CarParts.com, Inc.

Good afternoon. At this time, all participants will be in a listen-only mode. Please note, this call is being recorded. I would now like to pass the conference over to our host, Mark DeSiena, Interim Chief Financial Officer. Please go ahead.

Hello, everyone, and thank you for joining us for the CarParts.com fourth quarter of 2025 conference call. Joining me today is David Mignon, Chief Executive Officer. Before I turn it over to David to start the call, has some important disclosures. Our remarks on this call could contain certain forward-looking statements related to our company and our strategic initiatives under the federal securities law. Actual results may differ materially from those contained herein or implied by these forward-looking statements due to various risks and uncertainties. For discussion of the material risk and other important factors that could affect results, please refer to carparts.com annual report on Form 10-K and quarterly reports on Form 10-Q. each as followed with the SEC, all 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 a press release that we issued today. With that, I would now like to turn the call over to David.

In 2025, we closed the $35.7 million strategic investment, completed a full cost structure reset, and built an operating model that is now delivering results every quarter. Our eight premium partnership is already at a $35 million annual revenue run rate with a clear path to 50 million in the short term, and we believe it will eventually exceed $100 million at attractive contribution margins, all without requiring us to carry the inventory or the working capital. That's the headline. Now I'd like to talk to you about our current trajectory. Q4, which is historically a weakest quarter seasonally, was stronger than Q3 and showed significant year-over-year improvement. Q3 improved over Q2. Q2 improved over Q1. That marks four consecutive quarters of improvement in the metrics that matter most, contribution margin, fixed operating expenses, and adjusted EBITDA. We now have clear evidence that our new operating model is working, and we're progressing toward our profitability goals. Let me give you more context on why the A-Premium partnership is so important. Historically, CarParts.com has been a collision-focused business, roughly two-thirds of revenue, where we turn inventory up to three times annually. This is where we have real scale and operational expertise. Efficiently managing large, bulky, non-conveyable inventory at speed and at volume. It's where we have a clear right to win. Mechanical parts are fundamentally different. Slower turns, typically 1 to 1.5 times annually, higher minimum order quantities, and significant working capital when owned directly. Now, the A-Premium partnership addresses all of these issues. Rather than sourcing and carrying that inventory ourselves, we have access to a world-class mechanical catalog through a capital-efficient model with lower minimum order quantities. We expand assortment, improve coverage, and preserve contribution margin without assuming the working capital burden. The eight premium catalog is five times larger than our prior mechanical offering and growing. In the world of fitment-specific parts, coverage is a durable competitive advantage. In addition to the eight premium partnership, we took decisive operational action in 2025 to materially change our cost structure and margin profile. 2025 was a demanding year that required deliberate choices across the organization. Our prior cost structure and advertising spend were designed for revenue levels that no longer existed. And we chose to rebuild the business around profitability and cash generation rather than pursue unprofitable volume. We adjusted advertising spend, right-sized the organization and reduced our fixed cost base. Those actions are complete and the company we are today is leaner, more focused and built to operate at our current revenue scale. On the cost side, we consolidated operations and reduced our fixed overhead. In the fourth quarter, we completed the consolidation of our Virginia warehouse operations, centralized logistics into our four other warehouses, and leveraged our partnership with Zontane. This eliminates redundant overhead and allows for improved variable economics while maintaining service levels. We also completed the transition of our Manila-based captive operations to Lean Solutions Group, a third-party BPO company in January of this year. Now, this simplifies and reduces our cost structure, and it shifts to a more flexible variable operating model while allowing us to focus internal resources on our core U.S. distribution, supply chain, technology, and customer experience. Both of these consolidations are a meaningful driver of our operating expense reduction and our path toward free cash flow. On advertising, we significantly improved efficiency. Between Q1 and Q4, overall marketing efficiency improved by close to 300 basis points. We stopped chasing unprofitable one and done transactions, and we refocused on high intent customers. As a result, revenue from retention channels, such as email and SMS, increased from 6.7% of e-commerce revenue in Q4 of 2024 to over 10% in Q4 of 2025. We're retaining more of the customers we acquire, which lowers our long-term cost of revenue and improves lifetime value. We also doubled down on mobile app adoption, which in Q4 of 2025 represented over 13% of e-commerce revenue, up from 7.8% in Q4 of 2024 and 0% at launch in Q3 of 2023. And app customers converted higher rates. purchase more frequently, carry larger basket sizes, and come with lower customer acquisition costs. In addition, our ads, services, and paid membership offerings now generate nearly $4 million in annual high margin fee income with virtually no capital required, raising our margin profile over time. Turning to overall business performance, the fourth quarter results reinforce this progress. Despite being our seasonally weakest quarter, we delivered meaningful year-over-year improvement in adjusted EBITDA, with the loss narrowing to 2.2 million compared to 6.8 million in the prior year period. Gross margin expanded 70 basis points year-over-year to 33.2%, reflecting improved pricing discipline and mix, including higher margin fee income. Operating expenses also declined as the organization became more efficient. Our strategy is built on operational resilience, diversified sourcing, pricing discipline, and asset-light partnerships. As we look ahead, our path to free cash flow is not dependent on a sharp rebound in demand. It's driven by higher contribution margins, a materially lower fixed OPEX base, and improved capital efficiency as we scale through our partnerships. Our focus is execution, turning operational progress into consistent cash generation quarter by quarter. And with that, I'll turn it over to Mark to walk through the financial results and details. Thank you, David.