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spk05: The conference will begin shortly. Good afternoon. At this time, all participants will be in a listen-only mode. After the presentation, there will be a question and answer session. Please note, this call is being recorded. I would now like to pass the conference over to our host, Tina Mir-Farsi, Vice President of Communications and Culture. Please go ahead.
spk06: Hello, everyone, and thank you for joining us for the CarParts.com fourth quarter 2022 conference call. I'd like to start by welcoming the investors and others who are attending this meeting remotely. Joining me today from the company are David Mignon, Chief Executive Officer, Ryan Lockwood, Chief Financial Officer, and Michael Huffaker, Chief Operating Officer. Before I turn it over to David to start the meeting, I have some important disclosures. Their prepared remarks and responses to your questions could contain certain forward-looking statements related to the business under the federal securities laws. Actual results may differ materially from those contained in or implied by these forward-looking statements due to the risks and uncertainties associated with the business. For a discussion of the material risks and other important factors that could affect results, please refer to the carparts.com annual report on Form 10-K, and 10 Qs as filed with the SEC, both of which can be found on the Investor Relations website. On the call, both GAAP and non-GAAP financial measures will be discussed. A reconciliation of GAAP to non-GAAP financial measures is provided in the CarParts.com press release issued today. And with that, I would now like to turn the call over to David.
spk03: Thank you, Tina. Good afternoon, everyone, and thank you for joining us. As reported in today's release, for Q4 2022, we marked our 12th consecutive quarter of double-digit year-over-year sales growth of $154.5 million, up 11.8% from the prior year. On a two-year stack, revenues for the quarter are up 27.2%. Also for the full fiscal year 2022, we're excited to beat company records for both top line at $661.6 million and $26.1 million for adjusted EBITDA. For those keeping score, this is our third year in a row of posting record revenue. A lot happened in 2022. Within the organization, we refreshed our executive team, opened two buildings, increased the size of our credit facility while extending it for five years and much more. We did all of this while helping our customers navigate a much tougher economic environment. Our team outperformed and delivered record-breaking sales, profitability, and free cash flow while optimizing our inventory position. The key to our success lies in our culture and our commitment to shareholders. We've built an incredible business centered around positive unit economics, repeat customers, and a laser focus on financial discipline, all with the intention of maximizing long-term shareholder value. At CarParts.com, we are committed to empowering drivers along their journey and removing the stress from auto repair and maintenance. And to keep delivering on this, our team has continued executing on four focus areas, outstanding customer service, operational excellence, financial discipline, and innovation. Number one, outstanding customer service. Delivering an outstanding customer experience is the most critical thing we do. Our customers are already seeing a more streamlined experience on the website, as well as faster delivery times. Today, we're closer to our customers, and our click-to-delivery times are better than ever. These tangible improvements are part of the cultural shift that started in 2022 at CarParts.com, in which every decision starts with the customer. As a reminder, repeat customers account for over one-third of our e-commerce revenues. And as we continue to improve our customer experience, over time, we see an opportunity to build a long-term relationship with our customers, one that puts CarParts.com top of mind and makes us the go-to destination for all their automotive needs. Number two, operational excellence. Since the management team transitioned last year, we have doubled down on efficiency and continued our focus on profitable growth. We are very excited to welcome Michael Huffaker as our new chief operating officer. He comes to us with extensive e-commerce and retail experience at some of the largest companies in the world. Most recently, 15 years at Amazon. Michael shares both our cultural and business mindset, and we look forward to him bringing his best-in-class processes to our vertically integrated supply chain and beyond. Michael will provide further details on the operational improvements the team has made shortly. Also, we are pleased with the recent promotion of Stephanie Erbach to Chief Human Resources Officer. Stephanie's 25 years of HR experience and genuine care for employees have helped us establish a critical foundation for our business. She has implemented significant changes within the HR function and aligned our practices with our growth objectives. She will now focus on developing existing talent to drive performance globally. Number three, financial discipline. One important highlight is that our business is built on positive unit economics. Our adjusted EBITDA was up over 50% in 2022, and we're currently undrawn on our revolver. The key is focusing on the profitability of every transaction and maximizing gross profit dollars. While revenues and gross margin percentage may fluctuate, our overall goal is to always optimize for dollars. Internally, we like to say you can't deposit percentages in the bank. In the current environment, we have been very intentional on how we deploy capital with a heightened focus on incremental spend related to headcount. And by reallocating capital from discretionary spend, such as upper funnel marketing and branding campaigns, into more customer-centric initiatives. Number four, innovation. The path to disrupting our industry is by removing the friction from a notoriously burdensome process. Last year, we launched a new do it for me capability, get it installed on our website where customers in select markets can see installation pricing and book an appointment at a certified repair shop. We're excited to announce that we have doubled our booking since our last call in November, and we are expanding our offering with additional categories. And with that, I would like to turn it over to Michael. Michael, we're excited to have you and welcome to the team.
