CarParts.com(PRTS) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported $177 million in sales for Q2 2023, a slight increase from$176 million in the same period last year, marking the 14th consecutive quarter of year-over-year growth and the highest sales level in the company's history [12][41] - Adjusted EBITDA was $6.3 million, down from$8.3 million in the prior year, primarily due to higher freight costs and increased performance marketing spend [42][43] - Gross profit for the quarter was $60.4 million, down from$61.9 million in the prior year, with a gross margin of 34.2%, down from 35.1% [38][42] - The company ended the quarter with $79 million in cash and no revolver debt, up from$15 million in the prior year [44] Business Line Data and Key Metrics Changes - The company has seen a rise in the usage of its Buy Now Pay Later offerings, indicating a shift in customer purchase patterns [14] - The national brand assortment has expanded to a revenue run rate of $100 million, compared to under$50 million in 2021 [16] Market Data and Key Metrics Changes - The company noted that the consumer has been under increased pressure throughout the year, with lighter-than-expected tax refunds impacting spending patterns [97] - There is a pent-up demand for auto repairs as consumers generally do not prefer to keep their vehicles in disrepair [99][104] Company Strategy and Development Direction - The company is focusing on six strategic pillars: e-commerce fundamentals, digital transformation, assortment and catalog, marketing and customer experience, innovation, and supply chain and logistics [19][20] - The launch of a new mobile app aims to reduce customer acquisition costs and reliance on paid channels, enhancing the customer experience [21][22] - The company is committed to building strong relationships with branded partners and capturing a larger market share through improved customer experience and product offerings [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning despite short-term pressures from the macroeconomic environment, highlighting unit growth and positive unit economics [56][57] - The company anticipates that as consumer confidence rebounds, customers will return to the market for repairs [14] - Management emphasized the importance of balancing growth and profitability while maintaining a robust balance sheet [45] Other Important Information - The company repurchased 250,000 shares during the quarter for approximately $1.05 million, with$28.5 million remaining under the current share repurchase program [40] - The company is investing in supply chain technology to enhance efficiency and safety for associates [102] Q&A Session Summary Question: Can you talk about the health of consumers on CarParts since the beginning of the year? - Management noted that consumers have been under increased pressure, with lighter tax refunds impacting spending patterns, but there is a historical trend of pent-up demand for auto repairs [97][99] Question: How is the company leveraging artificial intelligence and automation? - Management indicated that they are embracing AI as a significant opportunity and are making intelligent investments in automation to improve efficiency and safety [91][92] Question: What are the expectations for the second half of the year? - Management expressed optimism about capturing demand as consumer confidence rebounds, despite current macroeconomic pressures [56][104]