In its Q3 2023 earnings call, CarParts.com announced its 15th consecutive quarter of year-over-year growth, with revenues reaching $167 million, marking a 1% increase from the previous year. Despite a slight dip in gross profit due to higher outbound transportation costs and a change in product mix, the company maintained a strong financial stance, ending the quarter with $67 million in cash and no revolver debt. The call also highlighted the company's strategic priorities and revealed its confidence in reaching $1 billion in revenue without additional capital.
Key takeaways from the call:
- CarParts.com reported an adjusted EBITDA of $3 million, down from $6.3 million due to higher outbound freight costs and increased performance marketing spend. The company repurchased 245,000 shares during the quarter.
- The company's strategic priorities include e-commerce fundamentals, digital transformation, assortment and catalog, marketing and customer experience, innovation, and supply chain and logistics.
- CarParts.com announced the successful launch of its mobile app and the return of JC Whitney, underlining its focus on improving delivery speed and optimizing its supply chain and logistics operations.
- The company's GAAP net loss for the quarter was $2.5 million, compared to a net loss of $0.9 million in the prior year.
- CarParts.com is maintaining a disciplined capital allocation program, including share repurchases, and believes it has ample liquidity and no need to raise capital.
- The company expects digital transformation to impact cash and operating expenses by approximately $1 million to $2 million over the next 18 to 24 months.
- The company's inventory balance at the end of the quarter was $124 million, and it expects to continue building inventory for the peak selling season in late Q1 and Q2.
During the earnings call, CarParts.com executives discussed the potential impact of automotive labor strikes on their business, stating that while there may be little short-term effect, the long-term implications could lead to higher new car prices, potentially driving more consumers towards their services. The company is also focusing on driving growth on their own e-commerce site with the aim of reducing their marketplace mix on Amazon (NASDAQ:AMZN) and eBay (NASDAQ:EBAY), despite these platforms performing in line with growth.
The executives expressed confidence in their strategy and ability to achieve $1 billion in revenue without raising additional capital. They also mentioned plans to expand their assortment of products and brands to offset the impact of price deflation. The company's current financial health, including significant growth in units and profitability, a solid balance sheet, and no debt, supports their optimistic outlook.
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