EX-99.1 2 d786427dex991.htm EX-99.1 EX-99.1
Investor Presentation
Investor Presentation
Exhibit 99.1


Safe Harbor
2
This presentation may contain certain forward-looking statements and management may
make additional forward-looking statements in response to your questions.  These
statements do not guarantee future performance and speak only as of the date hereof, and
qualify for the safe harbor provided by Section 21E of the Securities Exchange Act of 1934,
as amended, and Section 27A of the Securities Act of 1933.  We refer all of you to the risk
factors contained in US Auto Parts Annual Report on Form 10-K and quarterly reports on
Form 10-Q filed with the Securities and Exchange Commission, for more detailed discussion
on the factors that can cause actual results to differ materially from those projected in any
forward-looking statements.


Case for Investment
3
Large and Growing Online Market
Significant Customer Reach
Significant Private Label Offering
Reduced Cost Structure
Experienced Leadership Team


4
Sales up 13% for quarter
As of 8/5/14, we anticipate to have double digit comps in the back
half of the year
Adjusted
EBITDA
was
$2.2M
up
from
$1.1M
in
Q2-13
Adjusted EBITDA less CAPEX was $0.7M up from ($1.1M) in Q2-13
Highlights from Q2-14
Earnings Call


At 9.7% online market penetration, auto parts still lags industry average in the teens.
US Auto Parts is the largest pure-play online retailer of auto parts
1
AASA estimates
2
Estimates by US Auto Parts where amounts are not publicly reported & we estimate the total online
DIY
market
to
be
larger
than
the
$3.8B
that
is
reported
in
the
2014
AAIA
Fact
Book
3
Excludes AutoAnything which is wholly owned by AutoZone
Do It Yourself (DIY) Market Size
Company
2013 Est. Rev
% of total
Marketplaces
(in million)
eBay Motors
$2,200
47.6%
Amazon
$600
13.0%
Sub Total
$2,800
60.6%
Wholesale Online
Tire Rack (online)
$440
9.5%
Other Tire Companies
$190
4.1%
Sub Total
$630
13.6%
Pure Play
US Auto Parts
$250
5.4%
Rock Auto
$180
3.9%
Summit
$170
3.7%
Auto Anything
(AutoZone)
$120
2.6%
JEGS
$70
1.5%
CarID
$60
1.3%
All Other Pure Play
$90
1.9%
Sub Total
$940
20.3%
Brick & Mortar Retailers
AutoZone (w/o AA)
3
$110
2.4%
Advance
$80
1.7%
Pep
$30
0.6%
O'Reilly
$20
0.4%
NAPA
$10
0.2%
Sub Total
$250
5.4%
Total
4,620
100.0%
Total
DIY
Market
Size
for
2013
of
47.2B
$42.6B
90.3%
$4.6B
9.7%
2
5
1


Booz & Co. estimates by 2018 that Online DIY
could reach 17% of the total DIY market
6
Online Market is Vibrant and Growing
Aftermarket e-Commerce Overview
DIY Online Penetration
Mean Light Vehicle age
Source: R.L. Polk and BB&TCM
Source: Booz & Co.
The average age of a light vehicle on the road
continues to increase each year since 1997
8.3
8.4
8.8
8.9
8.9
9.6
9.7
9.8
9.8
9.9
10.0
10.1
10.3
10.6
10.9
11.1
11.3
0
2
4
6
8
10
12
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
2012
2013
2014
2015
2016
2017
2018


Offline
$42.6
$43.5
$44.2
$44.8
$45.3
$45.5
Online
4.6
5.5
6.6
8.0
9.5
11.5
Total
$47.2
$49.0
$50.9
$52.8
$54.8
$56.9
% Online
9.8%
11.3%
13.0%
15.1%
17.4%
20.1%
7
Do It Yourself (DIY) Projections
1
1
Projections obtained from AAIA 2014 Digital Automotive Aftermarket Fact Book and March 2014 AASA Digital Disruption: e-tailing in the Automotive Aftermarket Report
DIY Projected Revenue (in Billions)
0.0
0.5
1.0
1.5
2.0
2.5
2013
2014
2015
2016
2017
2018
DIY Projected Y/Y Revenue Growth
Offline
Online
Total


(some overlap of monthly visitors across websites)
8
USAP traffic includes traffic from continued sales channels
Competitive sites’
traffic based on Compete March 2014 reports
US Auto Parts Dominant Reach-
Largest Pure Play Internet Retailer
0
2,000
4,000
6,000
8,000
10,000
Customer Reach is a Competitive Moat
Over 500 man years of hand written unique content
Long domain history to help indexing in search
Multiple website management


