CarParts.com, Inc.
For the period ended Dec 28, 2024. Filed Mar 26, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 26, 2025
PRTS$8.38+6.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-30; filed 2024-03-08.
0001378950-24-000034
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-28; filed 2025-03-26.
0001378950-25-000036
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 72 previous paragraphs and 74 current paragraphs.
45 unchanged; 22 reworded; 4 added; 3 removed; 2 previous and 3 current paragraphs rearranged.
Tables are not compared: 7 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (4)
Current report
Net sales decreased $86,883, or 12.9%, for fiscal year 2024 compared to fiscal year 2023 primarily driven by the continued challenging consumer environment and our re-pricing strategy to focus on higher value customers.
Current report
Operating expense decreased $1,913, or 0.8%, for fiscal year 2024 compared to fiscal year 2023. Operating expense as a percent of net sales increased 4.9% to 40.3% in fiscal year 2024, mainly attributable to investments in our business, such as brand and marketing investments and one-time costs related to the move to the new Las Vegas distribution center, in addition to an unfavorable marketing spend.
Current report
Total Other Income, Net
Current report
*Impairment of Long-Lived Assets.*We assess potential impairments whenever events or changes in circumstances indicate that the carrying value of our long-lived assets, or asset group, may not be recoverable. If an indicator of impairment exists, we review the recoverability of our long-lived assets by estimating the undiscounted future cash flows compared to the carrying value of such assets. An impairment loss will result when the carrying value of the asset group exceeds the undiscounted future cash flows of the asset group. Impairment losses will be recognized in operating results. No impairment charges were recorded for the fiscal years ended December 28, 2024 and December 30, 2023.
Removed paragraphs (3)
Previous report
Net sales increased $14,125, or 2.1%, for fiscal year 2023 compared to fiscal year 2022 primarily driven by continued demand.
Previous report
Operating expense increased $9,048, or 3.9%, for fiscal year 2023 compared to fiscal year 2022. The increase in operating expense was primarily driven by investments in our business, combined with higher advertising expense, partially offset by a decrease in fulfillment expense primarily due to an improvement in distribution center fulfillment costs.
Previous report
Total Other Income (Expense), Net
Reworded paragraphs (22)
Previous wording
We are a leading online provider of aftermarket auto parts, including replacement parts, hard parts, and performance parts and accessories. Our proprietary product database maps our SKUs to product applications based on vehicle makes, models and years. We principally sell our products to individual consumers through our flagship website atwww.carparts.com**,our app, and online marketplaces. Our corporate website is located atwww.carparts.com**/investor. The inclusion of our website addresses in this report does not include or incorporate by reference into this report any information on our websites.
Current wording
We are a leading online provider of aftermarket auto parts, including replacement parts, hard parts, and other parts and accessories. Our proprietary product database maps our SKUs to product applications based on vehicle makes, models and years. We principally sell our products to individual consumers through our flagship website atwww.carparts.com**,our app, and online marketplaces. Our corporate website is located atwww.carparts.com**/investor. The inclusion of our website addresses in this report does not include or incorporate by reference into this report any information on our websites.
Previous wording
1.Number of SKUs required to serve the market. The number of automotive SKUs has grown dramatically over the last several years. In today’s market, unless the consumer is driving a high volume produced vehicle and needs a simple maintenance item, the part they need is not typically on the shelf at a brick-and-mortar store. We believe our user-friendly flagship website, and app, provides customers with a favorable alternative to the brick-and-mortar shopping experience by offering a comprehensive selection of approximately 1,047,000 SKUs with detailed product descriptions, attributes and photographs combined with the flexibility of fulfilling orders using both drop-ship and stock-and-ship methods.