spk11: Thank you, David. I joined about 90 days ago, and I've had the opportunity to visit our distribution centers, walk the floor, and hear from our frontline team members. I've also had the pleasure of visiting our Manila Philippines corporate office. One thing that has been clear during my time here so far is that I'm directly aligned with our business objectives and our focus on creating an unparalleled customer experience. 2022 was a year of expansion for us. We now have over 1 million square feet of built out distribution space, strategically positioned close to our customer base, allowing us to cover 98% of the country with a two day transit time. In 2023, we will remain laser focused on execution, process improvements, and operational efficiencies to get more out of our existing network. I'm super excited to be here and I look forward to our team delivering value for our customers and our shareholders. Next, I'd like to turn it over to Ryan.
spk02: Thank you, Michael. In Q4, we generated revenue of $154.5 million, up 11.8% from the prior year period. On a two-year stack, revenues increased 27.2%. For the full year 2022, revenues were $661.6 million, up 13.6% from 2021, and up 44.8% on a two-year stack. For the first eight weeks of fiscal year 2023, we produced high single-digit year-over-year revenue growth combined with sequential gross margin expansion. We remain committed to balancing growth, profitability, and free cash flow generation for the full year 2023. Gross profit for the quarter was $51.6 million, up 8.9% from the prior year period, with gross margin of 33.4% versus 34.3%. For the full year, gross profit was 230.9 million, up 17%, with gross margins improving to 34.9% compared to 33.9% in 2021, both driven by changes in freight charges. Net loss for the quarter and full year was 6.2 million and 1 million, respectively. The fourth quarter gap loss was predominantly driven by non-cash expenses and seasonally higher freight charges. For the fourth quarter, we reported adjusted EBITDA of 2.1 million, down from 2.6 million. The change in adjusted EBITDA in the quarter was predominantly driven by seasonal freight charges, which were higher and started earlier than the prior year. For the full year 2022, we reported adjusted EBITDA of 26.1 million, up 55.5% from 2021, reflecting our commitment to financial discipline, positive unit economics, as well as our unyielding focus on balancing profitable growth with free cash flow generation. Turning to the balance sheet, we ended the quarter with cash and equivalents of $18.8 million and no balance on a revolver line. We ended the year with inventory at $136 million compared to $138.9 million in the prior year. We believe we have ample liquidity and we have no intention or need to raise capital at current valuations. We continue to focus on self-funded growth and At the end of Q4, we were undrawn our revolving credit facility with an option to expand to 150 million, depending on our inventory levels and certain terms and conditions. And now, I'd like to turn it back to David for some closing remarks.
spk03: Thank you, Ryan, and everyone who made the time to join today's call. 2022 was our best year ever, and we are proud of the company we continue to build each and every day. It's amazing to watch a 25-year-old company go through a full transformation continue to reinvent itself and deliver incredible results. 2022 marked our third consecutive year of double digit growth. And since 2019, we have more than doubled our revenues and returned the company to profitability all while building a robust balance sheet. For 2023 and beyond, we continue to put our customers and team members at the center of our strategy. and feel prepared to tackle the future with intention, focus, and discipline as we gain market share. We're in a strong position to thrive and continue delivering profitable growth amid whatever changes the market brings us by leveraging our vertically integrated supply chain, proprietary catalog, and other advanced capabilities like data science. Our goal is to continue balancing our investments to be more streamlined without compromising on building an extraordinary business regardless of what is happening in the economy. We believe that by doing this, we'll benefit our shareholders in the years to come and grow the intrinsic value of our company. We will remain focused on positive unit economics, free cash flow generation, operational efficiencies, and delivering an outstanding customer experience. Now, none of this would be possible without the incredible work and commitment from everyone on our global team. You come to work each day to seize each new opportunity that comes your way. We're grateful. and honored to lead such an amazing organization. And as we say at carparks.com, get after it. I'll now turn it over to the operator to open it up for questions.
