PRTS - Earnings call transcript Q1 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon. [Operator Instructions] Please note, this call is being recorded. I would now like to pass the conference over to our host, Tina Mirfarsi, Senior Vice President of Global Communications and Culture. Please go ahead.

Tina Mirfarsi

Hello, everyone, and thank you for joining us for the CarParts.com First Quarter conference call.

Joining me today are David Meniane, Chief Executive Officer; Ryan Lockwood, Chief Financial Officer; and Michael Huffaker, Chief Operating Officer.

over important to disclosures. it I the turn some have I to start David meeting, Before business securities The questions forward-looking the could remarks contain the prepared and certain statements responses related laws. to your under federal to Actual associated implied due these or contained by business. the differ results and forward-looking uncertainties materially may risks those in from to with statements

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

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

David Meniane

you turn us. it provide the Tina, for performance then and up on you, will Thank detail update to Ryan for in from an all thank highlights more with opening quarter, our before review begin it to and financial over environment, some economic Q&A. joining I the

on headwinds performance gross customer key We this so been facing has and categories both margins. not maintain financial deteriorating to Our need a meet impacted We're job standards. and and do year does certain by being better segments our outlook. are disappointing a far in economic and discipline net

optimization, such expansion pricing margin control, Now where for our opportunities marketing, mile we have improvements. transportation have variables several and we as last costs product within

excluding we from first of to company in progress. flow, long-term significant our acute April. In efforts In low-cost February. We our which nondepartmental on the and parts and also gives to gross for began initiatives cost continued capabilities. more has focusing is prices. significant of our margin decision of the acquisition the which gross aggressive the margin EBITDA strength current at and made a we the measure more and volume, implemented savings last expect price-sensitive vast competitive acquisition on in better for other reductions period. maintain which in momentum by we $X.X efforts, result year-over-year to expected prior account targeting Due These efficient million, large during million, are of reached low-quality well few profitable in are up and a investments provide our have Combined $X of discipline, semi-automated majority to transition few the efficiency on customers, X categories, sales $XXX the mirrors throughout million the was quickly with these we to from adjustments, acquire flood Nevada, compliance, The customers. insufficient are we customer costs see QX, made XXXX, larger transportation, new us now half in driven adjust the in down QX pressure half for facility and basis. our is put operating the our in January profitability. The annualized replacement on rightsizing the our higher profile. reduce to and improvements to customer made related to attributable where business discount that to more of pricing competitive lighting seeking approximately an has that the quarter of last and improvement our Las which scarce these as and success often a represent experienced These weather becoming overseas, was to of both changes we revenue base, parts particularly outlook. ultimate financial less primarily quarter need cash first Vegas, price illegal. about costs impact in will have spend on focus back of will cost costs. time. Adjusted and over unit and as decline more more million also of service. To decline, on our $XX low on implications segments the talk XXXX masking environment categories include and subset quality customer consumers advantage. and moving deliver see underperformed the XXXX free our X% want over to approximately significant Over to year pricing we've years, in and a and effectiveness our We're related to in quarters, in This We parts And a pressure quarter. This infrastructure expensive our workforce. month economics Ryan X/X profitable

previously to want I range forecasted. Now had gross dollars emphasize to targeting the that we profit remain within we're

we're Our same comfortable with at and this us with position very strong capital provides sheet power, time. balance our

are the a brand expansion customer-centric digital long three, strategy; and of automotive and generating for two, our proprietary products of and CarParts.com portfolio CarParts.com and and short new markets and We customers; term first wider by the and base. on: capture e-commerce capturing focusing positioning development our services more the to one, with awareness customer for app premium term mobile

we highlights that each drivers defines for strategic announce to at detail. an of one some carparts.com/investor. CarParts.com is available published The opportunities the deck the quarter, describes Before that and more in I these investor wanted updated investment presentation into today going