Current wording
1.Number of SKUs required to serve the market. The number of automotive SKUs has grown dramatically over the last several years. In today’s market, unless the consumer is driving a high volume produced vehicle and needs a simple maintenance item, the part they need is not typically on the shelf at a brick-and-mortar store. We believe our user-friendly flagship website, and app, provides customers with a favorable alternative to the brick-and-mortar shopping experience by offering a comprehensive selection of approximately 1,544,000 SKUs with detailed product descriptions, attributes and photographs combined with the flexibility of fulfilling orders using both drop-ship and stock-and-ship methods.
Previous wording
2.U.S. vehicle fleet expanding and aging. The average age of U.S. light vehicles, an indicator of auto parts demand, reached a new record-high of 12.5 years in 2023, according to the U.S. Auto Care Association. We believe an increasing vehicle base and rising average age of vehicles will have a positive impact on overall aftermarket parts demand because older vehicles generally require more repairs. In many cases we believe these older vehicles are driven by DIY car owners who are more likely to handle any necessary repairs themselves rather than taking their car to the professional repair shop.
Current wording
2.U.S. vehicle fleet expanding and aging. The average age of U.S. light vehicles, an indicator of auto parts demand, reached a new record-high of 12.6 years in 2024, according to the U.S. Auto Care Association. We believe an increasing vehicle base and rising average age of vehicles will have a positive impact on overall aftermarket parts demand because older vehicles generally require more repairs. In many cases we believe these older vehicles are driven by DIY car owners who are more likely to handle any necessary repairs themselves rather than taking their car to the professional repair shop.
Previous wording
3.Growth of online sales. The U.S. Auto Care Association estimated that overall revenue from online sales of auto parts and accessories would reach approximately $21 billion by 2025. Improved product availability, lower prices and consumers’ growing comfort with digital platforms are driving the shift to online sales. We believe that we are well positioned for the shift to online sales due to being a leading source for aftermarket automotive parts through our flagship website, app, and online marketplaces.
Current wording
3.Growth of online sales. The U.S. Auto Care Association estimated that overall revenue from online sales of auto parts and accessories would reach over $23 billion by 2026. Improved product availability, lower prices and consumers’ growing comfort with digital platforms are driving the shift to online sales. We believe that we are well positioned for the shift to online sales due to being a leading source for aftermarket automotive parts through our flagship website, app, and online marketplaces.
Previous wording
For fiscal year 2023, the Company’s operations generated net sales of $675,729, compared to $661,604 for fiscal year 2022, representing an increase of 2.1%. The Company incurred a net loss of $8,223 for fiscal year 2023 compared to a net loss of $951 for fiscal year 2022. The Company’s net loss before interest (income) expense, net, income tax provision, depreciation and amortization expense, amortization of intangible assets, share-based compensation expense ("Adjusted EBITDA"), was $19,687 in fiscal year 2023 compared to $26,113 in fiscal year 2022. Refer to the section below titled “Non-GAAP measures” for information regarding our use of Adjusted EBITDA and a reconciliation from net loss.
Current wording
For fiscal year 2024, the Company’s operations generated net sales of $588,846, compared to $675,729 for fiscal year 2023, representing a decrease of 12.9%. The Company incurred a net loss of $40,601 for fiscal year 2024 compared to a net loss of $8,223 for fiscal year 2023. The Company’s net loss before interest (income) expense, net, income tax provision, depreciation and amortization expense, amortization of intangible assets, share-based compensation expense, workforce transition costs, and distribution center costs ("Adjusted EBITDA"), was $(7,055) in
Previous wording
Net sales increased in fiscal year 2023 compared to fiscal year 2022 primarily driven by continued demand. Gross profit decreased by 0.6% to $229,406. Gross margin decreased 100 basis points to 33.9% in fiscal year 2023 compared to 34.9% in fiscal year 2022. The decrease in gross margin was primarily driven by unfavorable freight costs and a shift in product mix.