spk05: Thank you. As a reminder, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Thomas Forte from DA Davidson.
spk07: Thomas Forte Great. So, two questions, one question, one follow-up, and then David and Ryan, great job on the quarter and on the year. So, the first question, I recognize your visibility may be limited given the challenging macro environment, but I want to know if you could provide at least high-level thoughts on revenue growth for 2023.
spk02: Sure. You know, I think, let me start by saying that the company, it really is in better shape than it's ever been. I think we have a lot of conviction in our ability to execute, you know, balance transparency with reliability. But, you know, right now there's just a lot of uncertainty with the macro environment. We feel good about our ability to grow mid single digits to high single digits. And I think if the economy turns more positive, we can grow double digits. So really the takeaway is that, you know, we feel good about being able to leverage all the improvements we've made over the last few years. We plan to continue growing, even if the environment is challenging.
spk07: Great. And then for my second question, can you talk about how improving supply chain may have possibly affected your fourth quarter sales and profitability and how it might impact you in 2023?
spk02: Sure. So, you know, one thing to keep in mind is we're FIFO, not LIFO. So, when the supply chain improves, that improvement goes into landed costs. So, unfortunately, unlike some of the LIFO people, you're not going to see the benefit until probably the back half this year.
spk01: Thank you. One moment for our next question.
spk05: Our next question comes from the line of Ryan Myers from Lake Street Capital Markets.
spk09: Hi guys, thanks for taking my question. First one for me, just kind of taking a step backwards. You guys talked about the double-digit growth in the month of October. Looks like that obviously flowed through for the rest of the quarter. I'm just curious what you guys saw in those last two months, maybe from a demand perspective and kind of how demand is looking for your core customers.
spk02: Yeah, so back half of last year, we obviously did capitalize on that demand. I think the way to categorize consumers right now is that they're being, I think, very discerning about how they spend money. They're being cautious. And as I kind of mentioned to Tom, we have a great ability to execute. We've done a lot of things right. And I think no matter what happens, we're in a good position to capitalize. you know, we're significantly cheaper than the competition. So as people look to save money versus the traditional big brick and mortar, I think we'll be able to capture customers there. And then the obvious offset is that here and there, some consumers may choose to defer some spend, and then that's what's going to lead to the actual on balance revenue growth.
spk09: Got it. And then just kind of looking at the do it for me offering sounds like you've doubled the number of bookings from, I think it was 1500 last quarter. Now that you have a couple quarters under your belt with that, what sort of feedback have you guys gotten from customers and mechanics, and what gets you excited about that for the future?
spk02: The feedback is really good. I actually go through and read all the comments individually. Predominantly, every comment is something along the lines of, I'm amazed this exists, this is helping me out, this made my life so much easier. The part that gives me confidence in the offering that makes it compelling is is that someone can, in many cases, go buy a part and get it installed and solve their problem for cheaper than just buying the part alone from a brick and mortar store. So especially in a recession, I think that that's a great way we're helping consumers through a difficult economic period.
spk10: Got it. Thanks for taking my question. Sure.
spk05: Thank you. One moment for our next question. Our next question comes from the line of Darren Aftahi from Ross MKM.
spk08: Hey, guys. Thanks for taking my questions, and nice job on the quarter. If I may, first, can you talk about just sort of the strange weather going on across the country? If that's had any impact on your business year to date, good, bad, or indifferent? And then second one, looks like your inventory fell sequentially again. I'm just kind of curious, given kind of the size of your business and Ryan, the comments you made about growth, whether in softer times or better times, what's the right inventory level that you think you guys should have?
spk03: Hey, Darren, it's David. I guess I'll take the first part of the question and then I'll hand it off to Ryan. You know, I think the weather when there's significant disruption kind of slows down the demand in certain regions, but then usually we see a pickup the following week. So we usually see some ups and downs during changes in temperature, but over the long term and at least over the course of a year, at least historically, we haven't seen a huge impact on sales. If anything, it's the wild swings in temperature that create potential demand in the future.
spk02: I'll take the inventory level. So where we ended the year for inventory is probably where you're going to see us end inventory levels at the end of fiscal year 2023. Obviously, quarter by quarter, you'll see some fluctuations up and down, but we feel pretty good about our inventory position as it sits. Great. Thanks, Seth. Thanks.
spk05: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.
