Carparts.com, Inc. · NASDAQ:PRTS
Carparts.com — U.S. Auto Parts Network — Q2 2016 Earnings Presentation
32 slides from Carparts.com's earnings presentation, Aug 11, 2016
Slide 1: Safe Harbor
Safe Harbor 1 This presentation contains “forward-looking” statements, within the meaning of the federal securities laws, that are based on our management’s beliefs and assumptions and on information currently available to management. Forward-looking statements include information concerning our pos
Slide 2: Company Overview
Company Overview US Auto Parts is a leading pure-play internet retailer of aftermarket auto parts We operate online sites, marketplaces and wholesale channels focused on the do-it-yourself (DIY) customer Offer over 1 million SKUs of high quality private label and branded aftermarket products Reach ~
Slide 3: How have we been performing
How have we been performing We experienced positive Y/Y traffic growth in the 2nd quarter and that trend is continuing in the 3rd quarter Our private label business continued its strong growth Gross Margin continued to expand above 30%, driven by higher product mix of private label SKUs Adjusted EBI
Slide 4: Customer Value Proposition
Price & Product Availability: The Two Most Important Factors for DIY Customers Customer Value Proposition 4 Source: Aftermarket Business World, Feb 2014 Low Cost Products Cost-conscious customers are able to purchase over 55,000 products at a significant cost savings because we are able to identify
Slide 5: Aftermarket Auto Parts Sales Benefits From Macro Trends
Aftermarket Auto Parts Sales Benefits From Macro Trends 5 Source: Miles Traveled – U.S. Department of Transportation; Gas Prices – U.S. Energy Information Administration. IHS Lower Gas Prices Result in Increased Auto Miles Traveled Average Age of Light Vehicles on the Road Continues to Increase 10.0
Slide 6: Online Adoption of Aftermarket Auto Parts has Favorable Trends
Online Adoption of Aftermarket Auto Parts has Favorable Trends 6 Increased online/mobile adoption, strong search demand for automotive related searches Drivers are increasingly relying on Google to search for parts and service information Source: : Google Relative Google Volume Queries Increased in
Slide 7: Online DIY Market is Growing Faster than Brick and Mortar
Online DIY Market is Growing Faster than Brick and Mortar 7 2012 – 2020P Online CAGR: 20.2% DIY Online Penetration The online portion of the DIY market is expected to double in the next four year1 Management estimates by 2020 Online DIY could reach 22% of the total DIY Market (1) Based on management
Slide 8: How We Go To Market: Channels & Percent of Revenue
How We Go To Market: Channels & Percent of Revenue1 8 91% Offline/Wholesale: Products distributed directly to commercial customers, mostly collision repair shops. Also our Kool-Vue™ branded products sold to wholesale distributors. 9% Based on estimates using TTM Q2-16 eCommerce Websites: Network of
Slide 9: We Address the Market with an Expansive Product Offering
We Address the Market with an Expansive Product Offering Over 1 Million SKUs Across Several Categories 9 Brake Discs Catalytic Converters Radiators Headers Oxygen Sensors Alternators Exhaust Driveshaft Fuel Injection / Delivery Lamps Mirrors Bumpers Hoods Tailgates Doors Grills Wheels Window Regulat
Slide 10: USAP Supply Chain Creates Pricing Advantage
USAP Supply Chain Creates Pricing Advantage 10 USAP has built a vertically integrated e-commerce business that also uses low/no capital intensive branded product to identify demand, drive traffic and supplement products that have not been private labeled Importer Auto Service Center Brand Warehouse
Slide 11: Projected Margin Profile
