U.S. Auto Parts Network reports loss for quarter and full year

by | Mar 8, 2019 | 0 comments

Automotive aftermarket online seller U.S. Auto Parts Network, Inc., has reported a drop in sales, profitability, and margin for Q4 and full year ended December 29, 2018.

All information and data are from continuing operations, which exclude the AutoMD operating segment unless specifically noted.

Highlights

Fourth Quarter 2018 Highlights vs. Year-Ago Quarter

  • Net sales were $64.6 million compared to $68.5 million.
  • Gross margin was 25.6% compared to 30.3%.
  • Net loss was $4.5 million, or $(0.13) per share, compared to $4.1 million or $(0.12) per diluted share.
  • Adjusted EBITDA (a non-GAAP measure defined below) was $0.7 million compared to $2.8 million.
  • Ended the quarter with no revolver debt.

Full Year 2018 Highlights vs. 2017

  • Net sales were $289.5 million compared to $303.4 million.
  • Gross margin was 27.2% compared to 29.6%.
  • Net loss was $4.9 million, or $(0.14) per share, compared to net income of $24.6 million or $0.62 per diluted share.
  • Adjusted EBITDA was $10.4 million compared to $14.2 million.

Management Commentary

“U.S. Auto Parts has a rich history of providing consumers with affordable aftermarket auto parts, be it through the company’s robust e-commerce platform or its third-party online marketplace partners,” said Lev Peker, CEO of U.S. Auto Parts. “We are also uniquely positioned in an online industry sector that is expected to more than double by 2023 as consumers continue to shift their auto parts shopping online. We have strong assets in place, a highly-efficient supply chain and over 1.5 million SKUs of high-quality private label and branded products to serve this growing consumer base.”

“U.S. Auto Parts struggled in 2018, and the company’s results have been disappointing to everyone. However, having assumed the leadership role just a few months ago, I have already identified multiple opportunities designed to return U.S. Auto Parts to profitable revenue growth, particularly within our e-commerce channel. This will require a reallocation of resources and incremental investments in personnel, technology and marketing strategies in 2019, along with a better utilization of the millions of consumer data points we generate every month.”

“We are in the early stages of developing and deploying these new initiatives, and we will likely have to take a step back before moving forward. However, we expect to begin realizing some of the benefit from these initiatives towards the end of 2019. Although we have plenty of work ahead, we have every expectation of growing revenue in 2019 and delivering positive adjusted EBITDA. The opportunities ahead for U.S. Auto Parts are just beginning, and I look forward to leading the team and all stakeholders into this next chapter of growth.”

Fourth Quarter 2018 Financial Results

Net sales in the fourth quarter of 2018 were $64.6 million compared to $68.5 million in the year-ago quarter. The decline was largely driven by a decrease in marketplace sales with one of the company’s channel partners, and a 5% 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 fourth quarter of 2018 was $16.6 million compared to $20.8 million in the year-ago quarter. As a percentage of net sales, gross profit was 25.6% compared to 30.3%. The decrease was primarily driven by costs associated with port and carrier fees from the customs issue as well as increased freight costs.

Total operating expenses in the fourth quarter were $21.3 million compared to $20.2 million in the fourth quarter of last year. As a percentage of net sales, operating expenses increased to 32.9% compared to 29.4% in the year ago quarter with the increase primarily driven by costs associated with executive management changes.

Net loss in the fourth quarter was $4.5 million, or $(0.13) per diluted share, compared to a net loss of $4.1 million or $(0.12) per diluted share in the year-ago period.

Adjusted EBITDA in the fourth quarter of 2018 was $0.7 million compared to $2.8 million in the year-ago quarter, with the decrease was primarily driven by the aforementioned decline in marketplace sales and lower traffic to the Company’s e-commerce sites, along with lower in-stock rates due to the customs issue.

At December 29, 2018, cash and cash equivalents totaled $2.0 million compared to $2.9 million at December 30, 2017. The Company also had no revolver debt at each of December 29, 2018 and December 30, 2017.

Full Year 2018 Financial Results

Net sales in 2018 were $289.5 million compared to $303.4 million in 2017.

Gross profit in 2018 was $78.7 million compared to $89.7 million in 2017. As a percentage of net sales, gross profit was 27.2% compared to 29.6%.

Total operating expenses in 2018 were $83.7 million compared to $85.0 million in 2017. As a percentage of net sales, operating expenses increased to 28.9% compared to 28.0% in 2017.

Net loss in 2018 was $4.9 million or $ (0.14) per share, compared to net income of $24.6 million or $0.62 per share in the year-ago period.

Adjusted EBITDA in 2018 was $10.4 million compared to $14.2 million in 2017.

The conference call on the results is available for replay via the investor relations section of the company’s website at www.usautoparts.net.

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