Attached files
| file | filename |
|---|---|
| 8-K - 8-K - CarParts.com, Inc. | d655901d8k.htm |
 1
U.S. Auto Parts Network, Inc.
Leading online source for automotive aftermarket parts and repair information
Investor Presentation
January 10, 2014
Exhibit 99.1 |
 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 provided by
Section 21E of the Securities Exchange Act of 1934, as amended, and Section
27A of the Securities Act of 1933. We refer all of you to the risk
factors contained in US Auto Parts Annual Report on Form 10-K and
quarterly reports on Form 10-Q filed with the Securities and Exchange
Commission, for more detailed
discussion
on
the
factors
that
can
cause
actual
results
to
differ
materially from those projected in any forward-looking statements.
2 |
 3
Broad Auto Parts Product Offering
Body Parts
Engine Parts
Performance & Accessories
*Represents USAP online mix, **Source; AAIA Factbook
Research 21%
40%
39%
$15B
$15B
Revenue*
Overall Market**
$50B
Brake Discs
Catalytic
Converters
Radiators
Headers
Oxygen
Sensors
Alternators
Exhaust
Driveshaft
Fuel Injection /
Delivery
Lamps
Mirrors
Bumpers
Hoods
Tailgates
Doors
Grills
Wheels
Window
Regulators
Seat Covers
Car Covers
Floor Mats /
Carpeting
Cold Air
Intakes
Vent Visors
Tonneau
Covers
Nerf Bars
Bug Shields
Car Bras |
 4
Online sales of automotive parts and accessories continue to grow
Google has experienced a 6 year compound annual growth rate (“CAGR”) of
16% in queries for automotive parts Mobile year over year queries increased
50% and 80% for cellphones and tablets, respectively, for September 2013 YTD
Online Market is Vibrant and Growing
Aftermarket e-Commerce Overview
Source: Google
eBay Parts Sales Continue to Increase
Source: eBay filings, press releases
Google Queries for Parts Growing |
 5
Online penetration for auto parts has trailed penetration rates of other consumer
product categories for two reasons: 1)
Auto parts are traditionally bought by demographics that have lower internet
access rates We believe consumer buying will shift from offline to online as
mobile device penetration increases for these demographics 2)
Shopping for auto parts online can be difficult for consumers
The complexity required to buy an auto part online increases consumers concerns it
will not fit their vehicle Online
retailers
continue
to
make
improvements
to
online
shopping,
reducing
concerns
and
increasing
conversion
Size and Penetration of Online Automotive Parts
Aftermarket e-Commerce Overview
Low Automotive Online Sales Penetration
Automotive Aftermarket by Segment
Source: Morgan Stanley and Forrester Research
Source: AAIA
Estimate based on AAAI Fact book -
$85B in parts, $70B in labor
* Excludes eBay
Desire to Repair
High
Low
$155B
Do-It-For-Me
$45B
Do-It-Yourself
(USAP Target Market)
$3.1B-$4.0B
Online Sales*
High
Online penetration rates for
most consumer products
categories range from 4% to 6%
Online sales of automotive
parts significantly lag other
product categories
45%
27%
24%
24%
21%
19%
19%
18%
13%
12%
11%
10%
10%
9%
9%
8%
6%
5%
4%
3%
1% |
 6
Changes to Our Business
2012 -
2013
•
Traffic and revenue declined resulting from search
engine changes forcing us to consolidate websites
•
Gross margin compression from increased
competition
•
Cost reductions could not be eliminated fast enough
