now, before to But that current efficiencies now, free customer right to and provide another XX% out, is to the call the is DC. shipping open network. cash medium we always it flow out again, getting operational as means to as The level obviously, best most far times of term, the and many going the service one-day

Thomas Forte

Prairie they? then -- XXX% to there And XXX% one Got close what expansion or percent you. point Jacksonville, of are Grand are then, clarification, how in so quick operational, they they

David Meniane

job so, started was the done the the labor, installation, Again, on full expansion. training, team it it's Jacksonville, we an it's now. a great pretty got we mean, right far almost Well, has the I right staffing, the now. shipping. Texas,

excited that that but it It his the time, live growth growth, it should the the really think out I'm second profitability. of, really of in as at for called double-digit What year-over-year prepared peak I Ryan balancing kind went the most quarter. same season, is year and half targeting us. about, Tom, that for really we're during help remarks, XXXX

Thomas Forte

Thank David. you, you, Thank Ryan.

David Meniane

Thanks Tom.

Ryan Lockwood

Thank you.

Operator

Thank you.

comes Partners. next from line Capital of ROTH Vetterick Our from question the Austin

Darren Aftahi

Hello.

David Meniane

Hey.

Darren Aftahi

it's anyway. confusing. call guys, for the Darren you're Aftahi. Thanks well. Little Hey, Hey, hope

David Meniane

Darren, Hey to you. good from hear

Darren Aftahi

may. I if Three, Likewise.

Jacksonville's that was say contributory I question the almost you topline Tom's full. So, to I just it how guess, business? I wise think to heard

David Meniane

Yes, good that's question a Darren.

focusing this an transportation online what is so for think metrics -- the same-store and for challenge for always and constantly times I costs. that optimizing us, with like shipping speed you're on delivery retailer we're

So, difficult same-store basis, of looking at you're if to on kind quantify. it's it the

Darren Aftahi

up, it's the I but noticed Okay, fair sort inventory margin. enough. ticked on slowed of

inventory supply logistics, having generating that, in monkey pricing, context know Asia, you terms where kind -- of kind in that some kind we been system of I chain, said do just fall maybe any would of, we? of, guess, like wrench great. will from [ph] where your kind consternation plateau, kind are here, about color things? you I be light there's with about of So, see Could and cash. some just levels shed just but Have container plateaued COVID of

David Meniane

think I Yes, some we're of signs improvement. seeing definitely

it's long-term, Now, to short-term it's or whether hard say.

in I think house. we've built some great capabilities

inventory it we've question the the It's in stock having out. the and to availability a Now, of always close called game always to inventory parts and customer.

build million. eight to that navigate we the call past $XX we disruption, extra extra and supply have the safety in weeks about carrying stock to or two been years, chain have Now, this

of you're come down as said, back see of over that inventory cash. to level this time, converted Now, signs the to and I I because going improvement think

less a support Now, you're next, call revert that think is to level it, little back at I SKU it's the see it giving of than over some number to XX inventory us six business. cash, a this of carrying and to just you months, at level more vendor the complicated to level. But because going inventory

Darren Aftahi

Great. me. last for And just one

marketing? order was the to do-it-for the source related On is Where And costs there how like getting what much like that? me, you're from? -- the much in how of --

David Meniane

part Yes, questions. so two

existing I auto our repair. base. think So, customer destination of for the right we've source the built fantastic is On customers is number a one CarParks.com, now

customers. have that, on on have we come one-third a of We we visitors revenues again, over millions repeat of top from million customers. our website. as pretty e-commerce pulled XXX robust out, On our email of with And list about

service there's So, this customers. of this, to offer to opportunities current our plenty us for

current the right So, Phase at I think customer. targeting we're for least X, now with okay

around Now, question initiative. to extra in any the the I think is efforts spending we're your Me Do-it-for doing is really cost. second part don't make work. incremental of our What of this we're dollars reprioritizing terms

we team, changer. opportunity a me game that to technology a we going team, do-it-for So, a have have to marketing we be think is

more allocating that, by We've matter last new it's in reflected a how initiative as just So, of were we three phase which resources to the is bookings. significant capacity push hundred this able more to the out the and several months. improvements made of

I think that's better. going to get

really now, is right success. a the team focused on this whole So, making phase

Darren Aftahi

Thanks guys. Great.

Operator

Thank you.

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

Ryan Meyers

Just one from me.

an could during Just us quarter parts give update that kind wondering been looking? if of business tracking you the and that the on how and how contributions mechanical

Ryan Lockwood

yes, I that Hey, number. do have

So, parts XX%, was and X%. we hard was replacement for was mechanical are at performance parts XX%,

minor So, down sequential, flat into year-over-year, basically it's read much but hair wouldn't too the a I fluctuations.

accessories. collision, performance and be That's it, at target long last, that, to Over long-term mechanical, call to XX% XX% goal. the X% XX% the run, still XX%, to that goal XX% is the to

Ryan Meyers

sense. Right, makes

for one labor Jacksonville? seen distribution Grand in or any centers you the ramping me. challenges Prairie Have either Next up

David Meniane

every for Yes, always in industrial I anyone is the think in space retailer warehouse talents. competing

big culture. think really retention, a we're there's the are trying think the job bonuses, environment, bonuses, you safe always incentivizes also investing ultimately, that. we're can where that But to warehouse compensation a of know, of we vision, do a into one, that gain and lot constantly have bought that looking they're build done things I you referral the setting bought We've at I into good sharing business in building performance, associates I number so do. think great we're that structure inclusion, great diversity, a values, and to equality, a culture, our a part different

our For teams supply first as a ourselves of company. the us, are we and always see chain company the warehouse really heart