Private Label Branded Total FY-15 Growth Rate1 17% (9%) 6% Projected Revenue Mix 65% 35% 100% Projected Gross Margins 34% - 36% 19% - 21% 29% - 31% Projected Variable OPEX Costs 16% - 17% 11% - 12% 15% - 16% Incremental Fixed Cost 0% 0% 0% Incremental Flow Thru 17% - 20% 7% - 10% 13% - 16% Projected
Slide 12: Competitive Landscape
Competitive Landscape Online Traffic Volume Comparison 12 Monthly Visitors¹ Competitor sites’ traffic based on Compete using the average monthly traffic for Q2-16 Monthly Visitors for US Auto Parts is average monthly traffic for Q2-16 Our long domain history and quality content drives 2x as many mon
Slide 13: Ad Spend Contributing to Improved Profitability
Ad Spend Contributing to Improved Profitability 13 We are becoming less dependant on organic search for revenue generation and project it to be ~14% of overall revenues in FY-16 Center 1 1 FY-16 EBITDA is the midpoint of Management’s guidance of $13.0 - $15.0M 2See Appendix for reconciliation of Adj
Slide 14: Ad Spend Contributing to Improved Profitability
Ad Spend Contributing to Improved Profitability (JS: NASDAQ:PRTS > We are becoming less dependant on organic search for revenue generation and project it to be ~14% of overall revenues in FY-16 100% 16 90% aa 80% 2 70% aE 4 = 3 10 £ E 60x : B 50% 8 S Pa] 5 40% 6 & a R 30% i 20% 2 10% C 0% - FY-13 FY
Slide 15: Key Stats: PRTS (NASDAQ) – Consolidated
Key Stats: PRTS (NASDAQ) – Consolidated 15 Data sources: Yahoo! Finance, S&P Capital IQ, company filings. Does not include 4.1M preferred shares Based on common shares outstanding As of July 2, 2016. Trading Data (@ August 8, 2016) Stock Price $3.79 52 Wk. High/Low $4.49/1.87 Avg. Daily Vol. (3 mo.)
Slide 16: Increased Private Label Penetration tracks to Margin & Adjusted EBITDA Improvement
Increased Private Label Penetration tracks to Margin & Adjusted EBITDA Improvement 16 Private Label continues to be a major focus of our business Our ability to grow our overall private label business has a positive impact to our overall margin and adjusted EBITDA 1See Appendix for reconciliation of
Slide 17: Year Stacked Private Label Quarterly Comp Sales Trend
2 Year Stacked Private Label Quarterly Comp Sales Trend1 17 1 Comparable net sales was calculated by excluding $2.0M in private label sales related to the final week of Q4-14, as well as $1.7M, $1.4M, $0.8M and $0.5M in sales related to the West Coast 0Wholesale operations from Q1-14, Q2-14, Q3-14 a
Slide 18: Financial Highlights – Q2-16
Financial Highlights – Q2-16 Total revenue $78.0M Total sales up 2.1% Gross Margin expansion of 320 basis points over prior year Adjusted EBITDA was 5.2% of net sales or $4.0M . A 129% increase over prior year Net Income $1.3M vs. net loss of ($0.6M) in the prior year $2M in cash with no borrowings
Slide 19: Grew $9M to $2.1M Cash with No Revolver Debt
Q2-15 Net Debt [cash less revolver debt] of ($7.0M) Grew $9M to $2.1M Cash with No Revolver Debt 19 Net Revolver Debt Q2-2015 Adj. EBITDA Less Capital Costs Net A/P Improvement Inventory Reduction Other Net Working Capital Q2 - 2016 Cash Position (no revolver debt) $6.9 $2.7 $0.8 $1.3 $2.1 ($7.0) ($
Slide 20: Key Business Metrics Improvement Over Last Five Quarters
Key Business Metrics Improvement Over Last Five Quarters 20 Private Label continues to be a major focus of our business 20 Y/Y BPS Change Y/Y BPS Change Q2-16 30.4% 3.2% Q2-16 65% 5% Q1-16 30.4% 2.3% Q1-16 67% 4% Q4-15 29.6% 2.9% Q4-15 63% 5% Q3-15 29.7% 2.6% Q3-15 60% 7% Q2-15 27.2% 0.7% Q2-15 60%
Slide 21: Financial Performance
Financial Performance 21 Excludes one time write downs of $6.1 and $0.9M for FY-13 and FY-14, respectively Non-GAAP financial measure EBITDA consists of net income before (a) interest expense, net; (b) income tax provisions; (c) amortization of intangible assets; (d) depreciation and amortization. A
Slide 22: Strong EBITDA Growth Trends for U.S. Auto Parts
