Market Overview

U.S. Auto Parts Reports First Quarter 2019 Results

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CARSON, Calif., May 9, 2019 /PRNewswire/ -- U.S. Auto Parts Network, Inc. (NASDAQ:PRTS), one of the largest online providers of aftermarket automotive parts and accessories, is reporting results for the first quarter ended March 30, 2019.

U.S. Auto Parts logo (PRNewsfoto/U.S. Auto Parts Network, Inc.)

First Quarter 2019 Highlights vs. Year-Ago Quarter

  • Net sales were $74.7 million compared to $78.4 million.
  • Gross margin was 26.9% compared to 29.6%.
  • Net loss was $3.6 million or $(0.10) per share, compared to net income of $0.6 million or $0.01 per share.
  • Adjusted EBITDA (a non-GAAP measure defined below) was $(0.1) million compared to $4.3 million.
  • Ended the quarter with no revolver debt.
  • Conversion rate increased 30 basis points to 2.6%.

Management Commentary

"During the first quarter, we began to lay the foundation to return U.S. Auto Parts to profitable revenue growth," said Lev Peker, CEO of U.S. Auto Parts. "I took over the leadership position in January, and we have already begun to rebuild and strengthen our team with a new chief marketing officer, chief legal officer, and chief operating and financial officer, all of whom bring unique qualifications and skillsets to U.S. Auto Parts. We have also brought in critical personnel to execute our new growth strategy, including a new user experience team, SEM and content teams, and retention marketing teams.

"We began to deploy various strategic initiatives during the quarter, including the consolidation of multiple websites and marketplace stores. As mentioned on our last quarterly update, we want to focus our resources on fewer properties to do a better job at both growing and optimizing these sites, while ensuring each property has a unique and differentiated value proposition for the customer.

"Subsequent to the quarter, in an effort to reduce shipping times, we signed a new lease for a 125,000 square foot distribution center in Las Vegas, Nevada. We expect this new facility to go live in September and will enable us to provide two-day delivery to 93% of the country.

"Although we have begun to take the necessary steps to return U.S. Auto Parts to growth, there is still much work to be done, particularly with improving our in-stock rates as we continue to be impacted by prior management decisions pertaining to the customs issue. Nevertheless, we remain committed to achieving revenue growth and positive adjusted EBITDA in 2019, and continue to expect the benefit of our various initiatives to materialize as we exit the year."

First Quarter 2019 Financial Results

Net sales in the first quarter of 2019 were $74.7 million compared to $78.4 million in the year-ago quarter. The decline was largely driven by a 6% decrease in e-commerce sales attributable to a reduction of traffic and lower in-stock rates resulting from the Company's customs issue.

Gross profit in the first quarter of 2019 was $20.1 million compared to $23.2 million in the year-ago quarter. As a percentage of net sales, gross profit was 26.9% compared to 29.6%. The decrease was primarily driven by increased freight along with costs associated with port and carrier fees from the customs issue.

Total operating expenses in the first quarter were $23.6 million compared to $21.9 million in the first quarter of last year. As a percentage of net sales, operating expenses increased to 31.5% compared to 27.9% in the year ago quarter with the increase primarily driven by employee transition costs, increased marketing spend and investments in marketing platforms and employees.

Net loss in the first quarter was $3.6 million, or $(0.10) per share, compared to net income of $0.6 million or $0.01 per share in the year-ago period.

Adjusted EBITDA in the first quarter of 2019 was $(0.1) million compared to $4.3 million in the year-ago quarter, with the decrease primarily driven by lower traffic to the Company's e-commerce sites, along with lower in-stock rates due to the customs issue.

At March 30, 2019, cash and cash equivalents totaled $4.8 million compared to $2.0 million at December 29, 2018. The Company also had no revolver debt at each of March 30, 2019 and December 29, 2018.

Key Operating Metrics














Q1 2019


Q1 2018


Q4 2018


Conversion Rate 1



2.60

%


2.30

%


2.52

%

Customer Acquisition Cost 1


$

7.33


$

7.31


$

7.33


Unique Visitors (millions) 1



18.2



20.1



16.5


Number of Orders - E-commerce only (thousands)



466



460



415


Number of Orders - Online Marketplace (thousands)



444



441



346


Total Number of Internet Orders (thousands)



910



901



761


Revenue Capture (% Sales) 2



87.5

%


88.2

%


86.7

%

Average Order Value - Total Internet Orders


$

82


$

85


$

85


___________________

1.

Excludes online marketplaces and media properties (e.g. AutoMD).

2.

Revenue capture is the amount of actual dollars retained after taking into consideration returns, credit card declines and product fulfillment and excludes online marketplaces and media properties (e.g. AutoMD).



Conference Call

U.S. Auto Parts will conduct a conference call today at 5:00 p.m. Eastern time (2:00 p.m. Pacific time) to discuss its financial results for the first quarter ended March 30, 2019.

The Company's CEO Lev Peker and CFO/COO David Meniane will host the conference call, followed by a question and answer period.

Date: Thursday May 9, 2019
Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time)
Toll-free dial-in number: 877‑407‑9039
International dial-in number: 201‑689‑8470
Conference ID: 13689562

Please call the conference telephone number 5‑10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios at 1‑949‑574‑3860.

The conference call will be broadcast live and available for replay via the investor relations section of the Company's website at www.usautoparts.net.

A telephone replay of the conference call will also be available on the same day through May 23, 2019.

Toll-free replay number: 844‑512‑2921
International replay number: 412‑317‑6671
Replay ID: 13689562

About U.S. Auto Parts Network, Inc.

Established in 1995, U.S. Auto Parts is a leading online provider of automotive aftermarket parts, including collision, engine, and performance parts and accessories. Through the Company's network of websites, U.S. Auto Parts provides consumers with a broad selection of competitively priced products, all mapped by a proprietary database with applications based on vehicle makes, models and years. U.S. Auto Parts' flagship websites include www.autopartswarehouse.com, www.carparts.com, and www.jcwhitney.com, as well as the Company's corporate website at www.usautoparts.net.

U.S. Auto Parts is headquartered in Carson, California.

Non-GAAP Financial Measures

Regulation G, and other provisions of the Securities Exchange Act of 1934, as amended, define and prescribe the conditions for use of certain non-GAAP financial information. We provide "Adjusted EBITDA," which is a non-GAAP financial measure. Adjusted EBITDA consists of net income before (a) interest expense, net; (b) income tax provision; (c) depreciation and amortization expense; (d) amortization of intangible assets; (e) share-based compensation expense; (f) costs associated with our customs issue; and (g) costs associated with the executive transitions.

The Company believes that this non-GAAP financial me

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