CarParts.com(PRTS) - 2022 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - CarParts.com achieved record sales of $166 million, up 15% year-over-year, and adjusted EBITDA increased 165% to a record$ 9.4 million [6][16] - Gross profit rose 24% to $61 million, with gross margins improving by 280 basis points to 36.8% compared to 34% in the same period last year [17][18] - Net profit for the quarter was$ 2.1 million, compared to a loss of $2.7 million in Q1 2021 [18] Business Line Data and Key Metrics Changes - Hard parts contributed approximately 29% of sales, while replacement parts accounted for 66%, with a year-over-year increase in hard parts mix by about 600 basis points [41] Market Data and Key Metrics Changes - The total addressable market for aftermarket parts exceeds$ 300 billion, with CarParts.com capturing less than 1% of that market [10] Company Strategy and Development Direction - The company is focused on outstanding customer service, operational excellence, financial discipline, and innovation [11][12][13][14] - Plans to expand the "do-it-for-me" market, aiming to become a one-stop destination for auto repair and maintenance [14][46] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about demand despite macroeconomic pressures, emphasizing that the business serves essential needs [40] - The company expects to continue double-digit year-over-year revenue growth for fiscal year 2022, correlating with the opening of new distribution centers [21] Other Important Information - The company is currently carrying approximately $40 million in extra inventory to account for longer lead times in the supply chain [20] - The Texas distribution center is almost fully stocked, and the Jacksonville facility is on schedule to be operational by the end of Q2 [23] Q&A Session Summary Question: Was there anything unique affecting gross margin this quarter? - Management indicated that gross margin improvements are sustainable and driven by data science optimization [30] Question: How is the company navigating supply chain challenges? - Management highlighted their capabilities in demand planning and logistics to ensure parts availability and speed to customers [32] Question: What are the capital allocation priorities? - The focus is on profitable growth and free cash flow generation, with potential for stock buybacks subject to Board approval [50][52] Question: How is the demand environment for end customers? - Management confirmed solid demand, noting that the business addresses essential needs rather than discretionary spending [40] Question: What is the contribution of mechanical parts during the quarter? - Hard parts contributed 29% of the mix, which positively impacted gross margin [41][44] Question: Update on the do-it-for-me offering? - The initiative is progressing well, with expectations for it to become a larger part of the business over time [46]