Form 8-K - Current report

0001378950false00013789502024-03-072024-03-07

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) May 7, 2024

CARPARTS.COM, INC.

(Exact name of registrant as specified in its charter)

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Delaware	001-33264	68-0623433
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

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2050 W. 190^th Street, Suite 400, Torrance, CA 90504

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code [phone]

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value per share	PRTS	The NASDAQ Stock Market LLC (NASDAQ Global Market)

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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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Item 2.02. Results of Operations and Financial Condition.

On May 7, 2024, CarParts.com, Inc. (the “Company”) issued a press release announcing its financial results for the first quarter ended March 30, 2024. A copy of the press release is furnished herewith as Exhibit 99.1.

The information contained in Item 2.02 and in Item 9.01 and in Exhibit 99.1 attached to this report is being furnished to the Securities and Exchange Commission and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that Section, or incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, as amended, regardless of any general incorporation language contained in such filing.

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Item 9.01. Financial Statements and Exhibits.

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(d) Exhibits.

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Exhibit No.		Description
99.1		Press Release, dated May 7, 2024, of CarParts.com, Inc.
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104	​	Cover Page Interactive Data File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

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Dated: May 7, 2024	CARPARTS.COM, INC.
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​	By:	/s/ Ryan Lockwood
​	Name:	Ryan Lockwood
​	Title:	Chief Financial Officer

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CarParts.com Reports First Quarter 2024 Results 

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TORRANCE, Calif. – May 7^th, 2024 – CarParts.com, Inc. (NASDAQ: PRTS), one of the leading eCommerce providers of automotive parts and accessories, and a one-stop shop for vehicle repair and maintenance needs, is reporting results for the first quarter ended March 30, 2024. 

First Quarter 2024 Summary vs. Year-Ago Quarter

●	Net sales decreased to $166.3 million, down 5% from the year-ago quarter.

●	Gross profit of $53.9 million vs. $62.6 million, with gross margin of 32.4%.

●	Net loss was ($6.5) million, or ($0.11) per share, compared to a net income of $1.1 million, or $0.02 per share.

●	Adjusted EBITDA of $1.1 million vs. $9.4 million.

●	Cash of $46.0 million and no revolver debt.

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Management Commentary

“In the past year, we have marked significant milestones. The successful launch of our mobile app stands out as it now contributes over 8% of our total eCommerce revenue. Additionally, we’ve captured 38% of our eCommerce revenue from loyal repeat customers, while our website has attracted over 100 million visits, affirming our strong online presence. We also realigned our cost structure to be leaner and more agile,” said David Meniane, CEO.

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“We are well positioned to capture the tremendous and growing opportunities within the highly fragmented and underserved four hundred-billion-dollar aftermarket auto parts industry.

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Despite these great achievements, we faced acute pressures throughout the year. However, financial discipline is ingrained in our organizational DNA. Given the evolving market dynamics, we are doubling down on opportunities for margin expansion, particularly centered around pricing optimization, marketing, supply chain and technology. Our endeavors for the remainder of fiscal 2024 will be laser-focused on improving efficiency and profitability to significantly increase Adjusted EBITDA for the years 2025 and 2026, ultimately enhancing shareholder value.

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Through our continued efforts around our three strategic pillars and an unwavering commitment to efficiency and profitability, we are confident in achieving Adjusted EBITDA growth next year. Looking ahead to the medium term, our aim is to attain a 6-8% Adjusted EBITDA margin while also increasing our free cashflow generation.”

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First Quarter 2024 Financial Results

Net sales in the first quarter of 2024 were $166.3 million, down 5% from the year-ago quarter. The decrease was primarily driven by softness in consumer demand in certain parts and selling price compression.

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Gross profit in the first quarter was $53.9 million compared to $62.6 million, with gross margin decreasing 320 basis points to 32.4%. The decrease in gross profit and gross margin was primarily driven by higher outbound transportation costs and selling price compression.

Total operating expenses in the first quarter were $60.4 million compared to $61.9 million in the year-ago quarter.

Net loss in the first quarter was ($6.5) million compared to net income of $1.1 million in the year-ago quarter.

Adjusted EBITDA in the first quarter was $1.1 million compared to $9.4 million in the year-ago quarter.

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On March 30, 2024, the Company had a cash balance of $46.0 million and no revolver debt, compared to no revolver debt and a $51.0 million cash balance at prior fiscal year-end December 30, 2023. 

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2024 Outlook

For the full year 2024, we are targeting gross profit to remain within the range we had previously forecasted but adjusting the net sales and gross margin ranges as follows:

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The Company expects net sales in a range of $600 million to $625 million to reflect our focus on gross margin improvement. Our previous net sales guidance had been in a range of $662 million to $688 million.