Current wording
Net sales decreased in fiscal year 2024 compared to fiscal year 2023 primarily driven by the continued challenging consumer environment and our re-pricing strategy to focus on higher value customers. Gross profit decreased by 14.2% to $196,739. Gross margin decreased 50 basis points to 33.4% in fiscal year 2024 compared to 33.9% in fiscal year 2023. The decrease in gross margin was primarily driven by unfavorable freight costs, partially offset by our re-pricing strategy.
Previous wording
Regulation G,“Conditions for Use of Non-GAAP Financial Measures,” and other provisions of the Exchange Act, as amended, define and prescribe the conditions for use of certain non-GAAP financial information. We provide EBITDA and Adjusted EBITDA, which are non-GAAP financial measures. EBITDA consists of net loss before (a) interest (income) expense, net; (b) income tax provision; (c) depreciation and amortization expense; and (d) amortization of intangible assets; while Adjusted EBITDA consists of EBITDA before share-based compensation expense.
Current wording
Regulation G,“Conditions for Use of Non-GAAP Financial Measures,” and other provisions of the Exchange Act, as amended, define and prescribe the conditions for use of certain non-GAAP financial information. We provide EBITDA and Adjusted EBITDA, which are non-GAAP financial measures. EBITDA consists of net loss before (a) interest (income) expense, net; (b) income tax provision; (c) depreciation and amortization expense; and (d) amortization of intangible assets; while Adjusted EBITDA consists of EBITDA before share-based compensation expense, workforce transition costs, and distribution center costs.
Previous wording
The Company believes that these non-GAAP financial measures provide important supplemental information to management and investors. These non-GAAP financial measures reflect an additional way of viewing aspects of the Company’s operations that, when viewed with the GAAP results and the accompanying reconciliation to corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting the Company’s business and results of operations.
Current wording
The Company believes that these non-GAAP financial measures provide important supplemental information to management and investors. These non-GAAP financial measures reflect an additional way of viewing aspects of the Company’s operations that, when viewed with the accounting principles generally accepted in the United States (“GAAP”) results and the accompanying reconciliation to corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting the Company’s business and results of operations.
Previous wording
Net Sales. Online and offline sales represent two different sales channels for our products. Online is our primary sales channel as we generate net sales primarily from eCommerce sales of auto parts to individual consumers through our mobile-friendly website atwww.carparts.com, our app, and online marketplaces. Online marketplaces consist primarily of sales of our products on online marketplace websites, where we sell through online storefronts that we maintain on third-party owned websites such as eBay and Amazon. Our offline sales channel represents our distribution of products directly to commercial customers by selling auto parts to collision repair shops. Our offline sales channel
Current wording
Net Sales. Online and offline sales represent two different sales channels for our products. Online is our primary sales channel as we generate net sales primarily from eCommerce sales of auto parts to individual consumers through our mobile-friendly website atwww.carparts.com, our app, and online marketplaces. Online marketplaces consist primarily of sales of our products on online marketplace websites, where we sell through online storefronts that we maintain on third-party owned websites such as eBay and Amazon. Our offline sales channel represents our distribution of products directly to commercial customers by selling auto parts to collision repair shops. Our offline sales channel also includes both stock ship distribution as well as drop ship programs for automotive warehouse distributors and other online resellers. The product mix includes the majority of our house brands stock ship parts, which include the replacement collision parts and our Kool-Vue® mirror line.
Previous wording
Gross profit decreased $1,484, or 0.6%, in fiscal year 2023 compared to fiscal year 2022. Gross margin decreased 100 basis points to 33.9% in fiscal year 2023 compared to 34.9% in fiscal year 2022. The decrease in gross margin was primarily driven by unfavorable freight costs and a shift in product mix.
Current wording
Gross profit decreased $32,667, or 14.2%, in fiscal year 2024 compared to fiscal year 2023. Gross margin decreased 50 basis points to 33.4% in fiscal year 2024 compared to 33.9% in fiscal year 2023. The decrease in gross margin was primarily driven by unfavorable freight costs, partially offset by our re-pricing strategy.