spk06: The conference will begin shortly. To raise and lower your hand during Q&A, you can dial star 1 1. Thank you. Thank you. you you you
spk01: Good afternoon.
spk05: At this time, all participants will be in a listen-only mode. After the presentation, there will be a question and answer session. Please note, this call is being recorded. I would now like to pass the conference over to our host, Tina Mir-Farsi, Vice President of Communications and Culture. Please go ahead.
spk06: Hello, everyone, and thank you for joining us for the CarParts.com fourth quarter 2022 conference call. I'd like to start by welcoming the investors and others who are attending this meeting remotely. Joining me today from the company are David Mignon, Chief Executive Officer, Ryan Lockwood, Chief Financial Officer, and Michael Huffaker, Chief Operating Officer. Before I turn it over to David to start the meeting, I have some important disclosures. Their prepared remarks and responses to your questions could contain certain forward-looking statements related to the business under the federal securities laws. Actual results may differ materially from those contained in or implied by these forward-looking statements due to the risks and uncertainties associated with the business. For a discussion of the material risks and other important factors that could affect results, please refer to the carparts.com annual report on Form 10-K, and 10 Qs as filed with the SEC, both of which can be found on the Investor Relations website. On the call, both GAAP and non-GAAP financial measures will be discussed. A reconciliation of GAAP to non-GAAP financial measures is provided in the carparts.com press release issued today. And with that, I would now like to turn the call over to David.
spk03: Thank you, Tina. Good afternoon, everyone, and thank you for joining us. As reported in today's release, for Q4 2022, we marked our 12th consecutive quarter of double-digit year-over-year sales growth of $154.5 million, up 11.8% from the prior year. On a two-year stack, revenues for the quarter are up 27.2%. Also, for the full fiscal year 2022, we're excited to beat company records for both top line at $661.6 million and $26.1 million for adjusted EBITDA. For those keeping score, this is our third year in a row of posting record revenue. A lot happened in 2022. Within the organization, we refreshed our executive team, opened two buildings, increased the size of our credit facility while extending it for five years, and much more. We did all of this while helping our customers navigate a much tougher economic environment. Our team outperformed and delivered record-breaking sales, profitability, and free cash flow while optimizing our inventory position. The key to our success lies in our culture and our commitment to shareholders. We've built an incredible business centered around positive unit economics, repeat customers, and a laser focus on financial discipline, all with the intention of maximizing long-term shareholder value. At CarParts.com, we are committed to empowering drivers along their journey and removing the stress from auto repair and maintenance. And to keep delivering on this, our team has continued executing on four focus areas, outstanding customer service, operational excellence, financial discipline, and innovation. Number one, outstanding customer service. Delivering an outstanding customer experience is the most critical thing we do. Our customers are already seeing a more streamlined experience on the website, as well as faster delivery times. Today, we're closer to our customers, and our click-to-delivery times are better than ever. These tangible improvements are part of the cultural shift that started in 2022 at CarParts.com, in which every decision starts with the customer. As a reminder, repeat customers account for over one-third of our e-commerce revenues. And as we continue to improve our customer experience, over time, we see an opportunity to build a long-term relationship with our customers. One that puts CarParts.com top of mind and makes us the go-to destination for all their automotive needs. Number two, operational excellence. Since the management team transition last year, we have doubled down on efficiency and continued our focus on profitable growth. We are very excited to welcome Michael Huffaker as our new chief operating officer. He comes to us with extensive e-commerce and retail experience at some of the largest companies in the world. Most recently, 15 years at Amazon. Michael shares both our cultural and business mindsets, and we look forward to him bringing his best-in-class processes to our vertically integrated supply chain and beyond. Michael will provide further details on the operational improvements the team has made shortly. Also, we are pleased with the recent promotion of Stephanie Erbach to Chief Human Resources Officer. Stephanie's 25 years of HR experience and genuine care for employees have helped us establish a critical foundation for our business. She has implemented significant changes within the HR function and aligned our practices with our growth objectives. She will now focus on developing existing talent to drive performance globally. Number three, financial discipline. One important highlight is that our business is built on positive unit economics. Our adjusted EBITDA was up over 50% in 2022, and we're currently undrawn on our revolver. The key is focusing on the profitability of every transaction and maximizing gross profit dollars. While revenues and gross margin percentage may fluctuate, our overall goal is to always optimize for dollars. Internally, we like to say you can't deposit percentages in the bank. In the current environment, we have been very intentional on how we deploy capital with a heightened focus on incremental spend related to headcount, and by reallocating capital from discretionary spend, such as upper funnel marketing and branding campaigns, into more customer-centric initiatives. Number four, innovation. The path to disrupting our industry is by removing the friction from a notoriously burdensome process. Last year, we launched a new do it for me capability, get it installed on our website where customers in select markets can see installation pricing and book an appointment at a certified repair shop. We're excited to announce that we have doubled our booking since our last call in November, and we are expanding our offering with additional categories. And with that, I would like to turn it over to Michael. Michael, we're excited to have you and welcome to the team.