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The Company expects gross margin in a range of 33%, plus or minus 100 basis points, which will partially offset the lower expected net sales. Our previous guidance was 31%, plus or minus 100 basis points.

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Conference Call

CarParts.com CEO David Meniane, CFO Ryan Lockwood and COO Michael Huffaker will host a conference call today to discuss the results, followed by a question-and-answer period.

Date: Tuesday, May 7, 2024

Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time) 

Webcast: www.carparts.com/investor/news-events 

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To listen to the live call, please click the link above to access the webcast. A replay of the audio webcast will be archived on the Company’s website at www.carparts.com/investor.  

 

About CarParts.com, Inc.

CarParts.com, Inc. is a technology-driven eCommerce company improving the way drivers shop for the parts they need. Operating over 25 years, CarParts.com has established itself as a premier destination for drivers seeking repair and maintenance solutions. Our commitment lies in placing the customer at the forefront of our operations, evident in our easy-to-use, mobile-friendly website and app. Offering a seamless shopping experience, we aim to eliminate the uncertainty and stress often associated with vehicle repair and maintenance. Backed by a robust company-operated fulfillment network, we ensure swift delivery of top-quality parts from leading brands to customers across the nation.

At CarParts.com, our global team is united by a shared vision: Empowering Drivers Along Their Journey.

CarParts.com is headquartered in Torrance, California.

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Non-GAAP Financial Measures

Regulation G, and other provisions of the Securities Exchange Act of 1934, as amended, define and prescribe the conditions for use of certain non-GAAP financial information. We provide “Adjusted EBITDA” in this earnings release and on today’s scheduled conference call, which are non-GAAP financial measures. Adjusted EBITDA consist of net (loss) income before (a) interest (income) expense, net; (b) income tax provision; (c) depreciation and amortization expense; (d) amortization of intangible assets; (e) share-based compensation expense; (f) workforce transition costs; and (g) distribution center moving costs. A reconciliation of Adjusted EBITDA to net (loss) income is provided below.

The Company believes that these non-GAAP financial measures provide important supplemental information to management and investors. These non-GAAP financial measures reflect an additional way of viewing aspects of the Company’s operations that, when viewed with the GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provides a more complete understanding of factors and trends affecting the Company’s business and results of operations.

Management uses Adjusted EBITDA as measures of the Company’s operating performance because it assists in comparing the Company’s operating performance on a consistent basis by removing the impact of stock compensation expense as well as other items that we do not believe are representative of our ongoing operating performance. Internally, these non-GAAP measures are also used by management for planning purposes, including the preparation of internal budgets; for allocating resources to enhance financial performance; and for evaluating the effectiveness of operational strategies. The Company also believes that analysts and investors use these non-GAAP measures as supplemental measures to evaluate the ongoing operations of companies in our industry.

These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. Management strongly encourages investors to review the Company’s consolidated financial statements in their entirety and to not rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names. In addition, the Company expects to continue to incur expenses similar to the non-GAAP adjustments described above, and exclusion of these items from the Company’s non-GAAP measures should not be construed as an inference that these costs are all unusual, infrequent or non-recurring.

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Safe Harbor Statement

This press release contains statements which are based on management’s current expectations, estimates and projections about the Company’s business and its industry, as well as certain assumptions made by the Company. These statements are forward looking statements for the purposes of 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, as amended. Words such as “anticipates,” “could,” “expects,” “intends,” “plans,” “potential,” “believes,” “predicts,” “projects,” “seeks,” “estimates,” “may,” “will,” “would,” “will likely continue” and variations of these words or similar expressions are intended to identify forward-looking statements. These statements include, but are not limited to, statements regarding our future operating results and financial condition, our potential growth, our ability to innovate, our ability to gain market share, and our ability to expand and improve our product offerings. We undertake no obligation to revise or update publicly any forward-looking statements for any reason. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors.

Important factors that may cause such a difference include, but are not limited to, competitive pressures, our dependence on search engines to attract customers, demand for the Company’s products, the online market and channel mix for aftermarket auto parts, the economy in general, increases in commodity and component pricing that would increase the Company’s product costs, the operating restrictions in its credit agreement, the weather and any other factors discussed in the Company’s filings with the Securities and Exchange Commission (the “SEC”), including the Risk Factors contained in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which are available at www.carparts.com/investor and the SEC’s website at www.sec.gov. You are urged to consider these factors carefully in evaluating the forward-looking statements in this release and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. Unless otherwise required by law, the Company expressly disclaims any obligation to update publicly any forward-looking statements, whether as result of new information, future events or otherwise.

