Carparts.com, Inc. · NASDAQ:PRTS
Carparts.com — U.S. Auto Parts Network — Investor Presentation (May 2015)
29 slides from Carparts.com's investor presentation, May 12, 2015
Slide 1: Investor Presentation
Exhibit 99.1 Investor Presentation
Slide 2: Safe Harbor
Safe Harbor This presentation may contain certain forward-looking statements and management may make additional forward-looking statements in response to your questions. These statements do not guarantee future performance and speak only as of the date hereof, and qualify for the safe harbor provide
Slide 3: Company Overview
Company Overview A leading online retailer of aftermarket auto parts and accessories Operates in multiple online channels focused on the DIY customer (operates a small wholesale DIFM channel) Offers over 1.5mm SKUs across a diverse assortment of high quality private label and branded products Reache
Slide 4: Company Snapshot
Company Snapshot US Auto Parts is a value leader in the aftermarket car parts category Operates online sites, marketplaces and wholesale channels Headquartered in Carson, CA Traded on NASDAQ since 2007: PRTS Revenue of $284M in FY-14 Track record of growth in sales and traffic CAGR 11.3% 4
Slide 5: Company History
Company History Spun off 36% of AutoMD / JC Whitney completely Returned to double digit integrated sales growth & positive FCF 2015 Company begins significantly expanding its private label engine line 2014 Acquires PartsBin 2013 Adds Engine Line Investing in LTV and GMROI / JC Whitney 2011 turns 100
Slide 6: Financial Highlights from Q1-15 Earnings Call
Financial Highlights from Q1-15 Earnings Call • Total revenue $76.3M • Sales up 12% for the quarter • Adjusted EBITDA excluding AutoMD was $2.9M • Hired new CFO Neil Watanabe 6
Slide 7: Positive Quarterly Comp Sales Trend
Positive Quarterly Comp Sales Trend Four consecutive positive, double digit comp growth 20.0% 18%* 18.0% 16.0% 14.0% 13% 12% 12.0% 10.0% 10% 8.0% 6.0% 4% 4.0% 2.0% 0.0% Q1-14 Q2-14 Q3-14 Q4-14 Q5-15 * Includes an extra week – would have been 12% on a normalized basis. 7
Slide 8: Q1 Financial Performance
Q1 Financial Performance (excluding AutoMD) Net Sales Operating Expenses as a % of net sales $80.0 40.0% $75.0 30.0% $70.0 20.0% $65.0 10.0% $60.0 $55.0 0.0% Q1-13 Q1-14 Q1-15 Q1-13 Q1-14 Q1-15 Operating Income (Loss) Adjusted EBITDA $1.0 $3.5 $3.0 $0.0 $2.5 ($1.0) $2.0 ($2.0) $1.5 $1.0 ($3.0) $0.5
Slide 9: Case for Investment
Case for Investment Improving Financial Performance Large and Growing Online Market Significant Customer Reach Significant Private Label Offering Experienced Leadership Team 9
Slide 10: Do It Yourself (DIY) Market Size
Do It Yourself (DIY) Market Size At 11% online market penetration, auto parts still lags industry average in the teens. US Auto Parts is estimated to be the largest pure-play online retailer of auto parts 1 Total DIY Market Size for 2014 of $49B Company 2014 Est. Rev 2 % of total Marketplaces (in mi
Slide 11: Online Market is Vibrant and Growing
Online Market is Vibrant and Growing Booz & Co. estimates by 2018 that Online DIY The average age of a light vehicle on the road could reach 17% of the total DIY market continues to increase each year since 1997 DIY Online Penetration Mean Light Vehicle age 18.0% 12 1 16.0% 14.0% 10 12.0% 8 10.0% 8.