to keep up with gross profit dollar lost
Go Forward
•
Traffic is stabilizing and revenue from go forward
sales channels has turned slightly positive
•
Larger focus on Private Label business with
healthier margins at competitive prices
•
Cost reductions have now exceeded gross profit
dollars
loss
from
2012
–
2013
$0
$0
* FCF is defined as Adjusted EBITDA less CAPX |
 Product Assortment
•
Over 50% of product sales directly sourced from Asia
•
Transition away from lower margin stock ship
branded product while expanding private label mix
•
Broad assortment
Marketing
•
Over 10 million unique monthly visitors to our websites
•
Unique visitors more than two times higher then any
other auto parts retailer
•
Less than a $8 customer acquisition cost (“CAC”)
USAP has two main competitive advantages
•
Over 40,000 private label SKUs
•
Over 1.5M branded SKUs
Competitive Advantages |
 8
USAP’s ability to competitively price products while maintaining healthy
margins is a function of the Company’s ability to leverage its robust
private label supply chain. The Company is working to increase margins by
shifting its product mix toward increased private label offerings
-
current
margins
range
from
29%
-
31%
The Company sources product directly from over 200 factories in Asia
USAP’s Supply Chain Creates Pricing Advantage
Margin %
In-Stock
Private Label
(Asia Sourced)
Branded
(U.S. Sourced)
40% -
70%
25% -
40%
10% -
25%
Drop Shipped
Current Mix
53%
47%
Current Mix
63%
37%
75%
25%
Goal
70%
30%
Goal |
 9
US Auto Parts Dominant Reach-
Largest
Pure Play Internet Retailer
(some overlap of monthly visitors across websites)
USAP’s traffic is 2x larger than any
other pure play online auto parts seller
0
2,000
4,000
6,000
8,000
10,000
12,000
USAP traffic includes traffic from USAP continued sales channels and WAG since the
acquisition Competitive sites’ traffic based on Compete September 2013 reports
|
 10
Revenue
100%
Gross Margins
29% -
31%
Variable OPEX Costs
15%
Fixed Costs
0%
Incremental Flow Thru
14% -
16%
Growth and Profitability
Incremental Flow Thru |
 11
Our business model has significant cost leverage as revenues grow
•
Excludes stock based compensation, depreciation and amortization
•
For every incremental year required to achieve growth levels, fixed expenses
increase $1.0M or 3% Financial Sensitivity
Base
10%
20%
30%
40%
Revenue
$250
$275
$300
$325
$350
Gross Margin %
Variable:
Fulfillment
3.2%
3.2%
3.2%
3.2%
3.2%
Marketing
9.3%
9.3%
9.3%
9.3%
9.3%
Technology
0.7%
0.7%
0.7%
0.7%
0.7%
G&A
1.8%
1.8%
1.8%
1.8%
1.8%
Total Variable
14.9%
14.9%
14.9%
14.9%
14.9%
Fixed:
Fulfillment
2.5%
2.2%
2.0%
1.9%
1.8%
Marketing
4.0%
3.6%
3.3%
3.0%
2.8%
Technology
1.2%
1.1%
1.0%
0.9%
0.9%
G&A
4.0%
3.6%
3.3%
3.1%
2.9%
Total Fixed
11.6%
10.6%
9.7%
9.0%
8.3%
Adjusted EBITDA %
Adjusted EBITDA $
$6 – $11
$10 – $15
$13 – $19
$17 – $23
$20 – $27
29.0% – 31.0%
29.0% – 31.0%
29.0% – 31.0%
29.0% – 31.0%
29.0% – 31.0%
2.4% – 4.4%
3.5% – 5.5%
4.4% – 6.4%
5.1% – 7.1%
5.8% – 7.8% |
 12
AutoMD –
Addressing the DIFM Market |
 13
$153.4
$176.3
$262.3
$327.1
$304.0
$257.9
2008
2009
2010
2011
2012
TTM Q3-13
$5.2
$13.5
$19.5
$16.3
$9.4
$3.2
2008
2009
2010
2011
2012
TTM Q3-13
Sales & Adjusted EBITDA
Consolidated Sales
1
Consolidated Adjusted EBITDA
2
($ In Millions)
($ In Millions)
1.
2.