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Investor Relations:

Ryan Lockwood, CFA

[e-mail]

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Summarized information for the periods presented is as follows (in millions):

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​	​	Thirteen Weeks Ended		​	Thirteen Weeks Ended		​
​		March 30, 2024			April 1, 2023
Net sales	​	$	166.29	​	$	175.49	​
Gross profit	​	$	53.92	​	$	62.55	​
​	​		32.4	%		35.6	%
Operating expense	​	$	60.44	​	$	61.92	​
​	​		36.3	%		35.3	%
Net (loss) income	​	$	(6.48)	​	$	1.05	​
​	​		(3.9)	%		0.6	%
Adjusted EBITDA	​	$	1.05	​	$	9.37	​
​	​		0.6	%		5.3	%

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The table below reconciles net (loss) income to Adjusted EBITDA for the periods presented (in thousands):

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​	​	Thirteen Weeks Ended		​	Thirteen Weeks Ended
​		March 30, 2024			April 1, 2023
Net (loss) income	​	$	(6,478)	​	$	1,051
Depreciation & amortization	​	​	4,025	​	​	3,919
Amortization of intangible assets	​	​	8	​	​	11
Interest (income) expense, net	​	​	(137)	​	​	347
Income tax provision	​	​	98	​	​	141
EBITDA	​	$	(2,484)	​	$	5,469
Stock compensation expense	​	$	2,582	​	$	3,899
Workforce transition costs(1)	​	​	483	​	​	—
Distribution center moving costs(2)	​	​	471	​	​	—
Adjusted EBITDA	​	$	1,052	​	$	9,368

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(1)	We incurred workforce transition costs, primarily related to severance, as part of our recent workforce reductions.

(2)	We incurred moving costs, overlapping rent expense and other non-recurring costs attributable to moving to our new Las Vegas, Nevada distribution center.

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CARPARTS.COM, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE OPERATIONS

(Unaudited, In Thousands, Except Per Share Data)

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​	​	Thirteen Weeks Ended
​	​	March 30,		​	April 1,
​		2024			2023
Net sales	​	$	166,289	​	$	175,492
Cost of sales (1)	​		112,370	​		112,941
Gross profit	​		53,919	​		62,551
Operating expense	​		60,436	​		61,915
(Loss) income from operations	​		(6,517)	​		636
Other income (expense):	​		​	​	​	​
Other income, net	​		437	​		914
Interest expense	​		(300)	​		(358)
Total other income, net	​		137	​		556
(Loss) income before income taxes	​		(6,380)	​		1,192
Income tax provision	​		98	​		141
Net (loss) income	​		(6,478)	​		1,051
Other comprehensive gain:	​		​	​		​
Unrealized gain on deferred compensation trust assets	​		87	​		24
Total other comprehensive gain	​		87	​		24
Comprehensive (loss) income	​	$	(6,391)	​	$	1,075
Net (loss) income per share:	​	​	​	​	​	​
Basic net (loss) income per share	​	$	(0.11)	​	$	0.02
Diluted net (loss) income per share	​	$	(0.11)	​	$	0.02
Weighted-average common shares outstanding:	​			​
Shares used in computation of basic net (loss) income per share	​		56,503	​		55,047
Shares used in computation of diluted net (loss) income per share	​		56,503	​		58,037

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(1)	Excludes depreciation and amortization expense which is included in operating expense.

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CARPARTS.COM, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited, In Thousands, Except Par Value Data)

