CarParts.com, Inc.

Previous wording

We continue to invest in modern technology, data, and design to power its digital platforms and improve ease of use across channels. In the fall of 2025, we launched Spark, our AI-powered shopping assistant, designed to help customers more easily discover products, navigate fitment, and complete purchases with greater confidence. We believe that we have a significant opportunity to become a preferred destination for automotive repair and maintenance by executing on our evolving strategy, which includes investing in technology, expanding product offerings and customer segments, and enhancing supply chain and logistics capabilities.

Current wording

We continue to invest in modern technology, data, and design to power our digital platforms and improve ease of use across channels. In the fall of 2025, we launched Spark, our AI-powered shopping assistant, designed to help customers more easily discover products, navigate fitment, and complete purchases with greater confidence. We believe that we have a significant opportunity to become a preferred destination for automotive repair and maintenance by executing on our evolving strategy, which includes investing in technology, expanding product offerings and customer segments, and enhancing supply chain and logistics capabilities.

Previous wording

Intandem, we have refined our eCommerce experience and segmentation strategy to prioritize direct customer relationships and long-term engagement. In 2025, we launched the JC Whitney Performance Hub, featuring branded performance and upgrade products. We are also expanding our assortment in the European vehicle segment, having launched the CarParts Euro hub in early 2025. These strategic initiatives are intended to strengthen brand loyalty and

Current wording

Intandem, we have refined our eCommerce experience and segmentation strategy to prioritize direct customer relationships and long-term engagement. In 2025, we launched the JC Whitney Performance Hub, featuring branded performance and upgrade products. We are also expanding our assortment in the European vehicle segment, having launched the CarParts Euro hub.

Previous wording

increase customer lifetime value, while positioning CarParts.com as a trusted destination for automotive parts and maintenance support.

Current wording

These strategic initiatives are intended to strengthen brand loyalty and increase customer lifetime value, while positioning CarParts.com as a trusted destination for automotive parts and maintenance support.

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 mobile app provides customers with a favorable alternative to the brick-and-mortar shopping experience by offering a comprehensive selection of approximately 1,869,000 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 mobile app provides customers with a favorable alternative to the brick-and-mortar shopping experience by offering a comprehensive selection of approximately 1,682,000 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

For the first quarter of 2026, the Company generated net sales of $131,961, compared with $147,378 for the first quarter of 2025, representing a decrease of 10.5%. The Company incurred a net loss of $1,940 for the first quarter of 2026 compared to a net loss of $15,283 for the first quarter of 2025. The Company’s net loss before interest expense (income), net, income tax (benefit) provision, depreciation and amortization expense, amortization of intangible assets, plus share-based compensation expense, gain on sale of subsidiary and strategic alternatives exploration costs (“Adjusted EBITDA”) of $585 in the first quarter of 2026 compared to $(6,229) in the first quarter of 2025. Adjusted EBITDA is not a Generally Accepted Accounting Principle (“GAAP”) measure. See the section below titled “Non-GAAP measures” for information regarding our use of Adjusted EBTIDA and a reconciliation from net loss.

Current wording

For the second quarter of 2026, we generated net sales of $135,640, compared with $151,949 for the second quarter of 2025, representing a decrease of 10.7%. We incurred a net loss of $3,222 for the second quarter of 2026 compared to a net loss of $12,711 for the second quarter of 2025. Our net loss before interest expense, net, income tax provision (benefit), depreciation and amortization expense, amortization of intangible assets, plus share-based compensation expense, workforce transition costs, gain on sale of subsidiary and strategic alternatives exploration costs (“Adjusted EBITDA”) was $1,763 in the second quarter of 2026 compared to $(3,116) in the second quarter of 2025. Adjusted EBITDA is not a Generally Accepted Accounting Principle (“GAAP”) measure. See the section below titled “Non-GAAP measures” for information regarding our use of Adjusted EBITDA and a reconciliation from net loss.

Previous wording

Net sales decreased by 10.5% to $131,961 in the first quarter of 2026 compared to the first quarter of 2025. The decrease in net sales was primarily driven by the Company’s efforts to increase profitability by rationalizing marketing spend. Gross profit decreased by 9.3% to $42,943 and gross margin increased 40 basis points to 32.5% compared to 32.1% in the first quarter of 2025. The increase in gross margin was primarily driven by product mix and favorable freight costs.