spk11: Thank you, David. I joined about 90 days ago, and I've had the opportunity to visit our distribution centers, walk the floor, and hear from our frontline team members. I've also had the pleasure of visiting our Manila Philippines corporate office. One thing that has been clear during my time here so far is that I'm directly aligned with our business objectives and our focus on creating an unparalleled customer experience. 2022 was a year of expansion for us. We now have over 1 million square feet of built-out distribution space strategically positioned close to our customer base, allowing us to cover 98% of the country with a two-day transit time. In 2023, we will remain laser focused on execution, process improvements, and operational efficiencies to get more out of our existing network. I'm super excited to be here, and I look forward to our team delivering value for our customers and our shareholders. Next, I'd like to turn it over to Ryan.
spk02: Thank you, Michael. In Q4, we generated revenue of $154.5 million, up 11.8% from the prior year period. On a two-year stack, revenues increased 27.2%. For the full year 2022, revenues were $661.6 million, up 13.6% from 2021, and up 44.8% on a two-year stack. For the first eight weeks of fiscal year 2023, we produced high single-digit year-over-year revenue growth combined with sequential gross margin expansion. We remain committed to balancing growth, profitability, and free cash flow generation for the full year 2023. Gross profit for the quarter was $51.6 million, up 8.9% from the prior year period, with gross margin of 33.4% versus 34.3%. For the full year, gross profit was $230.9 million, up 17%, with gross margins improving to 34.9% compared to 33.9% in 2021, both driven by changes in freight charges. Net loss for the quarter and full year was $6.2 million and $1 million respectively. The fourth quarter gap loss was predominantly driven by non-cash expenses and seasonally higher freight charges. For the fourth quarter, we reported adjusted EBITDA of 2.1 million, down from 2.6 million. The change in adjusted EBITDA in the quarter was predominantly driven by seasonal freight charges, which were higher and started earlier than the prior year. For the full year 2022, we reported adjusted EBITDA of 26.1 million, up 55.5% from 2021, reflecting our commitment to financial discipline, positive unit economics, as well as our unyielding focus on balancing profitable growth with free cash flow generation. Turning to the balance sheet, we ended the quarter with cash and equivalents of $18.8 million and no balance on a revolver line. We ended the year with inventory at $136 million compared to $138.9 million in the prior year. We believe we have ample liquidity and we have no intention or need to raise capital at current valuations. We continue to focus on self-funded growth and At the end of Q4, we were undrawn our revolving credit facility with an option to expand to 150 million, depending on our inventory levels and certain terms and conditions. And now, I'd like to turn it back to David for some closing remarks.
spk03: Thank you, Ryan, and everyone who made the time to join today's call. 2022 was our best year ever, and we are proud of the company we continue to build each and every day. It's amazing to watch a 25-year-old company go through a full transformation continue to reinvent itself and deliver incredible results. 2022 marked our third consecutive year of double digit growth. And since 2019, we have more than doubled our revenues and returned the company to profitability all while building a robust balance sheet. For 2023 and beyond, we continue to put our customers and team members at the center of our strategy. and feel prepared to tackle the future with intention, focus, and discipline as we gain market share. We're in a strong position to thrive and continue delivering profitable growth amid whatever changes the market brings us by leveraging our vertically integrated supply chain, proprietary catalog, and other advanced capabilities like data science. Our goal is to continue balancing our investments to be more streamlined without compromising on building an extraordinary business regardless of what is happening in the economy. We believe that by doing this will benefit our shareholders in the years to come and grow the intrinsic value of our company. We will remain focused on positive unit economics, free cashflow generation, operational efficiencies, and delivering an outstanding customer experience. Now, none of this would be possible without the incredible work and commitment from everyone on our global team. You come to work each day to seize each new opportunity that comes your way. We're grateful. and honored to lead such an amazing organization. And as we say at carparts.com, get after it. I'll now turn it over to the operator to open it up for questions.