I'd Next, main highlights our to like quarter. cover the for

needs. address and and maintenance choice to moves repair and First, stress-free for is to of destination experience their we app consumers mobile made vehicles e-commerce CarParts.com ensure the big our supercharge

us, and total in X% of our revenue our revenue on last and to continues app, while products time. reduce Our for drive repeat compared summer purchases both incentivizing believe to lower our of grow over mobile, Android also our for will last and e-commerce drive this savings app over increased of reliance launched which purchases. X% successfully on spend and marketing iOS engines profitability shopping to our search and we brands mobile expect Mobile XXX,XXX year. With currently accounts promote We QX marketing on to direct with customers performance downloads. XX% in-app

launched time, also will data. first our machine proprietary also expect introduced fee fitment several freight more income high-margin this recommendation to and make initiative we first which higher Over built of incremental ago, powered our units top order, the drive weeks product of engine to dollars. learning drive few on We increase we efficient gross margin. A per

at of approximately we up. initiatives profit and parts new $X annualized shipping time, Our Over expect are to an X rate protection million. both live incremental gross and dollars those ramping offerings generate

product growth. assortment our market optimize shoppers, attract enhancing new increase optimizing to SKUs more to we're this by we product continue positioning to margins customers, profit and enhance and Second, for aiming sustained our premium to adding share more and us mix expanded inventory quarter, In competitiveness price revenue. and our capture by our catering our overall

we revenue-generating context, add to time. have up compound a For last that XX over and products can most years capacity new

providing products brand an our JC We believe legacy launching we of are time, our to Over we branded brand. These label business upgrading model, also year. an leveraging under enhanced point private and QX can Whitney margin product focused Whitney unbranded of profile. margin gross price are a higher from increase by lines at this gross a the products several the quality products higher on in of QX and our JC

we to customer our in awareness Third, customer brand invest improve and base our reducing continue costs. to marketing channels while grow acquisition

on We own new strengthen with our attract content continue to channels. our and relationships customers with

customers an who grow new less expanding and to acquisition decrease Our our to YouTube push time, costs foster and make own number with sensitive. to continues tend reliance content will automotive profitable. channel be talks business community instructional customers proprietary lower on help educational to price on an attract third-party and Over only help of our our videos us more not but acquire advertisers

call I logistics to our discuss quarterly Ryan supply optimize management. want to chain and our over turn financials the details, I update on provide and efforts to Before an ongoing to

West allow significant this facility we those half made it us the fully will flagship conveyance This We will customer in drive Vegas, savings begin lower well for Ryan margin and a Coast realized in to operating financial up over our update. quarter. are feature start on the efficiencies, to assortment and now XXXX. The new was semi-automated investment a of freight at hand retail of state-of-the-art to costs. I'll that XXXX increased experience larger to through ramping an for Las well extensive in to leverage expanded and gross reduction operating track Nevada in process second operations as in as expect in due Module, AI-powered form a PIC new as costs as improve

Ryan Lockwood

$X.X rent adjusts costs Vegas from transition-related workforce ensure to new the compared last long-term of reduction Las respond initiatives million due in revenues David. year XX.X% our appropriately reduction million you, facility. These period. compression. GAAP and costs $XXX.X period. the million, creation year short-term reported In to to Thank year. $XXX,XXX to reported the expenses for of value $XX.X On in and pricing for for strategic X% annualized the prior expenses, million our freight from approximately margin investments $XXX.X and down to and the versus net sales, Gross Gross related was the This the of million $X.X initiatives in down overlapping net of prior XX.X% for an We of including expect EBITDA was and million. we $X.X in million, XX% $XXX,XXX million reduction recent basis, prior compared $X.X other from profit our environment us $XX shareholders. quarter retail equal the down QX, our to was quarter loss cost adjusted year certain cost we prior allow higher income to year.