Current wording

Net sales decreased by 10.7% to $135,640 in the second quarter of 2026 compared to the second quarter of 2025. The decrease in net sales was primarily attributable to initiatives to improve profitability, including the rationalization of marketing spend through reduced investment in lower-margin customers and customers with lower lifetime values (“LTVs”). Gross profit decreased by 9.5% to $45,056 and gross margin increased 40 basis points to 33.2% compared to 32.8% in the second quarter of 2025. The increase in gross margin was primarily driven by product mix and favorable freight costs.

Previous wording

Total expenses, which primarily consisted of cost of sales and operating expense, decreased in the first quarter of 2026 compared to the same period in 2025. The changes in both cost of sales and operating expense are described in further detail under — “Results of Operations” below.

Current wording

Total expenses, which primarily consisted of cost of sales and operating expense, decreased in the second quarter of 2026 compared to the same period in 2025. The changes in both cost of sales and operating expense are described in further detail under — “Results of Operations” below.

Previous wording

Regulation G,“Conditions for Use of Non-GAAP Financial Measures,” and other provisions of the Exchange Act, 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 interest expense (income), net; income tax (benefit) provision; depreciation and amortization expense; amortization of intangible assets; while Adjusted EBITDA consists of EBITDA before share-based compensation expense, gain on sale of subsidiary and strategic alternatives exploration costs.

Current wording

Regulation G,“Conditions for Use of Non-GAAP Financial Measures,” and other provisions of the Exchange Act, 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 interest expense, net; income tax provision (benefit); depreciation and amortization expense; amortization of intangible assets; while Adjusted EBITDA consists of EBITDA before share-based compensation expense, workforce transition costs, gain on sale of subsidiary and strategic alternatives exploration costs.

Previous wording

We believe 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 our business and results of operations.

Current wording

We believe that these non-GAAP financial measures provide important supplemental information to management and investors. We also believe that these non-GAAP financial measures reflect an additional way of viewing aspects of our 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 our business and results of operations.

Previous wording

Thirteen Weeks Ended April 4, 2026 Compared to the Thirteen Weeks Ended March 29, 2025

Current wording

Thirteen and Twenty-Six Weeks Ended July 4, 2026 Compared to the Thirteen and Twenty-Six Weeks Ended June 28, 2025

Previous wording

Gross profit decreased $4,405, or 9.3%, for the first quarter of 2026 compared to the same period in 2025. Gross margin increased 40 basis points to 32.5% in the first quarter of 2026 compared to 32.1% in the first quarter of 2025. The increase in gross margin was primarily driven by product mix and favorable freight costs.

Current wording

Gross profit decreased $4,723, or 9.5%, for the second quarter of 2026 compared to the same period in 2025, and decreased $9,128, or 9.4%, in YTD Q2 2026 compared to the same period in 2025. Gross margin increased 40 basis points to 33.2% in the second quarter of 2026 compared to 32.8% in the second quarter of 2025, and gross margin increased 50 basis points to 32.9% in YTD Q2 2026 compared to the same period of 2025. The increase in gross margin was primarily driven by product mix and favorable freight costs.

Previous wording

Operating expense decreased $16,498, or 26.4%, for the first quarter of 2026 compared to the same period in 2025. The decrease in operating expense was primarily attributable to favorable marketing spend, favorable payroll costs due to headcount reductions and the gain on sale of the Philippines subsidiary in January 2026.

Current wording

Operating expense decreased $13,918, or 22.4%, and decreased $30,416 or 24.4%, for the second quarter of 2026 and YTD Q2 2026, respectively, compared to the same periods in 2025. The decrease in operating expense was primarily attributable to favorable marketing spend and favorable payroll costs due to headcount reductions, in addition to the gain on sale of the Philippines subsidiary during YTD Q2 2026 that occurred in January 2026.

Previous wording

Total other (expense) income, net, decreased $283, or 9,433.3%, for the first quarter of 2026 compared to the same period in 2025. The increase was primarily driven by interest expense from the Convertible Notes that were issued by the Company in September 2025.

Current wording

Total other income (expense), net, increased $211, or 103.4%, and decreased $70, or 34.8%, for the second quarter of 2026 and YTD Q2 2026, respectively, compared to the same periods in 2025. The second quarter change was primarily driven by an increase in other income during the quarter, offset by interest expense from the Convertible Notes that were issued by the Company in September 2025. The YTD Q2 2026 change was primarily driven by interest expense from the Convertible Notes that we issued in September 2025.

