CarParts.com, Inc.

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, Senior Vice President of Global Communications and Culture. Please go ahead.

Hello, everyone, and thank you for joining us for the CarParts.com second quarter 2023 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. The 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-Q 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. With that, I would now like to turn the call over to David.

Thank you, Tina. Good afternoon, everyone, and thank you for joining us. Today, we reported $177 million of sales, up slightly from the $176 million we generated last year in the second quarter, marking our 14th consecutive quarter of year-over-year growth and the highest sales level for any quarter in our company's history. On the two-year stack, revenues for the quarter are up 12%. Adjusted EBITDA was $6.3 million. we also repurchased 250,000 shares during the quarter. The $79 million in cash on our balance sheet at the end of the quarter is a testament to the strong unit economics and cash-generating capabilities of our business. And we're also happy to announce the launch of our new mobile app, now available on both iOS and Android. When it comes to customer purchase patterns, we have seen a rise in the usage of our Buy Now, Pay Later offerings. And while some customers are choosing to defer their less urgent repairs, we believe that their return to market is inevitable once consumer confidence rebounds. At that point, we will be ready to meet their needs thanks to our infrastructure, mobile-first customer experience, and diversified assortment. We remain steadfast in focusing on building a world-class company dedicated to providing customers the best digital experience to help them with their auto repair and maintenance needs. On our last earnings call, we shared some of our accomplishments from the last four years, but we believe there are still opportunities for improvement and transformation. These fall into six strategic pillars that range from table stakes to industry disruption. We believe by putting focus on these areas, we will profitably grow to a billion-dollar company and beyond. Number one, e-commerce fundamentals. Number two, digital transformation. Number three, assortment and catalog. Number four, marketing and customer experience. Number five, innovation. And number six, supply chain and logistics. Let me briefly touch on each of these. First, e-commerce fundamentals. As a direct to consumer company, we want to ensure that our website provides a user-friendly experience, making it easy for customers to navigate the site find the product and or resources they need, and complete purchases. In addition, with approximately 80% of our customers shopping on their phone, we have launched a mobile app on both iOS and Android. By offering another seamless shopping platform, we expect to reduce our customer acquisition costs and reliance on search engines and paid channels over time. Other initiatives in the pipeline include improved search results, adding cross-sell and up-sell capabilities, loyalty programs, VIN lookup, and more. Second, digital transformation. We recently kicked off the modernization of some critical backend systems, which will allow us to grow our business more efficiently. Last year, we successfully completed our ERP migration and retired old systems with zero business interruption. Looking ahead, we are focusing on fully migrating to the cloud and upgrading critical infrastructure. These are just a few of our digital transformation initiatives, addressing roadblocks, legacy technology debt, and paving the way for a multi-billion dollar scalable infrastructure. Third, assortment and catalog. With the goal of capturing a bigger share of wallet over time, we are constantly looking at ways to grow our assortment. As an example, we made a deliberate decision to expand our national brand assortment, which is now running at a $100 million revenue run rate compared to under $50 million in 2021. On the catalog side, we are investing in proven industry standards that will enhance our proprietary catalog to increase sales through product recommendations and improve our customer experience. In addition, we have continued to build strong relationships with our branded partners and And with a segment of our customers willing to pay a higher average selling price, we have seen an incremental increase in revenues and gross profit dollars. Fourth, marketing and customer experience. 16 months ago, we decided to put the customer at the center of everything we do. And our intention is not just to sell more parts, but to be driver's go-to resource for valuable information about their vehicle, such as recall and maintenance notifications, which recently hit customer inboxes. Now, if you head to our YouTube page, you will see that we just launched our first series of professional installation videos. It kicked off with the most popular vehicle in America, the Ford F-150, with detailed videos explaining the top 50 repair and maintenance jobs with links to our website for parts and tools. This is the first step of expanding brand awareness as part of our new marketing strategy that will include podcasts, community events, sponsorships, social media campaigns, and more. We believe that building a direct relationship with our customers align with our new effort to reduce our dependency on paid channels. Instead, it positions carparts.com as an authority in the industry, increasing customer loyalty and ultimately organic and direct traffic. As a reminder, currently over one third of our e-commerce revenue come from repeat customers. Next, innovation and do it for me. In previous quarters, we gained a tremendous amount of data from the large number of our Get It Installed bookings. Now we're using that information to continue developing the program to create an even more refined customer journey. Over the last six months, we have virtually doubled our net promoter score. And over the next year, our Do It For Me customers will see an even more personalized experience tailored to their specific needs. And finally, supply chain logistics. we have made dramatic improvements in service levels and are now shipping faster than ever before. There have been several other supply chain improvements as we work hard to increase efficiencies, reduce costs, and improve customer satisfaction. And for more details, I'd like to turn it over to Michael.