Nasdaq:PRTS
CarParts.com, Inc.
CarParts.com is a leading online destination for aftermarket auto parts and accessories serving DIY enthusiasts and professional repair shops across North America.
Key Metrics
Investment Thesis
Bull Case
Investors might consider the stock for its dominant market position in the North American online auto parts sector with a vast SKU depth. The company benefits from recurring demand from vehicle owners performing maintenance and professional shops needing specific hard-to-find parts. Long-term growth potential exists if management can successfully optimize inventory levels and stabilize operating margins to match revenue growth.
Bear Case
The stock faces severe headwinds due to consecutive years of negative net income, with losses widening significantly in 2024 to $40.6M. Substantial cash burn and negative changes in working capital suggest underlying profitability challenges that could persist without strategic improvements. The current financial trajectory raises concerns about the company's ability to sustain operations and return value to shareholders given the retained earnings deficit of over $229M.
About CarParts.com, Inc.
CarParts.com, Inc. operates as an online retailer of aftermarket automotive parts and accessories serving North American markets. The company specializes in direct-to-consumer e-commerce sales of replacement parts, tools, and maintenance products for vehicle owners and professional mechanics. Key revenue streams include the sale of specific part numbers through a robust digital catalog and distribution network.
Analysis
Management Discussion
Despite generating $588.8M in revenue, the company reported a net loss of $40.6M in 2024, reflecting a sharp deterioration from prior years due to substantial working capital changes and non-cash adjustments. The balance sheet shows reduced cash reserves ending at $36.4M compared to $51.0M at the start of the period, indicating significant cash outflows from investing activities totaling $20.6M. Operating expenses of $237.4M against a cost of revenue of $392.1M resulted in gross profits that were insufficient to cover all operational costs and capital expenditures.
Industry Overview
The aftermarket automotive parts industry is highly fragmented but competitive, with growth driven by vehicle aging populations and increasing DIY maintenance trends. Digital transformation has reshaped the sector as consumers increasingly prefer ordering parts online rather than visiting physical stores. Success in this market requires a robust logistics network, extensive inventory depth, and strong digital customer experience.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Revenue | $661.6M | $675.7M | $588.8M |
| Cost of Revenue | $430.7M | $446.3M | $392.1M |
| Gross Profit | $230.9M | $229.4M | $196.7M |
| Operating Expenses | $230.2M | $239.3M | $237.4M |
| Operating Income | $651.0K | $-9.9M | $-40.6M |
| Stock-Based Comp | $11.3M | $11.7M | $12.0M |
| Depreciation | $13.6M | $16.7M | $19.0M |
| Non-Operating Income | $-970.0K | $1.8M | $301.0K |
| Interest Expense | $1.4M | $1.4M | — |
| Pre-Tax Income | $-319.0K | $-8.1M | $-40.3M |
| Income Tax | $632.0K | $145.0K | $267.0K |
| Continuing Ops | $-951.0K | $-8.2M | $-40.6M |
| Discontinued Ops | $0 | $0 | $0 |
| Net Income | $-951.0K | $-8.2M | $-40.6M |
| Minority Interest | $0 | $0 | $0 |
| Net to Common | $-951.0K | $-8.2M | $-40.6M |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Current Assets | $167.9M | $193.3M | $138.9M |
| Accounts Receivable | $6.4M | $7.4M | $6.1M |
| Inventory | $136.0M | $128.9M | $90.4M |
| Other Current Assets | $25.4M | $57.1M | $42.4M |
| Long-Term Assets | $70.5M | $64.5M | $71.7M |
| PP&E (Net) | $24.3M | $26.4M | $32.2M |
| Operating Leases | $24.0M | $19.5M | $26.7M |
| Other LT Assets | $22.3M | $18.6M | $12.8M |
| Total Assets | $238.4M | $257.9M | $210.6M |
| Current Liabilities | $88.0M | $113.0M | $90.4M |
| Accounts Payable | $57.6M | $77.9M | $60.4M |
| Current Leases | $4.6M | $4.7M | $5.8M |
| Other Current Liab | $9.4M | $9.6M | $8.2M |
| Long-Term Liabilities | $40.3M | $32.0M | $35.0M |
| LT Operating Leases | $21.4M | $16.7M | $23.2M |
| Other LT Liab | $18.9M | $15.3M | $11.8M |
| Total Liabilities | $128.3M | $145.0M | $125.4M |
| Shareholders' Equity | $110.1M | $112.8M | $85.2M |
| Retained Earnings | $-180.8M | $-189.0M | $-229.6M |
| AOCI | $1.1M | $783.0K | $1.1M |
| Treasury Stock | $7.6M | $11.9M | $11.9M |
| Total L&E | $238.4M | $257.9M | $210.6M |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Net Income (CFO) | $-951.0K | $-8.2M | $-40.6M |
| Non-Cash Adjustments | $26.5M | $40.1M | $113.7M |
| Working Capital Changes | $-10.2M | $18.1M | $-62.7M |
| Cash from Operations | $15.4M | $50.0M | $10.3M |
| Capital Expenditures | $12.6M | $11.9M | $20.6M |
| Cash from Investing | $-12.5M | $-11.9M | $-20.6M |
| Share Buybacks | — | $4.3M | — |
| Cash from Financing | $-2.2M | $-5.9M | $-4.4M |
| FX Effect | $-75.0K | $0 | $87.0K |
| Net Change in Cash | $623.0K | $32.2M | $-14.6M |
| Beginning Cash | $18.1M | $18.8M | $51.0M |
| Ending Cash | $18.8M | $51.0M | $36.4M |
Frequently Asked Questions
How does CarParts.com, Inc. make money?
The company's primary business segment involves the direct online retail of automotive replacement parts, tools, and accessories. Revenue is generated through e-commerce channels targeting both individual vehicle owners and professional automotive repair facilities. Operations focus on a vast inventory of specific part numbers available for immediate shipment or backorder fulfillment.
What are the main risks for PRTS?
1) Significant volatility in net income driven by large inventory adjustments and operating leverage issues. 2) High exposure to fluctuations in automotive sales cycles and parts demand. 3) Intense competition from other e-commerce platforms and traditional brick-and-mortar auto parts retailers. 4) Sensitivity to supply chain disruptions affecting part availability and shipping costs.
What is PRTS's competitive advantage?
1) Extensive digital catalog offering millions of specific part numbers with high search visibility. 2) Cost-effective direct-to-consumer model eliminating traditional middlemen distributors. 3) Strong brand recognition among DIY mechanics and professional shops in the North American aftermarket space.
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