Previous wording

For the thirteen weeks ended April 4, 2026, the effective tax rate for the Company was 41.7%. The effective tax rate differed from the U.S. federal statutory rate primarily due to state income taxes, share-based compensation that is either not deductible for tax purposes or for which the tax deductible amount is different than the financial reporting amount, the write-off of an accrued withholding tax associated with the disposition of the Philippines entity, and a change in the valuation allowance that offset the tax of the current period pre-tax loss.

Current wording

For the thirteen and twenty-six weeks ended July 4, 2026, our effective tax rate was (0.2)% and 21.1%, respectively. The effective tax rate differed from the U.S. federal statutory rate primarily due to state income taxes, share-based compensation that is either not deductible for tax purposes or for which the tax deductible amount is different than the financial reporting amount, the write-off of an accrued withholding tax associated with the disposition of the Philippines subsidiary, and a change in the valuation allowance that offset the tax of the current period pre-tax loss.

Previous wording

For the thirteen weeks ended March 29, 2025, the effective tax rate for the Company was (0.9)%. The effective tax rate differed from the U.S. federal statutory rate primarily due to state income taxes, income of our Philippines subsidiary that is subject to different effective tax rates, share-based compensation that is either not deductible for tax purposes or for which the tax deductible amount is different than the financial reporting amount, and a change in the valuation allowance that offset the tax of the current period pre-tax loss.

Current wording

For the thirteen and twenty-six weeks ended June 28, 2025, our effective tax rate was (0.7)% and (0.8)%, respectively. The effective tax rate differed from the U.S. federal statutory rate primarily due to state income taxes, income of our Philippines subsidiary that is subject to different effective tax rates, share-based compensation that is either not deductible for tax purposes or for which the tax deductible amount is different than the financial reporting amount, and a change in the valuation allowance that offset the tax of the current period pre-tax loss.

Previous wording

The Company accounts for income taxes in accordance with ASC Topic 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. We currently have a full valuation allowance against our deferred tax assets. As of each reporting date, the Company’s management considers new evidence, both positive and negative, that could impact management’s view with regard to future realization of deferred tax assets. For the thirteen weeks ended April 4, 2026, there was no material change from fiscal year ended January 3, 2026 in the amount of the Company's deferred tax assets that are not considered to be more likely than not to be realized in future years.

Current wording

We account for income taxes in accordance with ASC Topic 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. We currently have a full valuation allowance against our deferred tax assets. As of each reporting date, our management considers new evidence, both positive and negative, that could impact management’s view with regard to future realization of deferred tax assets. For the twenty-six weeks ended July 4, 2026, there was no material change from the fiscal year ended January 3, 2026 in the amount of our deferred tax assets that are not considered to be more likely than not to be realized in future years.

Previous wording

During the thirteen weeks ended April 4, 2026, we primarily funded our operations with cash and cash equivalents generated from operations, borrowings from our revolving loan, and issuance of common stock for $8,000 of gross proceeds (see “Note 3 - Stockholders’ Equity and Share-Based Compensation”). As of April 4, 2026 and January 3, 2026, our outstanding revolving loan balance under our Amended Credit Facility was $0 and $0, respectively. We had cash and cash equivalents of $37,856 as of April 4, 2026, representing a $12,035 increase from $25,821 of cash as of January 3, 2026. Based on our current operating plan, we believe that our existing cash and cash equivalents,

Current wording

During the twenty-six weeks ended July 4, 2026, we primarily funded our operations with cash and cash equivalents generated from operations and issuance of common stock for $8,000 of gross proceeds (see “Note 3 - Stockholders’ Equity and Share-Based Compensation”). As of July 4, 2026 and January 3, 2026, our outstanding revolving loan balance under our Credit Facility was $0 and $0, respectively. We had cash and cash equivalents of $38,171 as of July 4, 2026, representing a $12,350 increase from $25,821 of cash as of January 3, 2026. 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).

Previous wording

As of April 4, 2026 and January 3, 2026, our working capital was $58,127 and $53,817, respectively. The historical seasonality in our business during the year can cause cash and cash equivalents, inventory and accounts payable to fluctuate, resulting in changes in our working capital.