spk05: Thank you. As a reminder, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Thomas Forte from DA Davidson.
spk07: Thomas Forte Great. So, two questions, one question, one follow-up, and then David and Ryan, great job on the quarter and on the year. So, the first question, I recognize your visibility may be limited given the challenging macro environment, but I want to know if you could provide at least high-level thoughts on revenue growth for 2023.
spk02: Sure. You know, I think, let me start by saying that the company, it really is in better shape than it's ever been. I think we have a lot of conviction in our ability to execute, you know, balance transparency with reliability. But, you know, right now there's just a lot of uncertainty with the macro environment. We feel good about our ability to grow mid single digits to high single digits. And I think if the economy turns more positive, we can grow double digits. So really the takeaway is that, you know, we feel good about being able to leverage all the improvements we've made over the last few years. We plan to continue growing, even if the environment is challenging.
spk07: Great. And then for my second question, can you talk about how improving supply chain may have possibly affected your fourth quarter sales and profitability and how it might impact you in 2023?
spk02: Sure. So, you know, one thing to keep in mind is we're FIFO, not LIFO. So, when the supply chain improves, that improvement goes into landed costs. So, unfortunately, unlike some of the LIFO people, you're not going to see the benefit until probably the back half this year.
spk01: Thank you. One moment for our next question.
spk05: Our next question comes from the line of Ryan Myers from Lake Street Capital Markets.
spk09: Yeah, thanks for taking my question. You know, first one for me, just kind of taking a step backwards. You know, you guys talked about the double digit growth in the month of October. Looks like that obviously flowed through for the rest of the quarter. You know, I'm just curious what you guys saw in those last two months, maybe from a demand perspective and kind of how demand is looking for your core customers.
spk02: Yeah, so back half of last year, you know, we obviously did capitalize on that demand. I think the way to categorize consumers right now is that they're being, I think, very discerning about how they spend money. They're being cautious. And as I kind of mentioned to Tom, you know, we have a great ability to execute. We've done a lot of things right. And I think no matter what happens, we're in a good position to capitalize. you know, we're significantly cheaper than the competition. So as people look to save money versus the traditional big brick and mortar, I think we'll be able to capture customers there. And then the obvious offset is that here and there, some consumers may choose to defer some spend, and then that's what's going to lead to the actual on balance revenue growth.
spk09: Got it. And then just kind of looking at the do it for me offering sounds like you've doubled the number of bookings from, I think it was 1500 last quarter. Now that you have a couple quarters under your belt with that, what sort of feedback have you guys gotten from customers and mechanics, and what gets you excited about that for the future?
spk02: The feedback is really good. I actually go through and read all the comments individually. Predominantly, every comment is something along the lines of, I'm amazed this exists, this is helping me out, this made my life so much easier. The part that gives me confidence in the offering that makes it compelling is is that someone can, in many cases, go buy a part and get it installed and solve their problem for cheaper than just buying the part alone from a brick and mortar store. So especially in a recession, I think that that's a great way we're helping consumers through a difficult economic period.
spk10: Got it. Thanks for taking my question. Sure.
spk05: Thank you. One moment for our next question. Our next question comes from the line of Darren Aftahi from Roth MKM.
spk08: Hey, guys. Thanks for taking my questions, and nice job on the quarter. If I may, first, can you talk about just sort of the strange weather going on across the country, if that's had any impact on your business year to date, good, bad, or indifferent? And then second one, looks like your inventory fell sequentially again. I'm just kind of curious, given kind of the size of your business and, Ryan, the comments you made about growth, whether in softer times or better times, what's the right inventory level that you think you guys should have?
spk03: Hey, Darren, it's David. I guess I'll take the first part of the question and then I'll hand it off to Ryan. You know, I think the weather, when there's significant disruption, kind of slows down the demand in certain regions, but then usually we see it pick up the following week. So we usually see some ups and downs during changes in temperature, but over the long term and at least over the course of a year, at least historically, we haven't seen a huge impact on sales. If anything, it's the wild swings in temperature that create potential demand in the future.
spk02: I'll take the inventory level. So where we ended the year for inventory is probably where you're going to see us end inventory levels at the end of fiscal year 2023. Obviously, quarter by quarter, you'll see some fluctuations up and down, but we feel pretty good about our inventory position as it sits. Great. Thanks, Jess. Thanks.
spk05: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.
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