Previous wording
Total other income (expense), net, increased $2,773, or 285.9%, for fiscal year 2023 compared to fiscal year 2022 primarily driven by an increase in interest income due to higher interest rates and a higher cash balance during 2023.
Current wording
Total other income, net, decreased $1,502, or 83.3%, for fiscal year 2024 compared to fiscal year 2023 primarily driven by a decrease in interest income due to a lower cash balance during 2024.
Previous wording
The Company accounts for income taxes in accordance with ASC 740* - Income Taxes* (“ASC 740”). Under the provisions of ASC 740, management is required to evaluate whether a valuation allowance should be established against its deferred tax assets based on the consideration of all available evidence using a “more likely than not” standard. Realization of deferred tax assets is dependent upon taxable income in prior carryback years, estimates of future taxable income, tax planning strategies, and reversal of existing taxable temporary differences. ASC 740 provides that forming a conclusion that a valuation allowance is not needed is difficult when there is negative evidence such as cumulative losses in recent years or losses expected in early future years. As of December 30, 2023, due to cumulative losses in recent years, the Company maintained a valuation allowance in the amount of $38,458 against deferred tax assets that were not more likely than not to be realized.
Current wording
The Company accounts for income taxes in accordance with ASC 740* - Income Taxes* (“ASC 740”). Under the provisions of ASC 740, management is required to evaluate whether a valuation allowance should be established against its deferred tax assets based on the consideration of all available evidence using a “more likely than not” standard. Realization of deferred tax assets is dependent upon taxable income in prior carryback years, estimates of future taxable income, tax planning strategies, and reversal of existing taxable temporary differences. ASC 740 provides that forming a conclusion that a valuation allowance is not needed is difficult when there is negative evidence such as cumulative losses in recent years or losses expected in early future years. As of December 28, 2024, due to cumulative losses in recent years, the Company maintained a valuation allowance in the amount of $45,463 against deferred tax assets that were not more likely than not to be realized.
Previous wording
As of December 30, 2023, the Company had no material unrecognized tax benefits, interest or penalties related to federal and state income tax matters. As of December 30, 2023, the Company’s federal and state NOL carryforwards were $105,224 and $84,780, respectively. Federal NOL carryforwards of $891 were acquired in the acquisition of WAG which are subject to Section 382 of the Code and limited to an annual usage limitation of $135. The Company’s federal NOL carryforwards begin to expire in 2029, while state NOL carryforwards also begin to expire in 2029.
Current wording
As of December 28, 2024, the Company had no material unrecognized tax benefits, interest or penalties related to federal and state income tax matters. As of December 28, 2024, the Company’s federal and state NOL carryforwards were $127,019 and $93,822, respectively. Federal NOL carryforwards of $891 were acquired in the acquisition of WAG which are subject to Section 382 of the Code and limited to an annual usage limitation of $135. The Company’s federal NOL carryforwards begin to expire in 2029, while state NOL carryforwards also begin to expire in 2029.
Previous wording
During the fifty-two weeks ended December 30, 2023, we primarily funded our operations with cash and cash equivalents generated from operations. We had cash and cash equivalents of $50,951 as of December 30, 2023, representing a $32,184 increase from $18,767 of cash and cash equivalents as of December 31, 2022. Based on our current operating plan, we believe that our existing cash and cash equivalents, investments, cash flows from operations and available funds under our Credit Facility will be sufficient to finance our operations through at least the next twelve months (see “Debt and Available Borrowing Resources” and “Funding Requirements” below).
Current wording
current operating plan, we believe that our existing cash and cash equivalents, investments, cash flows from operations and available funds under our Credit Facility will be sufficient to finance our operations through at least the next twelve months (see “Debt and Available Borrowing Resources” and “Funding Requirements” below).
Previous wording
As of December 30, 2023 and December 31, 2022, our working capital was $80,352 and $79,843, respectively.