Broad Auto Parts Product Offering
Body Parts
Engine Parts
Performance &
Accessories
*Represents  USAP online mix  
36%
48%
16%
Revenue*
US Auto Parts has one of the largest product offerings with over
1.5 million
products across body parts, engine parts, and performance & accessories
Broad Auto Parts Product Offering
Brake
Discs
Catalytic
Converters
Radiators
Headers
Oxygen
Sensors
Alternators
Exhaust
Driveshaft
Fuel Injection /
Delivery
Lamps
Mirrors
Bumpers
Hoods
Tailgates
Doors
Grills
Wheels
Window
Regulators
Seat Covers
Car Covers
Floor Mats /
Carpeting
Cold Air
Intakes
Vent Visors
Tonneau
Covers
Nerf Bars
Bug Shields
Car Bras
9


Currently over 40,000 Private Label Products.
Adding 4,000 –
5,000 Private Label SKUs this year
The
Company
sources
product
directly
from
over
200
factories
in
Asia
10
Margin %
In-Stock
Private Label
(Asia Sourced)
Branded
(U.S. Sourced)
30% -
60%
15% -
30%
5% -
20%
Drop Shipped
Current Mix
Current Mix
The
breath
of
our
Private
Label
products
provides
a
significant
competitive
moat
USAP’s Supply Chain Creates
Pricing Advantage
68%
32%
55%
45%
USAP’s ability to competitively price products while maintaining healthy margins is a function of the
Company’s ability to leverage its robust private label supply chain.


Revenue
100%
Gross Margins
27% -
29%
Variable OPEX Costs
15%
Fixed Cost
0%
Incremental Flow
12% -
14%
Incremental Flow Thru
Growth and Profitability
We anticipate to have double digit comps in the back half of the year
11


12
*Excludes non-cash D&A, stock based comp and restructuring
Over $19M of costs have been reduced over a two year period
USAP has significantly reduced
operating cost
OPEX
(in
thousands)
Q1-14
% of rev
Q1-13
% of rev
$ Change
% of rev change
Fulfillment*
3,935
5.8%
3,994
6.1%
(59)
(30 bps)
Marketing*
8,691
12.8%
8,967
13.7%
(276)
(90 bps)
Technology*
1,129
1.7%
1,395
2.1%
(266)
(40 bps)
General & Administrative*
3,620
5.3%
3,873
5.9%
(252)
(60 bps)
Subtotal
17,376
25.5%
18,229
27.9%
(853)
(240 bps)
D&A and  Stock Based Comp
2,829
4.2%
4,153
6.3%
(1,324)
(210 bps)
Restructuring
-
0.0%
498  
0.8%
(498)
(80 bps)
Total OPEX
20,205
29.7%
22,880
35.0%
(2,675)
530 bps)
Fixed Cost
7,206
10.6%
8,253
12.6%
(1,047)
(200 bps)
Variable
10,170
14.9%
9,976
15.3%
193
40 bps
D&A & Stock Based Comp
2,829
4.2%
4,153
6.3%
(1,324)
(210 bps)
Restructuring
-
0.0%
498  
0.8%
(498)
(80 bps)
Total
20,205
29.7%
22,880
35.0%
(2,675)
(530 bps
CAPEX
1,558
2.3%
2,623
4.0%
(1,065)
(170 bps)
Total OPEX & CAPEX
21,763
32.0%
25,503
39.0%
(3,740)
(700 bps)
Annualized
87,053
102,012
(14,959)


13
Our business model has significant cost leverage as revenues grow
1.
2013 Revenue was $255M
2.
Excludes stock based compensation, depreciation and amortization
3.
For every incremental year required to achieve growth levels, fixed expenses increase $1.0M or 3%
Financial Sensitivity
Base
8%
18%
27%
37%
Revenue
$255
$275
$300
$325
$350
Gross Margin %
27.0%
29.0%
27.0%
29.0%
27.0%
29.0%
27.0%
29.0%
27.0%
29.0%
Variable:
Fulfillment
3.4%
3.4%
3.4%
3.4%
3.4%
Marketing
9.2%
9.2%
9.2%
9.2%
9.2%
Technology
0.6%
0.6%
0.6%
0.6%
0.6%
G&A
1.7%
1.7%
1.7%
1.7%
1.7%
Total Variable
14.9%
14.9%
14.9%
14.9%
14.9%
Fixed:
Fulfillment
2.5%
2.3%
2.1%
2.0%
1.8%
Marketing
3.8%
3.5%
3.2%
3.0%
2.8%
Technology
1.1%
1.1%
1.0%
0.9%
0.8%
G&A
3.8%
3.5%
3.2%
3.0%
2.8%
Total Fixed
11.2%
10.4%
9.5%
8.8%
8.2%
Adjusted EBITDA %
0.9%
2.9%
1.7%
3.7%
2.5%
4.5%
3.3%
5.3%
3.9%
5.9%
Adjusted EBITDA $
$2
$7
$5
$10
$8
$14
$11
$17
$14
$21