Slide 12: Do It Yourself (DIY) Projections
Do It Yourself (DIY) Projections More of the incremental growth will come online vs. offline DIY Projected Y/Y Revenue Growth Offline Online Total 2.5 2.0 1.5 1.0 0.5 0.0 2013 2014 2015 2016 2017 2018 DIY Projected Revenue (in Billions) Offline $42.6 $43.5 $44.2 $44.8 $45.3 $45.5 Online* 4.6 5.5 6.6
Slide 13: US Auto Parts Has Dominant Reach
US Auto Parts Has Dominant Reach (some overlap of monthly visitors across websites) 10,000 8,000 Customer Reach is a Competitive Moat • Over 500 man years of hand written unique content • Long domain history to help indexing in search 6,000 • Multiple website management 4,000 2,000 0 Competitor site
Slide 14: Historical Traffic & Conversion Growth
Historical Traffic & Conversion Growth Year over Year Traffic Comp 70.0% Consolidated websites and turned 60.0% off about $80mm of revenue 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% -10.0% -20.0% -30.0% Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-
Slide 15: Strategies For Increasing Customer Life Time Value
Strategies For Increasing Customer Life Time Value The 2015 strategy is to increase Customer Life Time Value Gross Profit per Average Order Repeat Purchase Conversion = Increased Traffic Transaction Size • Efficient sourcing • Sell the job • Easy to do business • Easy to find Product • We anticipate
Slide 16: Broad Auto Parts Product Offering
Broad Broad Auto Auto Parts Parts Product Product Offering Offering US Auto Parts has one of the largest product offerings with over 1.5 million products across collision parts, engine parts, and performance & accessories Collision Parts Engine Parts Performance & Accessories Lamps Mirrors Bumpers B
Slide 17: Supply Chain Creates Pricing Advantage
Supply Chain Creates Pricing Advantage USAP’s ability to competitively price products while maintaining healthy margins is a function of leveraging its robust private label supply chain: – Currently over 40,000 Private Label Products. – Adding 5,000 – 7,000 Private Label SKUs this year – The Company
Slide 18: Historical Product Sales Mix
Historical Product Sales Mix US Auto Parts has transitioned to Private Label products to be a low cost leader with high quality products in the marketplace 70.0% 60% 60.0% 56.5% 56.3% 57.6% 58% 55% 52% 50.0% 48% 40.0% 43.5% 43.7% 45% 42.4% 42% 40% 30.0% 20.0% 10.0% 0.0% 2009 2010 2011 2012 2013 2014
Slide 19: GMROI Focused Strategy
GMROI Focused Strategy Utilize our automated price optimization tool to tailor our pricing strategies for all online channels Take action on slow moving inventory to minimize margin erosion Leverage our proprietary inventory management systems to improve in- stock levels and reduce unnecessary weeks
Slide 20: Growth and Profitability
Growth and Profitability Incremental Flow Thru Revenue 100% Gross Margins 27% - 29% Variable OPEX Costs 15% Fixed Cost 0% Incremental Flow 12% - 14% 20
Slide 21: Financial Sensitivity
Financial Sensitivity Our business model has significant cost leverage as revenues grow Base 10% 20% 30% 40% 50% Revenue $284 $312 $341 $369 $398 $426 Gross Margin % 27.0% – 29.0% 27.0% – 29.0% 27.0% – 29.0% 27.0% – 29.0% 27.0% – 29.0% 27.0% – 29.0% Variable: Fulfillment 3.4% 3.4% 3.4% 3.4% 3.4% 3.4
Slide 22: AutoMD – Repair Lead Generation Site
AutoMD – Repair Lead Generation Site Overview • Repair lead generation site addresses the DIFM market Recent Strategic Investment • $12.5M pre-money valuation • Raised $7.0M in capital • Fed Mogul: $3.0M • Cox Automotive: $2.0M • Insiders: $2.0M • Post-funding valuation of $19.5M • USAP in control w
Slide 23: In Summary
In Summary US Auto Parts A leading e-Commerce company That is growing with positive FCF In a $5B industry that is expected to double in the next 5-7 years We have two significant competitive advantages Our customer reach is over 10mm visitors monthly Our supply chain sources over 40,000 Private Labe
Slide 24: Appendix
APPENDIX 24
Slide 25: Leadership Team
Leadership Team Shane Evangelist - Chief Executive Officer since October 2007 • Over 10 years experience leading internet businesses • Senior Vice President and General Manager of Blockbuster Online • Vice President of Strategic Planning for Blockbuster Inc. • B.A. degree in Business Administration
Slide 26: Sales & Adjusted EBITDA
Sales & Adjusted EBITDA 1 Consolidated Sales 2 Consolidated Adjusted EBITDA3 ($ In Millions) ($ In Millions) $327.1 $304.0 $283.4 $19.5 $262.3 $254.8 $16.3 $13.5 $176.3 $153.4 $9.4 $8.1 $76.3 $6.0 $5.2 $2.9 2008 2009 2010 2011 2012 2013 2014 Q1-15 2008 2009 2010 2011 2012 2013 2014 Q1-15 3% 8% 7% 5%
Slide 27: Adjusted EBITDA
Adjusted EBITDA (Non-GAAP Financial Measure – in thousands) Thirteen Weeks Ended April 4, 2015 Thirteen Weeks Ended March 29, 2014 Base Base (in thousands) USAP AutoMD Consolidated USAP AutoMD Consolidated Net loss $ 187 $ (503) $ (316) $ 683 $ (482) $ 201 Interest expense, net 373 - 373 259 - 259 I
Slide 28: Consolidated Statements of Comprehensive Operations
Consolidated Statements of Comprehensive Operations (Unaudited, in Thousands, Except Per Share Data) Thirteen Weeks Ended April 4, 2015 March 29, 2014 Net sales $ 76,388 $ 68,028 (1) Cost of sales 54,910 47,327 Gross profit 21,478 20,701 Operating expenses: Marketing 10,852 10,115 General and admini
Slide 29: Consolidated Balance Sheet
Consolidated Balance Sheet (Unaudited, in Thousands, Except Par and Per Share Liquidation value) April 4 January 3 ASSETS 2015 2015 Current assets: Cash and cash equivalents $ 7,917 $ 7,653 Short-term investments 66 62 Accounts receivable, net of allowances of $38 and $41 at April 4, 2015 and Januar
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