Current wording
As of December 28, 2024 and December 30, 2023, our working capital was $48,445 and $80,352, respectively.
Previous wording
Net cash provided by operating activities for the fiscal years ended December 30, 2023 and December 31, 2022 was $50,001 and $15,368, respectively. The increase in net cash provided by operating activities was primarily driven by a higher net cash inflow from the change in working capital.
Current wording
Net cash provided by operating activities for the fiscal years ended December 28, 2024 and December 30, 2023 was $10,338 and $50,001, respectively. The decrease in net cash provided by operating activities was primarily driven by a lower net cash inflow from the change in working capital, in addition to the higher net loss for 2024.
Previous wording
For the fiscal years ended December 30, 2023 and December 31, 2022, net cash used in investing activities was primarily the result of additions to property and equipment ($11,879 and $12,585, respectively), which are mainly related to capitalized website and software development costs.
Current wording
For the fiscal year ended December 28, 2024, net cash used in investing activities was primarily the result of additions to property and equipment of $20,573, which are mainly related to capitalized website and software development costs and machinery and equipment additions, primarily related to the new Las Vegas distribution center. For the fiscal year ended December 30, 2023, net cash used in investing activities was primarily the result of additions to property and equipment of $11,879, which are mainly related to capitalized website and software development costs.
Previous wording
Net cash used in financing activities was $5,916 and $2,153 for the fiscal years ended December 30, 2023 and December 31, 2022, respectively. The increase was primarily attributable to the repurchase of treasury stock in the fiscal year ended December 30, 2023.
Current wording
Net cash used in financing activities was $4,422 and $5,916 for the fiscal years ended December 28, 2024 and December 30, 2023, respectively. The decrease was primarily attributable to the absence of proceeds from the exercise of stock options in 2024.
Previous wording
Total debt was $16,635 as of December 30, 2023 compared to $20,669 as of December 31, 2022 and primarily consists of right-of-use obligations-finance.
Current wording
Total debt was $12,313 as of December 28, 2024 compared to $16,635 as of December 30, 2023 and primarily consists of right-of-use obligations-finance.
Previous wording
As of December 30, 2023 and December 31, 2022, our outstanding revolving loan balance was $0, respectively. The outstanding standby letters of credit balance as of December 30, 2023 and December 31, 2022 was $680 and $620, respectively, and we had $0 of our trade letters of credit outstanding in accounts payable in our consolidated balance sheets. We use the trade letters of credit in the ordinary course of business to satisfy certain vendor obligations.
Current wording
and we had $0 of our trade letters of credit outstanding in accounts payable in our consolidated balance sheets. We use the trade letters of credit in the ordinary course of business to satisfy certain vendor obligations.
Previous wording
Credit Agreement, cash receipts are deposited into a lock-box, which are at the Company’s discretion unless the “cash dominion period” is in effect, during which cash receipts will be used to reduce amounts owing under the Credit Agreement. The cash dominion period is triggered in an event of default or if “excess availability,” as defined under the Credit Agreement, is less than the $9,000 (12% of the aggregate revolving commitment) for three consecutive business days, and will continue until, during the preceding 45 consecutive days, no event of default existed and excess availability has been greater than $9,000 at all times (with the trigger subject to adjustment based on the Company’s revolving commitment). The Company’s required excess availability related to the “Covenant Testing Trigger Period” (as defined under the Credit Agreement) is less than $7,500 (10% of the aggregate revolving commitment) for three consecutive business days, the Company shall be required to maintain a minimum fixed charge coverage ratio of 1.0 to 1.0, and continuing until excess availability has been greater than or equal to $7,500 at all times for 45 consecutive days (with the trigger subject to adjustment based on the Company’s revolving commitment).