Adj. EBITDA Margin
3%
5%
8%
7%
3%
1%
JC Whitney was acquired in Aug 2010 adding revenue of $39.1M in 2010 and $83.4M in 2011. Amounts
not separately disclosed after 2011. 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 restructuring costs and other one time charges of $0.4M, $5.8M, $8.0M, $0.7M and $0.8M
in 2009, 2010, 2011, 2012 and TTM Q3-13, respectively, stock based compensation of
$2.9M, $3.3M, $2.7M, $2.6M, $1.7M and $1.3M in 2008, 2009, 2010, 2011, 2012 and TTM Q3-13
respectively. There were no restructuring or other one time charges in 2008. |
 14
Adjusted EBITDA
Thirteen Weeks Ended
Thirty-Nine Weeks Ended
September 28
September 29
September 28
September 29
2013
2012
2013
2012
Net loss
(1,399)
$
(2,711)
$
(14,309)
$
(5,195)
$
Interest expense, net
285
118
696
500
Income tax provision
1
41
91
293
Amortization of intangible
assets 86
331
299
1,012
Depreciation and amortization expense
2,472
3,785
9,736
11,533
EBITDA
1,445
1,564
(3,487)
8,143
Share-based compensation expense
315
450
1,065
1,408
Impairment loss on property and
equipment -
-
4,832
-
Impairment loss on
intangible assets -
-
1,245
-
Loss on debt
extinguishment -
-
-
360
Restructuring costs
-
640
723
640
Adjusted EBITDA
1,760
$
2,654
$
4,378
$
10,551
$
(Non-GAAP
Financial
Measure
–
in
thousands) |
 15
Consolidated Statements of Comprehensive Operations
Thirteen Weeks Ended
Thirty-Nine Weeks Ended
September 28
September 29
September 28
September 29
2013
2012
2013
2012
Net sales
61,724
$
73,014
$
195,018
$
241,169
$
Cost of sales
(1)
43,817
50,121
138,360
167,307
Gross profit
17,907
22,893
56,658
73,862
Operating expenses:
Marketing
9,385
12,909
31,762
39,337
General and administrative
4,261
4,926
13,626
15,510
Fulfillment
4,217
5,685
14,589
17,242
Technology
1,204
1,590
4,035
4,826
Impairment loss on property and equipment
-
-
4,832
-
Impairment loss on intangible assets
-
-
1,245
-
Amortization of intangible assets
86
331
299
1,012
Total operating expenses
19,153
25,441
70,388
77,927
Loss from operations
(1,246)
(2,548)
(13,730)
(4,065)
Other income (expense):
Other income (expense), net
135
(1)
214
34
Interest expense
(287)
(121)
(702)
(511)
Loss on debt extinguishment
-
-
-
(360)
Total other expense, net
(152)
(122)
(488)
(837)
Loss before income tax provision
(1,398)
(2,670)
(14,218)
(4,902)
Income tax provision
1
41
91
293
Net loss
(1,399)
(2,711)
(14,309)
(5,195)
Other comprehensive income, net of tax:
Foreign currency translation adjustments
6
11
31
35
Unrealized gains on investments
2
1
4
30
Total other comprehensive income
8
12
35
65
Comprehensive loss
(1,391)
$
(2,699)
$
(14,274)
$
(5,130)
$
Basic and diluted net loss per share
(0.04)
$
(0.09)
$
(0.44)
$
(0.17)
$
Shares used in computation of basic and
diluted net loss per share
33,218
30,854
32,493
30,716
(1)
Excludes depreciation and amortization expense which is included in
marketing, general and administrative and fulfillment expense. (Unaudited, in
Thousands, Except Per Share Data) |
 16
Consolidated Balance Sheets
(Unaudited in Thousands, Except Par and Per Share Liquidation Value)
September 28
December 29
2013
2012
ASSETS
Current assets:
Cash and cash equivalents
1,099
$
1,030
$
Short-term investments
93
110
Accounts receivable, net of allowances of $245 and $221
at September 28, 2013 and December 29, 2012, respectively
5,044
7,431
Inventory
40,177
42,727
Deferred income taxes
54
39
Other current assets
3,716
4,176
Total current assets
50,183
55,513
Property and equipment, net
20,408
28,559
Intangible assets, net
1,683
3,227
Other non-current assets
1,472
1,578
Total assets
73,746
$
88,877
$
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
20,505
$
28,025
$
Accrued expenses
6,820
10,485
Revolving loan payable
8,299
16,222
Current portion of capital leases payable
285
70
Other current liabilities
3,873
4,738
Total current liabilities
39,782
59,540
Capital leases payable, net of current portion
9,558
70
Deferred income taxes
437
314
Other non-current liabilities
2,175
1,309
Total liabilities
51,952
61,233
Commitments and contingencies
Stockholders' equity:
Series A convertible preferred stock, $0.001 par value; $1.45
per share liquidation value or aggregate of $6,017; 4,150
shares authorized; 4,150 and 0 shares issued and outstanding
at September 28, 2013 and December 29, 2012, respectively
4
-
Common stock, $0.001 par value; 100,000 shares authorized;
33,219 shares and 31,128 shares issued and outstanding
at September 28, 2013 and December 29, 2012, respectively
33
31
Additional paid-in capital
168,263
159,781
Common stock dividend distributable
60
-
Accumulated other comprehensive income
419
384
Accumulated deficit
(146,985)
(132,552)
Total stockholders' equity
21,794
27,644
Total liabilities and equity
73,746
$
88,877
$
|
 Thank You
17 |