CarParts.com, Inc. Q1 FY2025 earnings call

• Tariffs: Less than a quarter of private label products imported from China, two-thirds from Taiwan. Team working on mitigating impacts via pre-buying inventory, vendor cost concessions, pricing adjustments, etc. - 2025 performance: Soft consumer demand, bad weather, increased cost per click, falling part prices affected first quarter. But second quarter first six weeks saw double-digit revenue growth y-o-y with lower marketing spend. Repeat customers, mobile app traffic, and high margin fee income are paying off. - Strategic initiatives: Scaled and optimized vertically integrated supply chain with mid-50s percent product margin. Invested in fitment-based proprietary catalog with 83,000 private label SKUs and 1.5 million premium branded SKUs. Fully replatformed website with mobile-first experience. Onboarded over 700 new commercial customers in wholesale.

In the first quarter, revenues were $147.4 million, down 11% from $166.3 million in the prior year. Gross profit was $47.3 million, down 12% compared to the prior year, with a gross margin of 32.1% (slightly down from 32.4% in the prior year period). The decline in gross margin was primarily due to increased outbound transportation costs. Regarding product segments, less than one-quarter of private label products are imported from China, and approximately two-thirds from Taiwan. Collision parts account for approximately two-thirds of purchases and are primarily sourced from Taiwan, which is not currently subject to the same high tariffs as products from China.

• Continue to expand product offering to attract new customers and increase average basket size. - Monetize 100 million annual visits and customer list with high-margin fee income. - Scale B2B offering with last-mile transportation and higher touch sales in key markets. - Grow mobile app business to diversify marketing mix and enhance customer lifetime value. - Maintain strong balance sheet with focus on managing cash flow and inventory levels while navigating tariff uncertainty.

• Tariffs: Uncertainty around final rates and applications. Less than a quarter of private label products from China, two-thirds from Taiwan. Tariffs expected to raise part prices. - Soft consumer demand: Impacted first quarter performance. - Weather: Bad weather in many parts of the country affected business. - Cost per click increases: Response to AI models taking share from traditional search. - Volatile prices: Need to navigate dynamic macroeconomic environment.

Q: Will you take questions related to the strategic alternatives process?

A: Today, we are not going to take questions related to our strategic alternatives process beyond what we announced on March 5. That process is ongoing and being overseen by our Board of Directors with the assistance of financial and legal advisers.