Ryan Meyers

feedback the then offering, one makes What Do-it-for touching me just of that just with you helpful partnership gotten the last that. with on sort they it's have Me thought positive hear the whether of some guys to partnered you're your they pretty commentary customers adding it, customers, not have And gotten us walk have but offering? of Got have on would that of only for sense. kind mechanics that kind that you DIFM mechanics wouldn't from just for using the through

David Meniane

partnered this the the with for are that Yes, of the phase fact is bring pre-bought in really parts. that initiative, they're to mechanics the to customer we in already going

that and have that phase, is come a least, know to pre-selection success, customers and and the a for are codes So, that the making part initiative we're of the in. at And going this transparent, zip is scheduling focusing part to mechanics of on. categories already names trend and the

there's lot the surprises there's So, front, mechanic. a that been at of no up so communication

obviously, one it it's Now, no before. and experience new done has a

that themselves, don't of it customers from like But out an great. also themselves. because working another been I'm repair has the subset And maybe repair frankly, if the customer, the still about kinks. So, the targeting the overall, the feedback excited doesn't and comfortable gives doing doing this feedback them option they they alternative, feel have feel

expanding what market me excites is that the for addressable most. So, us

Ryan Meyers

Thanks, guys. Got it.

Operator

Sigdahl difficulty] [technical Ryan Craig-Hallum from

Ryan Sigdahl

rates, margins, in on and anything gross costs gross think quarter, look to in kind the as but of inventory? cost QX, the from the cargo accounting, run the forth. QX how you much forward so model about so pieces good all kind about going you and between kind or as FIFO this we sold structure be is margin of With Curious your the containers moving of as aware movement of, cost coming inflation China on so really

Ryan Lockwood

gross multiple Thanks, yes. in quarters take we at say we this, always the year. margins, and Ryan. margins, step over really look Obviously, only about EBITDA it back full can but a Sure, we think

we you still about the remainder that said, being do the margin So, for feel the good very know, of year.

For and obviously year-over-year up a we were sequentially on QX, basis. nominal

container pressures hedged. as are far As mostly we go,

and -- very our So rates. hedges attractive are

next it. working going over And So, very the happened, matter far years, think, no great generally as year. I of last a we back I to through history done as then the feel there job as think obviously, remainder three our comfortable what has the well we've year,

whatever our I'm pressures environment handle So, think in team can at of I it. might us XXXX, confident pretty throw kind the

Ryan Sigdahl

Good.

profitable think the about back of, in the that? at can seasonally focus, willing growth, still stay least of the look talked near-term. You year, increased you at When if on you're or kind, softer big half comment we focus you profitable to

Ryan Lockwood

As far a with growth balance as profitability. that profitability, laser absolutely. It's half focus back to

be will we believe do back half. we So, the profitable

Ryan Sigdahl

EBIDTA or are to you talking income? clarify, net Just

Ryan Lockwood

margin EBITDA and Adjusted nominal?

Ryan Sigdahl

good these if want some them talk that? Great. also, CarParts. employee And maybe arms seen embracing and are you -- lay-off come little seen open out that guess, a with kind of Thanks. for of starting forward they kind there, of any of David companies but through for I've your people, go existing I've talent I question work a seen you, success bit some mentioned to retention you to you have Then your tech base?

David Meniane

we've We're high in Yes, that culture. a and listen, think a made discipline, investments culture significant excellence, building I rewards performance.

think been lower competitors. our significantly pretty and public I to turnover been I than our of some our higher balance. have will has

developing, best trying with me, business expectational For and build starts we're an hiring, hiring to the retaining. people; training, that

So, there, in want if Yes, we talent good Obviously, good we there's had critical? it. out success.

CarParts.com/career. you're willing going destination. be an we is build business, to for hard extremely be friend great can this commercial So, you to work exceptional to And exceptional CarParts.com, have an think to a a would I I if go and

Ryan Sigdahl

see selling marketing you Maybe I through standpoint, flows opportunity. that next of And look guess much the into the this little revenue how last I through product, and as then can kind to a marketing that standpoint? but the one -- as puts/takes you a from bit Me, as year, Do-It-For not of an is of, shift question margin you I a product, that? you mechanics, talk it's through it. miss that, P&L kind will flow how like from Next me that for realized from year,

David Meniane

maybe Ryan one. I'll that take

So, phases. DIFM always for two I in think about me,

in now this can get on trust it, you in right customer So, experience. destination. customers a repaired to about phase, the no that focused car they go that single there's we're really, we're where place if their And short-term think

but have people. a in the of you If go to dealership, very you small actual a car fraction warranty, regular that's

get to once the and repair. is phase So, to we of our the Obviously, we're scale the in. scale phase And obviously marketing. and next comes bookings, the out customer is this that right for that car down, goal get it stress offering, market, that's take scale nailed the with then the

Ryan Sigdahl

luck. Good Nice guys. quarter. Thanks Good.

David Meniane

Thanks Ryan. it. I appreciate

Operator

Thank [technical call. [technical conference you. difficulty] This difficulty]

CarParts.com (PRTS) 3 Aug 222022 Q2 Earnings call transcript