Current wording

As of July 4, 2026 and January 3, 2026, our working capital was $55,816 and $53,817, respectively. The historical seasonality in our business during the year can cause cash and cash equivalents, inventory and accounts payable to fluctuate, resulting in changes in our working capital.

Previous wording

The following table summarizes the key cash flow metrics from our consolidated statements of cash flows for the thirteen weeks ended April 4, 2026 and March 29, 2025 (in thousands):

Current wording

The following table summarizes the key cash flow metrics from our consolidated statements of cash flows for the twenty-six weeks ended July 4, 2026 and June 28, 2025 (in thousands):

Previous wording

Net cash provided by operating activities for the thirteen weeks ended April 4, 2026 and March 29, 2025 was $7,261 and $5,505, respectively. The increase was primarily driven by a lower net loss in the thirteen weeks ended April 4, 2026, partially offset by lower net cash inflow from the change in working capital.

Current wording

Net cash provided by (used in) operating activities for the twenty-six weeks ended July 4, 2026 and June 28, 2025 was $10,643 and ($20,060), respectively. The increase was primarily driven by a lower net loss in the twenty-six weeks ended July 4, 2026 and a higher net cash inflow from the change in working capital.

Previous wording

For the thirteen weeks ended April 4, 2026, net cash used in investing activities was primarily the result of additions to property and equipment of $2,099, which are mainly related to capitalized website and software development costs. For the thirteen weeks ended March 29, 2025, net cash used in investing activities was primarily the result of additions to property and equipment of $2,116, which are mainly related to capitalized website and software development costs.

Current wording

For the twenty-six weeks ended July 4, 2026, net cash used in investing activities was primarily the result of additions to property and equipment of $4,405, which are mainly related to capitalized website and software development costs. For the twenty-six weeks ended June 28, 2025, net cash used in investing activities was primarily the result of additions to property and equipment of $4,408, which are mainly related to capitalized website and software development costs.

Previous wording

Net cash provided by financing activities was $7,167 for the thirteen weeks ended April 4, 2026, primarily due to $8,000 of gross proceeds from the issuance of common stock, partially offset by $720 of payments on finance leases. Net cash used in financing activities was $1,254 for the thirteen weeks ended March 29, 2025, primarily due to $954 of payments on finance leases.

Current wording

Net cash provided by financing activities was $6,406 for the twenty-six weeks ended July 4, 2026, primarily due to $8,000 of gross proceeds from the issuance of common stock, partially offset by $1,411 of payments made on finance leases. Net cash provided by financing activities was $7,845 for the twenty-six weeks ended June 28, 2025, primarily due to $10,000 of net borrowings from the revolving loan payable, offset by $1,786 of payments made on finance leases.

Previous wording

Total debt was $33,412 as of April 4, 2026 compared to $34,010 as of January 3, 2026 and primarily consists of Convertible Notes payable and right-of-use obligations – finance.

Current wording

Total debt was $32,850 as of July 4, 2026 compared to $34,010 as of January 3, 2026 and primarily consists of Convertible Notes payable and right-of-use obligations – finance.

Previous wording

On September 8, 2025, the Company entered into a Purchase Agreement with certain investors, pursuant to which the Company issued Convertible Notes with an aggregate principal amount of $25,000. The Convertible Notes accrue interest quarterly at a rate of two percent (2%) per annum, payable in kind. The maturity date is September 10, 2028. The outstanding Convertible Notes principal balance, plus any unpaid and accrued interest, is convertible at the option of the

Current wording

On September 8, 2025, we entered into a Purchase Agreement with certain investors, pursuant to which the we issued Convertible Notes with an aggregate principal amount of $25,000. The Convertible Notes accrue interest quarterly at a rate of two percent (2%) per annum, payable in kind. The maturity date is September 10, 2028. The outstanding Convertible Notes principal balance, plus any unpaid and accrued interest, is convertible at the option of the investors into shares of our common stock at the maturity date, at a Conversion Price of $12.00 per share. As of July 4, 2026 and January 3, 2026, the Convertible Notes payable balance was $25,416 and $25,161, respectively.

Previous wording

As of April 4, 2026 and January 3, 2026, our outstanding revolving loan balance was $0 and $0, respectively. As of April 4, 2026 and January 3, 2026, the outstanding standby letters of credit balance was $680 and $680, respectively, and we had $0 of our trade letters of credit outstanding in accounts payable in our consolidated balance sheets.