Strong EBITDA¹ Growth Trends for U.S. Auto Parts 22 Non-GAAP financial measure EBITDA consists of net income before (a) interest expense, net; (b) income tax provisions; (c) amortization of intangible assets; (d) depreciation and amortization. Adjusted EBITDA excludes Stock based compensation, restr
Slide 23: Key Takeaways
Key Takeaways A leading pure-play internet retailer of aftermarket auto parts $6.7 billion on-line DIY market anticipated to nearly double by 20202 ~10 million monthly website visitors – more than double next competitor Transitioning to a higher mix of private label products to drive increased conve
Slide 24: Key Takeaways
Key Takeaways AUTOPARTS" NASDAQ:PRTS > A leading pure-play internet retailer of aftermarket auto parts m Revenue! > $6.7 billion on-line DIY market anticipated to Adj. EBITDA nearly double by 20202 > ~10 million monthly website visitors — more than double next competitor > Transitioning to a higher
Slide 25: Company History
Launched first internet site selling automotive Collision Line Launches a network of sites catered to various consumer segments Company begins significantly expanding its private label engine line JC Whitney completely integrated 1995 2000 2010 2005 2006 2011 Launches AutoMD / Acquires JC Whitney Ad
Slide 26: Experienced Leadership Team
Experienced Leadership Team 26 Aaron E. Coleman Chief Operating Officer Since April 2008 Former Executive Vice President of Operations and CIO from April 2008 - September 2010 Over 18 years of e-commerce experience Senior Vice President – Online Systems at Blockbuster Inc. B.A. degree in Business Ad
Slide 27: Yearly Adjusted EBITDA Reconciliation
Yearly Adjusted EBITDA Reconciliation 27 Non-GAAP financial measure EBITDA consists of net income before (a) interest expense, net; (b) income tax provisions; (c) amortization of intangible assets; (d) depreciation and amortization. Adjusted EBITDA excludes stock based compensation, restructuring co
Slide 28: Quarterly Adjusted EBITDA Reconciliation
Quarterly Adjusted EBITDA Reconciliation 28 Non-GAAP financial measure EBITDA consists of net income before (a) interest expense, net; (b) income tax provisions; (c) amortization of intangible assets; (d) depreciation and amortization. Adjusted EBITDA excludes stock based compensation, restructuring
Slide 29: Projected FY-16 Adjusted EBITDA reconciliation
Projected FY-16 Adjusted EBITDA reconciliation 29 Non-GAAP financial measure EBITDA consists of net income before (a) interest expense, net; (b) income tax provisions; (c) amortization of intangible assets; (d) depreciation and amortization. Adjusted EBITDA excludes Stock based compensation (in thou
Slide 30: Our Business Model Projects Significant Cost Leverage as Revenues Grow
Our Business Model Projects Significant Cost Leverage as Revenues Grow Financial Sensitivity 30 For every incremental year required to achieve growth levels, fixed expenses projected to increase $1.0M or 3%. Excludes stock based compensation, depreciation and amortization. 2015 5% 10% 20% 30% 40% Re
Slide 31: Key Avenues for Growth – Increase Customer Lifetime Value
Increased customer LTV would result in greater mix of traffic from both direct-to-website and paid channels, and less dependence on organic search Key Avenues for Growth – Increase Customer Lifetime Value 31 Gross Profit per Transaction Average Order Size Repeat Purchase Conversion Increased Traffic
Slide 32: Key Avenues for Growth – Increase Customer Lifetime Value
Key Avenues for Growth — AUTOPARTS: Increase Customer Lifetime Value NASDAQ:PRTS Gross Profit per Average Order Repeat Purchase Conversion = _ Increased Traffic Transaction Size + emicient sourcing serthejob + Easytodo business | | + Easytofnd Product + We anicpate strategy + Cross-sell + Improved s
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