the For fiscal be approximately $X XXXX, million. flow-through should

the cash of income revolver $XXX,XXX in $XX generated sheet. the ended first interest million balance to We debt. of quarter and quarter. with We the Turning no

was support position cash business balance in plan. The revolver the quarter the our to continues end at year. inventory versus $XXX untapped million million prior $XXX and Our

on we existing for to until of higher we account benefit we delayed a the cost we FIFO layers. improve will as sourcing expect Therefore, through inventory reminder, a As be basis. some the FIFO sell our see

top outlook guidance, saw margin above which offset to March the previous of lower and our Turning for by In months we of was XXXX. end in improvements revenue. our the April, gross

of range dollars the are our For profit year, previous still gross the targeting we guidance. inside full

However, our given lower discipline than profitable focus expansion market around guided. Financial DNA. will short XXXX and marketing, fee rest achieve on spend dynamics, And to efficiency our be is around margin the and improving gross on In margin adjusted down X focused more we year-over-year channels significantly we and sales and next are chain, opportunities our pillars part the segments, and XXXX EBITDA strategic doubling the supply higher at evolving technology for XXXX. By EBITDA believe of optimization, can as term, continuing fiscal income. efforts on in a profitability adjusted pricing the we of we previously percent year. growth will increase we efficiency,

As term, we increasing towards adjusted our free achieving medium X% EBITDA look generation. margin we are as X% well cash as flow to to working the a

For revenue margin the we on million XXXX, to to full focus $XXX $XXX improvement. our our to guidance down year reflect revised million

to Our million million. We up XX%, $XXX basis previous points, or minus had guidance margin to guidance profit expected our partially sales. been will plus for which offset revised gross lower range XXX of a $XXX

gross transactions Our previous outlined lower dollar service around making handling medium-term or is the believe from more at perspective. target, will basis through We a us logistic less relatively plus change fewer and reverse minus by achieve neutral of requests profit a points. The strategy packages, efficient gross profitability higher XXX customer help optimizing costs. us our guidance was margin XX%, guidance

David Meniane

focus adjusted the our and that priorities will profitability of customers restore impact believe and higher we growth. on strategic value Overall, attracting EBITDA

to positioned auto capture and a aftermarket well underserved fragmented and tremendous opportunity industry. $XXX growing are We highly billion in the parts

world-class a long-term our our and the organization, believe stakeholders come. of we needs build around and we to value create for will center continue to benefit We customers, years

the returning everyone, with through remainder today's the We joining will financial prudence opportunistically to year. Thank shareholders capital continue you, call. of for balancing

the to for operator will open your it now up We and over it turn questions.

Operator

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

Ryan Sigdahl

now? assuming Curious within is previously, assumption branded the of what $XXX guidance, you drop-ship million revenue. were Curious that

David Meniane

won't you term, but that label, in to be Whitney, making to is new because a the think probably much we SKUs private that private which parts label the to moving JC attached long I for going before. of side continue branded from short investments we're the the And Mix bring to branded in term. there's have over going we've attack change never are beneficial lot in different to to segments

Ryan Sigdahl

topic, focused label categories private I SKUs the added you've year-to-date there guess, on? curious are On what how new many those and

Ryan Lockwood

sorry, and to the X,XXX is mechanical we've PLX our added PLX business is our PLX about and XX/XX business. PLX about year-to-date, collision is -- product mix our So SKUs our

Ryan Sigdahl

term moving cetera, on target just you're see optimization and I X% over target, et are focused and to given Then guess come Good. previously to X% X%, margins higher to to EBITDA cetera. from revenue I'm improving guys the surprised et lower. term everything and cost medium less the guess a margin, margin medium XX%. I the margin but over you

