Release Date: March 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• CarParts.com Inc (NASDAQ:PRTS) achieved a gross profit margin of 33.4% for the year, which was near the upper end of their guidance.
• The company has scaled and optimized its vertically integrated supply chain, leading to an attractive product margin in the mid-50% range.
• CarParts.com Inc (NASDAQ:PRTS) expanded its nationwide direct-to-consumer fulfillment network, covering 98% of the population with 2-day shipping.
• The company launched a highly profitable B2B business with same and next-day last-mile delivery in North Florida, offering a contribution margin up to three times higher than e-commerce.
• CarParts.com Inc (NASDAQ:PRTS) fully re-platformed its website, enhancing the mobile-first user experience and generating 100 million annual visits.

Negative Points

• Revenues for the fourth quarter were down 15% from the previous year, and full-year revenues decreased by 13% compared to 2023.
• The company reported a GAAP net loss of $40.6 million for the year, significantly higher than the $8.2 million loss in 2023.
• Gross margin declined slightly from 33.9% in 2023 to 33.4% in 2024, primarily due to increased outbound transportation costs.
• CarParts.com Inc (NASDAQ:PRTS) faced significant pressures in its lighting and mirror business due to low-cost, non-compliant parts from China.
• The company incurred $6.4 million of elevated expenses outside of normal operations in 2024, which impacted financial performance.

Q & A Highlights

• Warning! GuruFocus has detected 4 Warning Signs with PRTS.

Q: Can you elaborate on the strategic alternatives process mentioned in the call? A: David Robson, Senior Vice President, stated that they are not commenting or taking questions related to the strategic alternatives process beyond what was announced on March 5th. The process is being overseen by the board of directors with assistance from financial and legal advisors.

Q: What were the main challenges faced by CarParts.com in 2024? A: David Robson highlighted that the economic environment was challenging for lower-income consumers, leading to a pullback in spending and deferral of auto repairs. Additionally, there was significant price compression and pressure from low-cost, non-compliant parts imported from China.

Q: How did CarParts.com perform financially in 2024? A: Ryan Lockwood, CFO, reported full-year revenues of $588.8 million, down 13% from 2023. Gross profit was $196.7 million with a gross margin of 33.4%. The company faced a GAAP net loss of $40.6 million, primarily due to lower gross profit.

Q: What strategic initiatives is CarParts.com focusing on for future growth? A: David Robson mentioned several initiatives, including expanding product offerings, monetizing website visits with high-margin fee income, scaling B2B offerings, growing the mobile app business, and maintaining a strong balance sheet.

Q: What are the expectations for 2025? A: Ryan Lockwood stated that due to the ongoing evaluation of strategic alternatives, the company is not providing guidance for 2025. However, they are focused on harvesting returns from strategic investments made in 2024.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.