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​	​	March 30,		​	December 30,
​		2024			2023
ASSETS		​			​
Current assets:		​			​
Cash and cash equivalents	​	$	46,046	​	$	50,951
Accounts receivable, net	​		8,889	​		7,365
Inventory, net	​		120,015	​		128,901
Other current assets	​		8,028	​		6,121
Total current assets	​		182,978	​		193,338
Property and equipment, net	​		31,329	​		26,389
Right-of-use - assets - operating leases, net	​	​	31,020	​	​	19,542
Right-of-use - assets - finance leases, net	​	​	14,086	​	​	15,255
Other non-current assets	​		3,811	​		3,331
Total assets	​	$	263,224	​	$	257,855
LIABILITIES AND STOCKHOLDERS' EQUITY	​			​
Current liabilities:	​		​	​	​	​
Accounts payable	​	$	74,796	​	$	77,851
Accrued expenses	​		22,158	​		20,770
Right-of-use - obligation - operating, current	​	​	5,592	​	​	4,749
Right-of-use - obligation - finance, current	​	​	4,172	​	​	4,308
Other current liabilities	​		5,470	​		5,308
Total current liabilities	​		112,188	​		112,986
Right-of-use - obligation - operating, non-current	​	​	27,517	​	​	16,742
Right-of-use - obligation - finance, non-current	​	​	11,353	​	​	12,327
Other non-current liabilities	​		3,014	​		2,969
Total liabilities	​		154,072	​		145,024
Commitments and contingencies	​		​	​	​	​
Stockholders’ equity:	​		​	​	​	​
Common stock, $0.001 par value; 100,000 shares authorized; 56,624 and 56,303 shares issued and outstanding as of March 30, 2024 and December 30, 2023 (of which 3,786 are treasury stock)	​		61	​		60
Treasury stock	​		(11,912)	​		(11,912)
Additional paid-in capital	​		315,585	​		312,874
Accumulated other comprehensive income	​		870	​		783
Accumulated deficit	​		(195,452)	​		(188,974)
Total stockholders’ equity	​		109,152	​		112,831
Total liabilities and stockholders' equity	​	$	263,224	​	$	257,855

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CARPARTS.COM, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, In Thousands)

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​	​	Thirteen Weeks Ended
​	​	March 30,		​	April 1,
​		2024			2023
Operating activities	​	​	​	​	​	​
Net (loss) income	​	$	(6,478)	​	$	1,051
Adjustments to reconcile net (loss) income to net cash provided by operating activities:	​	​	​	​	​	​
Depreciation and amortization expense	​		4,025	​		3,919
Amortization of intangible assets	​		8	​		11
Share-based compensation expense	​		2,582	​		3,899
Stock awards issued for non-employee director service	​		8	​		6
Stock awards related to officers and directors stock purchase plan from payroll deferral	​	​	1	​	​	—
Amortization of deferred financing costs	​		16	​		16
Changes in operating assets and liabilities:	​	​	​	​	​	​
Accounts receivable	​		(1,524)	​		(3,362)
Inventory	​		8,886	​		23,662
Other current assets	​		(1,907)	​		(511)
Other non-current assets	​		(504)	​		(55)
Accounts payable and accrued expenses	​		(1,808)	​		2,399
Other current liabilities	​		163	​		1,450
Right-of-use obligation - operating leases - current	​	​	957	​	​	181
Right-of-use obligation - operating leases - long-term	​	​	(817)	​	​	(117)
Other non-current liabilities	​		44	​		232
Net cash provided by operating activities	​		3,652	​		32,781
Investing activities	​	​	​	​	​	​
Additions to property and equipment	​		(7,431)	​		(2,745)
Net cash used in investing activities	​		(7,431)	​		(2,745)
Financing activities	​	​	​	​	​	​
Borrowings from revolving loan payable	​		61	​		76
Payments made on revolving loan payable	​		(61)	​		(76)
Payments on finance leases	​		(1,093)	​		(1,242)
Net proceeds from issuance of common stock for ESPP	​	​	202	​	​	221
Statutory tax withholding payment for share-based compensation	​		(323)	​		—
Proceeds from exercise of stock options	​		—	​		1,523
Net cash (used in) provided by financing activities	​		(1,214)	​		502
Effect of exchange rate changes on cash	​		88	​		—
Net change in cash and cash equivalents	​		(4,905)	​		30,538
Cash and cash equivalents, beginning of period	​		50,951	​		18,767
Cash and cash equivalents, end of period	​	$	46,046	​	$	49,305
Supplemental disclosure of non-cash investing and financing activities:	​	​	​	​	​	​
Right-of-use operating asset acquired	​	$	12,857	​	$	—
Accrued asset purchases	​	$	1,621	​	$	312
Share-based compensation expense capitalized in property and equipment	​	$	242	​	$	271
Supplemental disclosure of cash flow information:	​	​	​	​	​	​
Cash received during the period for income taxes	​	$	(8)	​	$	(34)
Cash paid during the period for interest	​	$	300	​	$	358
Cash received during the period for interest	​	$	437	​	$	11

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Document and Entity Information	Mar. 07, 2024
Document and Entity Information [Abstract]
Document Type	8-K
Document Period End Date	May 07, 2024
Entity File Number	001-33264
Entity Registrant Name	CARPARTS.COM, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	68-0623433
Entity Address, Address Line One	2050 W. 190th Street
Entity Address, Address Line Two	Suite 400
Entity Address, City or Town	Torrance
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	90504
City Area Code	424
Local Phone Number	702-1455
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $0.001 par value per share
Trading Symbol	PRTS
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false
Entity Central Index Key	0001378950
Amendment Flag	false

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