Current wording

As of July 4, 2026 and January 3, 2026, our outstanding revolving loan balance was $0 and $0, respectively. As of July 4, 2026 and January 3, 2026, the outstanding standby letters of credit balance was $0 and $680, respectively, and we had $0 of our trade letters of credit outstanding in accounts payable in our consolidated balance sheets. Loans drawn under the Credit Facility bear interest at a per annum rate equal to the One-Month Term Secured Overnight Financing Rate (“SOFR”) plus an applicable margin of 3.25% per annum.

Previous wording

The Amended Credit Agreement requires us to satisfy certain financial covenants which could limit our ability to react to market conditions or satisfy extraordinary capital needs and could otherwise restrict our financing and operations. If we are unable to satisfy the financial covenants and tests at any time, we may as a result cease being able to borrow under the Amended Credit Facility or be required to immediately repay loans under the Amended Credit Facility, and our liquidity and capital resources and ability to operate our business could be severely impacted, which would have a material adverse effect on our financial condition and results of operations. In those events, we may need to sell assets or seek additional equity or additional debt financing or attempt to modify our existing Amended Credit Agreement. There can be no assurance that we would be able to raise such additional financing or engage in such asset sales on acceptable terms, or at all, or that we would be able to modify our existing Amended Credit Agreement.

Current wording

If we are unable to satisfy the financial covenants and tests at any time, we may as a result cease being able to borrow under the Credit Facility or be required to immediately repay loans under the Credit Facility, and our liquidity and capital resources and ability to operate our business could be severely impacted, which would have a material adverse effect on our financial condition and results of operations. In those events, we may need to sell assets or seek additional equity or additional debt financing or attempt to modify our existing Credit Agreement. There can be no assurance that we would be able to raise such additional financing or engage in such asset sales on acceptable terms, or at all, or that we would be able to modify our existing Credit Agreement.

Previous wording

Based on our current operating plan, we believe that our existing cash, cash equivalents, investments, cash flows from operations and available debt financing will be sufficient to finance our operational cash needs through at least the next twelve months. Our future capital requirements may, however, vary materially from those now planned or anticipated. Changes in our operating plans, lower than anticipated net sales or gross margins, increased expenses, continued or worsened economic conditions, worsening operating performance by us, or other events, including those described in “Risk Factors” included in this report and any other reports we filed with the SEC may force us to sell assets or seek additional debt or equity financings in the future, including the issuance of additional common stock under a registration statement. As such, there can be no assurance that we would be able to raise such additional financing or engage in asset sales on acceptable terms, or at all. If we are not able to raise adequate additional financing or proceeds from asset sales, we will need to defer, reduce or eliminate significant planned expenditures, restructure or significantly curtail our operations.

Current wording

next twelve months. Our future capital requirements may, however, vary materially from those now planned or anticipated. Changes in our operating plans, lower than anticipated net sales or gross margins, increased expenses, continued or worsened economic conditions, worsening operating performance by us, or other events, including those described in “Risk Factors” included in this report and any other reports we filed with the SEC may force us to sell assets or seek additional debt or equity financings in the future, including the issuance of additional common stock under a registration statement. As such, there can be no assurance that we would be able to raise such additional financing or engage in asset sales on acceptable terms, or at all. If we are not able to raise adequate additional financing or proceeds from asset sales, we will need to defer, reduce or eliminate significant planned expenditures, restructure or significantly curtail our operations.

Previous wording

There were no significant changes to our critical accounting policies during the thirteen weeks ended April 4, 2026. We believe our critical accounting policies affect the more significant judgments and estimates used in the preparation of our consolidated financial statements. Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our historical consolidated financial condition and results of operations (for further detail, refer to our Annual Report on Form 10-K that we filed with the SEC on March 5, 2026):

Current wording

There were no significant changes to our critical accounting policies during the thirteen weeks ended July 4, 2026. We believe our critical accounting policies affect the more significant judgments and estimates used in the preparation of our consolidated financial statements. Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our historical consolidated financial condition and results of operations (for further detail, refer to our Annual Report on Form 10-K for the fiscal year ended January 3, 2026 that we filed with the SEC on March 5, 2026):