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U.S. Auto Parts Reports Second Quarter 2017 Results

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CARSON, Calif., Aug. 10, 2017 /PRNewswire/ -- U.S. Auto Parts Network, Inc. (NASDAQ: PRTS), one of the largest online providers of aftermarket automotive parts and accessories, reported results for the second quarter ended July 1, 2017. All information and data are from continuing operations, which exclude the AutoMD operating segment unless specifically noted.

Second Quarter 2017 Financial Summary vs. Year-Ago Quarter

  • Net sales increased 3% to $80.2 million compared to $78.0 million.
  • Gross margin was 29.0% compared to 30.4%.
  • Net income was $26.9 million, or $0.67 per diluted share, compared to $1.2 million or $0.03 per diluted share.
  • Adjusted EBITDA (a non-GAAP measure defined below) was $3.8 million compared to $4.0 million.
  • Ended the quarter with no revolver debt.

Second Quarter 2017 Operational Highlights vs. Year-Ago Quarter

  • Total online orders increased by 11% to 954,000 orders.
  • Conversion rate increased 20 basis points to 2.0%.
  • Customer acquisition cost reduced by 7% to $6.99.

Management Commentary

"Our second quarter was highlighted by the return to double-digit growth in our private label business, largely driven by a 37% increase in online marketplace sales," said Aaron Coleman, CEO of U.S. Auto Parts. "Despite lower sales in our e-commerce channel, we still increased overall sales and grew total online orders by 11%, while improving conversion and reducing customer acquisition cost.

"We are continuing to experience a shift in channel mix this year, with our lower-margin online marketplace channel gaining momentum and our e-commerce channel experiencing lower traffic. We are addressing these channel dynamics with various initiatives, including a new e-commerce traffic optimization strategy and prudent cost management across the entire organization, which is further reflected by the 130 basis point reduction of operating expenses.

"Looking ahead to the remainder of 2017, we expect the deployment of these initiatives to help drive improved results as we exit the year. But regardless of the sales channel, we plan to continue capitalizing on industry tailwinds as more and more consumers shop online for auto parts, be it through third-party sites like Amazon and eBay, or our e-commerce sites."

Second Quarter 2017 Financial Results

Net sales in the second quarter of 2017 increased 3% to $80.2 million compared to $78.0 million in the year-ago quarter. The increase was largely driven by a 37% increase in online marketplace sales to $28.3 million, partially offset by a 13% decrease in e-commerce sales.

Gross profit in the second quarter of 2017 was $23.2 million compared to $23.7 million in the year-ago quarter. As a percentage of net sales, gross profit was 29.0% compared to 30.4% in the year ago quarter. The decrease in gross margin was primarily driven by lower-margin channel mix and higher freight costs. The company continues to expect gross margin to range between 29-30% going forward.

Total operating expenses in the second quarter were reduced to $21.7 million compared to $22.1 million in the second quarter of last year. As a percentage of net sales, operating expenses decreased 130 basis points to 27.1% compared to 28.4% in the year ago quarter as a result of lower call center and marketing expenses.

Net income in the second quarter was $26.9 million, or $0.67 per diluted share, compared to $1.2 million or $0.03 per diluted share in the year-ago period. The significant increase was driven by the release of a valuation allowance from the company's cumulative net operating losses, which resulted in a $25.9 million tax credit.

Adjusted EBITDA in the second quarter of 2017 was $3.8 million compared to $4.0 million in the year-ago quarter.

At July 1, 2017, cash and cash equivalents totaled $9.9 million compared to $2.7 million at December 31, 2016. The company also continued to have no revolver debt at July 1, 2017.

Read full press release: http://www.prnewswire.com/news-releases/us-auto-parts-reports-second-quarter-2017-results-300502431.html

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