14
AutoMD –
Addressing the
DIFM Market


Case for Investment
15
Large and Growing Online Market
Significant Customer Reach
Significant Private Label Offering
Reduced Cost Structure
Experienced Leadership Team


16
Shane Evangelist -
Chief Executive Officer
Chief
Executive
Officer
since
October
2007
with
over
10
years
of
leading
internet
businesses
Senior Vice President and General Manager of Blockbuster Online
Vice President of Strategic Planning for Blockbuster Inc.
B.A. degree in Business Administration from the University of New
Mexico and a M.B.A. from Southern Methodist University
David Robson -
Chief Financial Officer
Chief Financial Officer since January 2012
Over
20
years
of
finance,
accounting,
and
operational
experience
and
has
held senior positions with both public and private companies
Executive Vice President and Chief Administrative Officer at Mervyns'
LLC, SVP of Finance and Principal Accounting Officer for Guitar
Center, Inc.
B.S. degree in Accounting from University of Southern California;
certified public accountant
Aaron E. Coleman -
Chief Operating Officer
Chief Operating Officer since September 2010, and was Executive
Vice President of Operations and CIO from April 2008 until September
2010 with over 18 years of e-commerce experience
Senior Vice President –
Online Systems at Blockbuster Inc.
Multiple positions with internet and technology companies including
American Airlines, Travelweb (Priceline), Baan
B.A. degree in Business Administration from Gonzaga University
Leadership Team
Charles Fischer -
Senior Vice President of Global Procurement
Senior Vice President of Global Sourcing and Procurement since May 2008 with
over 30 years of global sourcing experience
Vice President, Supply Chain Management for Keystone Automotive Industries
Director, Business Development for Modern Engineering
Multiple leadership positions with multiple companies in the automotive
aftermarket industry


17
Over $19M of costs have been reduced over a two year period
Adjusted EBITDA
(Non-GAAP Financial Measure –
in thousands)
Thirteen Weeks Ended
Twenty-Six Weeks Ended
June 28
June 29
June 28
June 29
2014
2013
2014
2013
Net loss
(2,180)
$           
(9,567)
$           
(1,979)
$           
(12,910)
$         
Interest expense, net
238
                  
228
                  
497
                  
415
                  
Income tax provision
21
                    
69
                    
53
                    
90
                    
Amortization of intangible assets
126
                  
107
                  
210
                  
213
                  
Depreciation and amortization expense
2,252
               
3,626
               
4,620
               
7,264
               
EBITDA
457
                  
(5,537)
              
3,401
               
(4,928)
              
Share-based compensation expense
629
                  
341
                  
1,005
               
750
                  
Impairment loss on property and equipment
-
                   
4,832
               
-
                   
4,832
               
Impairment loss on intangible assets
-
                   
1,245
               
-
                   
1,245
               
Inventory write-down related to Carson closure
478
                  
-
                   
478
                  
-
                   
Restructuring costs
625
                  
225
                  
625
                  
723
                  
Adjusted EBITDA
2,189
$             
1,106
$             
5,509
$             
2,622
$             


18
Consolidated Statements of Comprehensive Operations
(Unaudited, in Thousands, Except Per Share Data)
Thirteen Weeks Ended
Twenty-Six Weeks Ended
June 28
June 29
June 28
June 29
2014
2013
2014
2013
Net sales
76,947
$          
67,889
$          
144,975
$        
133,294
$        
Cost of sales
(1)
56,527
             
