PRTS earnings name for the interval ending December 31, 2024.
Picture supply: The Motley Idiot.
CarParts.com (PRTS -7.34%)
This autumn 2024 Earnings Name
Mar 25, 2025, 5:00 p.m. ET
Contents:
- Ready Remarks
- Questions and Solutions
- Name Contributors
Ready Remarks:
Operator
Good afternoon. Right now, all individuals can be in a listen-only mode. Please observe, this name is being recorded. I’d now wish to move the convention over to our host, Tina Mirfarsi, senior vp of worldwide communications and model.
Please go forward.
Tina Mirfarsi — Vice President, World Communications and Tradition
Hey, everybody, and thanks for becoming a member of us for the CarParts.com fourth quarter and financial year-end 2024 convention name. Becoming a member of me in the present day are David Meniane, chief government officer; and Ryan Lockwood, chief monetary officer. Earlier than I flip it over to David to start out the decision, I’ve some vital disclosures. The ready remarks might comprise sure forward-looking statements associated to the enterprise below the federal securities legal guidelines.
Precise outcomes might differ materially from these contained in or implied by these forward-looking statements because of dangers and uncertainties related to the enterprise. For a dialogue of the fabric dangers and different vital components that would have an effect on outcomes, please seek advice from the CarParts.com annual report on Kind 10-Okay and quarterly report on Kind 10-Q, every as filed with the SEC. Each of which may be discovered on our investor relations web site. On the decision, each GAAP and non-GAAP monetary measures can be mentioned.
A reconciliation of GAAP to non-GAAP monetary measures is supplied within the CarParts.com press launch issued in the present day. With that, I’d now like to show the decision over to David.
David Meniane — Chief Government Officer
Thanks, Tina, and thanks, everybody, for becoming a member of us in the present day. On the outset, let me say that in the present day, we’re not going to remark or take questions associated to our strategic alternate options course of past what we introduced on March fifth. That course of is being overseen by our board of administrators with the help of monetary and authorized advisors. 2024 was an vital 12 months within the ongoing transformation of CarParts.com.
We started the 12 months by refocusing our technique on three key components: primary, driving progress and internet margin to strengthen monetary efficiency; quantity two, accelerating effectivity and effectiveness to rapidly ship improved profitability; and quantity three, reaching sustainable progress with sturdy long-term free money move. The financial surroundings was difficult for lower-income customers for all of 2024, resulting in a big pullback in spending and deferral of prices like auto repairs. We confronted significant value compression within the first a part of 2024 and noticed promoting costs stabilize within the second half. Moreover, our lighting and mirrors enterprise was below substantial stress because of low value noncompliant unlawful components imported from China flooding the market.
In consequence, we labored diligently to realign our enterprise by increasing our product providing to draw a broader shopper base, repricing our merchandise to focus on higher-margin gross sales, including high-margin payment revenue, rising buyer lifetime worth with our cell app, and growing our deal with B2B and different business alternatives. These actions led to a full 12 months 2024 revenues of $589 million, barely beneath expectations. Nevertheless, gross revenue of $197 million and gross revenue margin of 33.4% for the 12 months was close to the higher finish of steering. 2024 was a change and funding 12 months as we glance to improve our buyer base and alter the long-term margin profile and unit economics of the enterprise.
We presently depend on promoting components on to cost-conscious customers by way of costly paid search and have skilled further margin pressures from rising outbound transportation prices. By specializing in refining our buyer combine, optimizing acquisition methods, and mitigating value will increase, we goal to ship larger worth to our prospects and safe sustainable progress for the enterprise. To deal with these pressures, we’re prioritizing a number of nonpaid advertising and marketing initiatives, reminiscent of enhancing our web site conversion, and strengthening our search engine marketing, alongside driving cell app adoption, producing high-margin payment revenue, increasing our product assortment, and rising our wholesale channel. We imagine these efforts will place us to extend our internet revenue margin and drive long-term progress.
Earlier than protecting our monetary outcomes, I need to take a second and recap what we’ve got constructed during the last two years. Primary, we’ve got scaled and optimized our vertically built-in provide chain with tightly managed in-house capabilities, together with sourcing, stock forecasting, inbound logistics, commerce compliance, achievement, and reverse logistics, resulting in a horny product margin within the mid-50s p.c. Quantity two, we proceed to broaden our nationwide direct to shopper achievement community and might cowl 98% of the inhabitants with two-day transport. We’ve a novel skill to deal with each conveyable and nonconveyable merchandise with capability for scale.
This consists of our lately opened semi-automated facility in Las Vegas with 200,000 sq. ft of house that’s now absolutely operational and processing 25% of our firm’s quantity. Quantity three, we continued investing in our fitment-based proprietary catalog that took 20 years to construct and serves a full assortment throughout collision, mechanical, non-public label, and branded merchandise, with the power to construct customized units and kits. Immediately, our catalog comprises 83,000 non-public label SKUs, 1.5 million premium branded SKUs, and continues to develop annually. Quantity 4, we proceed to be the second-largest importer of aftermarket collision components in the US and the world’s No.
1 vendor on eBay Motors. As a reminder, our collision components are primarily sourced from Taiwan and account for roughly two-thirds of our purchases that aren’t presently topic to the excessive tariffs imposed on merchandise made in China. Quantity 5, we proceed to optimize our stock throughout our achievement community, which was at $90 million at year-end. As mentioned in prior calls, our blended pre-freight product margin exceeds 50%, which makes this stock considerably extra beneficial at retail costs, particularly in an inflationary surroundings.
