On October 29, 2024, CarParts.com Inc (PRTS, Financial) released its 8-K filing detailing its financial performance for the third quarter ended September 28, 2024. CarParts.com Inc, a leading eCommerce provider of automotive parts and accessories, reported a decline in net sales but highlighted improvements in gross margin.
Performance and Challenges
CarParts.com Inc reported net sales of $144.8 million for Q3 2024, a 13% decrease compared to the same quarter last year. This decline was attributed to strategic price increases aimed at attracting higher-value customers, adverse consumer conditions, and one-time impacts from external factors such as hurricanes Helene and Milton. Despite these challenges, the company managed to improve its gross margin by 230 basis points to 35.2%, up from 32.9% in the previous year.
Financial Achievements
The company's gross profit for the quarter was $51.0 million, down from $54.8 million in the year-ago period. However, the improvement in gross margin is significant for the Vehicles & Parts industry, as it indicates better cost management and pricing strategies. The company also reported a net loss of $10.0 million, compared to a net loss of $2.5 million in the same quarter last year, reflecting the impact of increased operating expenses and external challenges.
Key Financial Metrics
CarParts.com Inc's total operating expenses increased to $60.9 million from $57.7 million in the previous year. The company's cash balance stood at $38.1 million as of September 28, 2024, with no revolver debt, compared to $51.0 million at the end of the previous fiscal year. Adjusted EBITDA was reported at a loss of $1.2 million, down from a positive $3.0 million in the year-ago quarter.
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Net Sales | $144.8 million | $166.9 million |
| Gross Profit | $51.0 million | $54.8 million |
| Net Loss | ($10.0) million | ($2.5) million |
| Adjusted EBITDA | ($1.2) million | $3.0 million |
Management Commentary
“Over the last 12 months, we have been working on re-platforming carparts.com to increase performance and shorten our development cycles. I’m proud to announce that carparts.com is now on a best-in-class cloud-based infrastructure which allows us to roll out new features faster than ever. Our OE premium brands are up 24% YOY, our European brands are up 23% YOY, and finally, our wholesale commercial sales channel, excluding the impact of our Vegas move, is up mid-single digits,” said David Meniane, CEO.
Analysis and Outlook
CarParts.com Inc's strategic initiatives, including partnerships and platform enhancements, are showing promising early results. However, the company faces ongoing challenges from external factors and a competitive market environment. The narrowing of full-year net revenue guidance to $595 million to $600 million reflects these challenges, though the company remains optimistic about its gross margin outlook.
Overall, while CarParts.com Inc's revenue fell short of analyst estimates, the improvement in gross margin and strategic initiatives could position the company for future growth in the automotive aftermarket industry.
Explore the complete 8-K earnings release (here) from CarParts.com Inc for further details.