Current wording
Loans drawn under the Credit Facility bear interest at a per annum rate equal to either (a) SOFR plus an applicable margin of 1.50% to 2.00% per annum based on the Company’s fixed charge coverage ratio, or (b) an “alternate prime base rate” subject to an increase from 0.00% to 0.50% per annum based on the Company’s fixed charge coverage ratio. As of December 28,2024, the Company’s SOFR based interest rate was 6.46% and the Company’s prime based rate was 8.00%. A commitment fee, based upon undrawn availability under the Credit Facility bearing interest at a rate of either 0.20% or 0.25% per annum based on the amount of undrawn availability, is payable monthly. Under the terms of the Credit Agreement, cash receipts are deposited into a lock-box, which are at the Company’s discretion unless the “cash dominion period” is in effect, during which cash receipts will be used to reduce amounts owing under the Credit Agreement. The cash dominion period is triggered in an event of default or if “excess availability,” as defined under the Credit Agreement, is less than the $9,000 (12% of the aggregate revolving commitment) for three consecutive business days, and will continue until, during the preceding 45 consecutive days, no event of default existed and excess availability has been greater than $9,000 at all times (with the trigger subject to adjustment based on the Company’s revolving commitment). The Company’s required excess availability related to the “Covenant Testing Trigger Period” (as defined under the Credit Agreement) is less than $7,500 (10% of the aggregate revolving commitment) for three consecutive business days, the Company shall be required to maintain a minimum fixed charge coverage ratio of 1.0 to 1.0, and continuing until excess availability has been greater than or equal to $7,500 at all times for 45 consecutive days (with the trigger subject to adjustment based on the Company’s revolving commitment).
Previous wording
Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, net sales, costs and expenses, and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Actual results could differ from those estimates under different assumptions and conditions. We believe that of our significant accounting policies, which are described in*Note 1 – Summary of Significant Accounting Policies and Nature of Operations”*of the Notes to Consolidated Financial Statements, the following accounting policies and estimates set forth below involve a greater degree of judgment or complexity.
Current wording
Our consolidated financial statements have been prepared in accordance with GAAP. The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, net sales, costs and expenses, and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Actual results could differ from those estimates under different assumptions and conditions. We believe that of our significant accounting policies, which are described in*Note 1 – Summary of Significant Accounting Policies and Nature of Operations”*of the Notes to Consolidated Financial Statements, the following accounting policies and estimates set forth below involve a greater degree of judgment or complexity.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
fiscal year 2024 compared to $19,687 in fiscal year 2023. Refer to the section below titled “Non-GAAP measures” for information regarding our use of Adjusted EBITDA and a reconciliation from net loss.
Current report — wording carried from elsewhere
During the fifty-two weeks ended December 28, 2024, we primarily funded our operations with cash and cash equivalents generated from operations. We had cash and cash equivalents of $36,397 as of December 28, 2024, representing a $14,554 decrease from $50,951 of cash and cash equivalents as of December 30, 2023. Based on our
Current report — wording carried from elsewhere
As of December 28, 2024 and December 30, 2023, our outstanding revolving loan balance was $0, respectively. The outstanding standby letters of credit balance as of December 28, 2024 and December 30, 2023 was $680, respectively,
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
also includes both stock ship distribution as well as drop ship programs for automotive warehouse distributors and other online resellers. The product mix includes the majority of our house brands stock ship parts, which include the replacement collision parts and our Kool-Vue® mirror line.
Previous report — wording carried elsewhere
Loans drawn under the Credit Facility bear interest at a per annum rate equal to either (a) SOFR plus an applicable margin of 1.50% to 2.00% per annum based on the Company’s fixed charge coverage ratio, or (b) an “alternate prime base rate” subject to an increase from 0.00% to 0.50% per annum based on the Company’s fixed charge coverage ratio. As of December 30,2023, the Company’s SOFR based interest rate was 7.45% and the Company’s prime based rate was 9.00%. A commitment fee, based upon undrawn availability under the Credit Facility bearing interest at a rate of either 0.20% or 0.25% per annum based on the amount of undrawn availability, is payable monthly. Under the terms of the