Quantity six, we absolutely replatformed our CarParts.com web site with a best-in-class, mobile-first, fit-specific consumer expertise, which generates 100 million annual visits and serves 10 million prospects with a brand new search, product suggestions and payment revenue capabilities. Our greatest-in-class cell app, with over 800,000 customers in lower than 18 months, now accounts for over 10% of e-commerce income and rising, whereas permitting for a long-term change in our paid versus nonpaid site visitors combine. Quantity seven, our extremely worthwhile B2B enterprise lately launched similar and next-day last-mile supply within the North Florida market with a contribution margin as much as thrice larger than e-commerce, served by real-time integrations with store administration and estimating programs. Quantity eight, we have launched a nascent high-margin payment revenue choices, which embrace transport and product safety, affiliate income, and a premium paid membership and roadside help with over 3,000 paying members and rising.
Over time, we anticipate this a part of our enterprise to assist elevate our internet revenue margins. Quantity 9, we proceed to leverage our two distinctive logos in CarParts.com and JC Whitney, which permits us to distinguish our non-public label choices over time. Whereas 2024 offered its share of challenges, we made important progress in key areas that place us nicely for future progress. I will now flip it over to Ryan to assessment our monetary outcomes.
Ryan Lockwood — Chief Monetary Officer
Thanks, David. Within the fourth quarter, we reported revenues of $133.5 million, down 15% from $156.4 million final 12 months. For the complete 12 months, we generated $588.8 million in revenues, down 13% from $675.7 million in 2023, with 2023 representing our highest income quantity ever in buyer historical past. The decline was primarily pushed by elevated pricing mixed with the affect of sentimental shopper demand, in addition to important pressures in lighting and mirrors.
Gross revenue for the quarter was $43.4 million, down 16% in comparison with the prior 12 months. Gross margin was 32.5%, down barely from 33% within the prior-year interval. For the complete 12 months, gross revenue was inside our anticipated vary at $196.7 million, down 14% in comparison with the prior 12 months. Gross margin was 33.4%, down from 33.9% in 2023.
The decline in gross margin was primarily pushed by elevated outbound transportation prices regardless of some offset from larger pre-freight gross margin. GAAP internet loss for the quarter was $15.4 million in comparison with a lack of $6.1 million within the prior-year interval. For the 12 months, GAAP internet loss for the 12 months was $40.6 million in comparison with a lack of $8.2 million in 2023, primarily pushed by decrease gross revenue. For the fourth quarter, adjusted EBITDA loss was $6.8 million, down from adjusted EBITDA of $1 million within the prior-year interval, primarily because of tender shopper demand, value compression, and elevated aggressive stress in efficiency advertising and marketing.
For the complete 12 months, adjusted EBITDA lack of $7.1 million was down from $19.7 million in 2023, primarily impacted by our fourth quarter outcomes. In 2024, we incurred $6.4 million of elevated bills outdoors of our regular operations, which we do not anticipate to reoccur in 2025, together with overlapping software program bills associated to our digital transformation and one-time prices associated to the transfer of our Las Vegas facility. As David talked about, we’re targeted on harvesting return on these strategic investments over the following few years. Turning to the steadiness sheet.
We ended the 12 months with $36.4 million of money and no revolver debt. We generated $0.3 million of curiosity revenue within the fourth quarter and $1.5 million for the complete 12 months. Our stock steadiness was $90.4 million at year-end versus $128.9 million on the finish of 2023. Our money place and untapped revolver continues to supply the required liquidity to assist our marketing strategy.
As David talked about above, our firm is presently evaluating varied strategic alternate options in response to inbound curiosity. In consequence, we’re not offering steering for 2025. I will now flip it again over to David for last remarks.
David Meniane — Chief Government Officer
Thanks, Ryan. Trying forward, we’re assured that the sturdy basis and enhancements throughout our enterprise secured all through 2024 have set us on a path to attain long-term, sustainable optimistic adjusted EBITDA. Our priorities in 2025 embrace: one, proceed to broaden our product providing to draw new prospects and improve common basket dimension; quantity two, monetize our 100 million annual web site visits and buyer lists with high-margin payment revenue; quantity three, scale our B2B providing with last-mile transportation and better contact gross sales in key markets; quantity 4, develop our cell app enterprise to diversify our advertising and marketing combine and ship larger buyer lifetime worth; and quantity 5, keep a robust steadiness sheet with a deal with managing money move and stock ranges. We’re dedicated to maximizing long-term shareholder worth as we deal with capturing the rising alternative in entrance of us throughout the extremely fragmented and underserved $400 billion auto components market.
I want to thank our world crew for his or her resilience, exhausting work, and dedication as we proceed to rework our enterprise. Thanks, everybody, for becoming a member of in the present day’s name. We’ll now flip it again over to the operator.
Questions & Solutions:
Operator
This concludes in the present day’s convention name. Thanks for collaborating. [Operator signoff]
Length: 0 minutes
Name individuals:
Tina Mirfarsi — Vice President, World Communications and Tradition
David Meniane — Chief Government Officer
Ryan Lockwood — Chief Monetary Officer
