CarParts.com, Inc.

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 fourth quarter and fiscal year end 2024 conference call. I'd like to start by welcoming the investors and others who are attending this meeting remotely. Joining me today 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-Qs as filed with the SEC, both of which can be found on our 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.

Thank you, Tina, and thank you all for joining us. I will begin some highlights for the quarter, end full year, and then turn it over to Ryan to review our financial performance in more detail. I will then give a more detailed update on the economic environment and discuss our 2024 outlook before opening up the call for Q&A. In the fourth quarter of 2023, sales were $156 million, bringing our full year 2023 sales to a record-breaking $676 million, up 2% from the prior year and 16% on the two-year stack. Adjusted EBITDA was $1 million for the quarter, and $19.7 million for the full year 2023, and we repurchased another 726,000 shares during the quarter, bringing our total repurchases in the year to 1.2 million shares. We had $51 million in cash on our balance sheet and an untapped revolver of up to $75 million at the end of the year. Across the industry, Due to the difficult macroeconomic environment, we saw sustained price deflation as some price sensitive consumers are choosing to defer non-essential purchases. Despite the challenging operating environment, we continue to see strong unit growth of approximately 8% in the fourth quarter. We believe we are taking share from other online players and as consumer confidence rebounds, we're well positioned to support the $389 billion automotive aftermarket, and deliver long-term growth both in volume and dollars. Over fiscal year 2023, our team surpassed several company records and reached significant achievements, including number one, generating the highest sales volume and revenues in the company's history. Number two, launching our mobile app, which now generates over 7% of our total e-commerce revenue. Number three, achieving 38% of total e-commerce revenue from repeat customers. Number four, recording our highest historical website traffic with over 100 million visits to carparts.com over the year. And number five, increasing revenue from the friction category, which includes brakes and rotors, by over 40% from the prior year, which accounted for approximately 5% of total volume. These accomplishments are a testament to the value of our strategic growth drivers, the hard work of our talented CarParts.com team, and our consistent focus on delivering results. As we previously outlined, our growth levers range from table stakes to industry disruption, and we believe they will propel CarParts to reach over $1 billion in company revenues. Turning to a few highlights for 2023. First, we continue to make progress on supercharging, our commerce experience and marketing strategy. In August of last year, we launched our mobile app on both iOS and Android and are excited that today it has over 250,000 downloads and accounts for more than 7% of e-commerce revenue. With 80% of our customers using mobile phones to purchase their automotive parts, we're confident that over time direct in-app purchases will reduce our reliance on search engines and performance marketing to create a cost-effective way to promote our brands and products while incentivizing repeat purchases. Additionally, we continue to build these direct and long-term relationships with current and prospective customers thanks to our new podcast, In the Garage by CarParts.com, and our YouTube channel featuring an expanding number of proprietary educational and instructional videos, which to date have received hundreds of thousands of views. Historically, we focused our marketing investments on Google advertising, but lagged in creating new video content on our own channel, which is a focus for 2024. We can already share in the first two months of 2024, our YouTube views are up to 15 million, an increase of more than 10 times on a year-over-year basis. We believe over time, our own content push will help us acquire new customers, drive revenue, and lower customer acquisition costs. That being said, during 2023, we prioritized our resources to focus on removing some roadblocks in our tech stack, which prevented us from completing the rollout of some of the new capabilities we had slated for the year, but we expect to start accelerating progress this year. Overall, we're pleased to see CarParts.com becoming the destination for consumers to address their vehicle's maintenance and repair needs with links to purchase products directly from our website or mobile app, and how-to videos that empower them to tackle easy jobs. Second, we invested in expanding our tech and product offerings. On the product offering side, we made significant investments in growing our third-party premium brands business across expanded price points to offset the competitive pressure from low-cost sellers on online marketplaces, some of which sell non-compliant replacement parts. This part of the business was up over 25% year over year, and is now a profitable $100 million revenue business. While it does have a lower gross margin profile than our house brands business, our strategy is to maximize for gross profit dollars. Expending our product and price assortment on carparts.com aims to capture a larger market share by catering to both premium and value shoppers, enhancing our competitiveness and positioning us for sustained growth. And third, We continue to upgrade our logistics and optimize for supply chain management. On the fulfillment side, we're on track with the move and opening of our new and larger semi-automated facility in Las Vegas, Nevada. As we shared last quarter, this building will serve as our West Coast flagship and will carry between 80% to 90% of our assortment. It will feature a state-of-the-art PIC module and extensive conveyance that will allow for a significant reduction in operating costs And the newly expended assortment will also help to reduce last mile transportation costs to the West Coast. We expect this building to begin operating in Q2 2024. And once this building is open, it should drive operating leverage and growth in the form of process efficiencies and improved conversion for customers in the region. Those savings will slowly start ramping in the second half of 2024 and fully realized in 2025. Over time, we intend to continue expanding our footprint to get closer to our customers for faster delivery and lower transportation costs. We will remain financially disciplined and evaluate each node in the network based on the return on investment and the timing of the impact to the P&L. Now I'll hand it over to Ryan for a financial update.