So the can you puts on bps? talk that through takes and XXX

David Meniane

and me, lower that it's it's a think time, it's I definitely I'm again, line in I listen, disappointing. Ryan, step with XXX% it But one. And I'll me. our No, last Yes, on and I it's QX, just David. on satisfied say said can just it margin. taking not expectations. with sales for take lower back

macro, to What a our to The find profitability. is X% to need is win. want short-term expansion way target. regardless a and medium-term X% I the think on emphasize to focus of kind we we margin of really

opportunities and We have on gross freight. some margin

side. We opportunities the on have some marketing

efficiencies labor opportunities and some on have with improvements. We productivity

to can a term, long achievable ton a profitable trying and good reasonable X% the generate be think and do that's think this free checkpoint. flow. target What I of an term, in medium I is out to cash but is business X% put extremely we're

Ryan Sigdahl

positive Very cash quick me, you stay willing if positive? one and/or expect in Do to 'XX free to good. One for flow last EBITDA you're comment.

Ryan Lockwood

Yes.

moving of lot a parts. there's EBITDA, for So

of to flow making on some guidance. large cash end flow, some the the depend as we're to in And sides then investments be free predominantly up that we as where it's of think I going far negative to Las on going free both Vegas. cash

$XX year, step be at ending much the and taking cash think year I of million you're inventory the about end cash we on So how to going that kind with. $XX picture to back, end big depends balance, the a million of

So be you give like that on would of million the there. the change $XXX between inventory sheet would $XXX to balance million

David Meniane

Yes. And something. if I add can

thing the margin the lean on in possible side income terms definitely as the think cash other terms working as much of as business But efficient and business, we're side, free we're making The balance statement the we is and on of with more flow. think that about making the inventory, to rationalize we sheet as be business the sure optimizing that going at possible. the year, looking run to have increase as and end I cash

Ryan Sigdahl

What more Sorry. related. and Maybe if million CapEx total $X change the one What's it I including QX? the move? year, was Vegas sneak in for expected can in, the

Ryan Lockwood

Yes.

to million total $X to you're at million million the So $XX for $X for like year, $X million Vegas, and normal CapEx. for just looking

Operator

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

Ryan Meyers

for take that products? able one those going First level for What's still see demand confidence respective to me. to be of price your you're still and

Ryan Lockwood

change new guidance. exactly goes the So that to I in think

seeing have was offset. we're of definitely levels an margin, the there range and prior We been and taking above price

much bit We far comes ship less our to flow helping, shipping little on calling at processes, many center, on a as warehouse how customers as goes on to many on the efficiencies out, And touch returns, seeing people are it we which different in, demand. how we units out, are a and how does call actually strategy back.

bit bit for more better were margin and So be units. touch it a all expensive is but we less have us before a around to better where little than little

strategy of, So to time. I hit over guidance is think, medium-term part from a -- that our this

David Meniane

add one Yes, and could thing. if I

at X customers what's million on last orders year, customer our we you call think CarParts.com. about look and base place I had it, if is important

one is or that rely and some more and more you hunting is and and customers not level subset time. our down acquire to we're the expensive is go back money If a customer spends segmentation, to be less a once, back is focus subset there over which of tend customer the than do lower spends on the on comes profitable end. more, there that is really that discounts. And efforts on more seeking. does to of They And what typically bargain coupons do and discount trying comes

end up flow-through much and much higher smaller we higher base, with a what but profitability. So is slightly customer

generate it's ability important. think prices best for So really, maximize is to on. that the extent way to kind free can ultimately, ultimately maximizing our take we're But cash to focusing is flow. what flow. that shareholders up We we And the and free that's value cash flow-through of

Ryan Meyers

in operating I million want Is And of else that see Got the product Or as is it. goods $X just Just is sure well mix? going to makes expenses? both cost spread I that see savings helpful. in you sense. we're be of that it in with to a that to expenses? would XXXX, million the across $X going correctly. kind be That just of to Or expect then what shifting understanding understand good cost as make anything there operating

Ryan Lockwood

would OpEx. No, be purely that

Operator

At this you concludes This call. time, further there participating. Thank questions. today's are conference for no

You all disconnect. may now

CarParts.com (PRTS) 7 May 242024 Q1 Earnings call transcript