48,876
             
103,854
          
94,543
             
Gross profit
20,420
             
19,013
             
41,121
             
38,751
             
Operating expenses:
    Marketing
10,963
             
11,186
             
21,078
             
22,377
             
    General and administrative
4,623
               
4,678
               
8,770
               
9,365
               
    Fulfillment
5,383
               
4,991
               
10,095
             
10,372
             
    Technology
1,264
               
1,316
               
2,412
               
2,831
               
    Impairment loss on property and equipment
-
                   
4,832
               
-
                   
4,832
               
    Impairment loss on intangible assets
-
                   
1,245
               
-
                   
1,245
               
    Amortization of intangible assets
126
                  
107
                  
210
                  
213
                  
        Total operating expenses
22,359
             
28,355
             
42,565
             
51,235
             
Loss from operations
(1,939)
              
(9,342)
              
(1,444)
              
(12,484)
           
Other income (expense):
    Other income, net
18
                    
72
                    
15
                    
79
                    
    Interest expense
(238)
                 
(228)
                 
(497)
                 
(415)
                 
        Total other expense, net
(220)
                 
(156)
                 
(482)
                 
(336)
                 
Loss before income tax provision
(2,159)
              
(9,498)
              
(1,926)
              
(12,820)
           
Income tax provision
21
                    
69
                    
53
                    
90
                    
Net loss
(2,180)
              
(9,567)
              
(1,979)
              
(12,910)
           
Other comprehensive income (loss), net of tax:
    Foreign currency translation adjustments
(12)
                   
31
                    
(4)
                     
25
                    
    Net unrealized losses on derivative instrument
(22)
                   
-
                   
(22)
                   
-
                   
    Unrealized gains on investments
-
                   
2
                      
-
                   
2
                      
        Total other comprehensive income (loss)
(34)
                   
33
                    
(26)
                   
27
                    
Comprehensive loss
(2,214)
$           
(9,534)
$           
(2,005)
$           
(12,883)
$         
Basic and diluted net loss per share
(0.07)
$              
(0.29)
$              
(0.06)
$              
(0.40)
$              
Shares used in computation of basic and
    diluted net loss per share
33,460
             
33,119
             
33,422
             
32,130
             
(1)
Excludes depreciation and amortization expense which is included in marketing, general and administrative and fulfillment expense.


19
Consolidated Balance Sheet
(Unaudited, in Thousands, Except Par and Per Share Liquidation value)
June 28
December 28
ASSETS
2014
2013
Current assets:
    Cash and cash equivalents
1,675
$                
818
$                 
    Short-term investments
786
                     
47
                     
    Accounts receivable, net of allowances of $295 and $213
       at June 28, 2014 and December 28, 2013, respectively
3,731
                  
5,029
                
    Inventory
35,178
                
36,986
              
    Other current assets
3,000
                  
3,234
                
       Total current assets
44,370
                
46,114
              
Property and equipment, net
17,936
                
19,663
              
Intangible assets, net
1,828
                  
1,601
                
Other non-current assets
1,355
                  
1,804
                
       Total assets
65,489
$              
69,182
$           
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable
21,784
$              
19,669
$           
    Accrued expenses
7,439
                  
5,959
                
    Revolving loan payable
-
                     
6,774
                
    Current portion of capital leases payable
256
                     
269
                   
    Other current liabilities
4,180
                  
3,682
                
       Total current liabilities
33,659
                
36,353
              
Capital leases payable, net of current portion
9,387
                  
9,502
                
Deferred income taxes
387
                     
335
                   
Other non-current liabilities
1,895
                  
2,126
                
       Total liabilities
45,328
                
48,316
              
Stockholders' equity:
    Series A convertible preferred stock, $0.001 par value; $1.45
        per share liquidation value or aggregate of $6,017;  4,150
       shares authorized; 4,150 shares issued and outstanding
       at June 28, 2014 and December 28, 2013, respectively
4
                         
4
                       
    Common stock, $0.001 par value; 100,000 shares authorized;
       33,506 shares and 33,352 shares issued and outstanding
       at June 28, 2014 and December 28, 2013, respectively
34
                       
33
                     
    Additional paid-in capital
170,111
              
168,693
           
    Common stock dividend distributable
60
                       
60
                     
    Accumulated other comprehensive income
420
                     
446
                   
    Accumulated deficit
(150,468)
           
(148,370)
          
       Total stockholders' equity
20,161
                
20,866
              
       Total liabilities and equity
65,489
$              
69,182
$           


Sales & Adjusted EBITDA
20
Consolidated Sales
($ In Millions)
Consolidated Adjusted EBITDA
($ In Millions)
Adj. EBITDA Margin
3%
5%
8%
7%
3%
2%
3%
5%
1.
JC Whitney was acquired in Aug 2010 adding revenue of $39.1M in 2010 and $83.4M in 2011.  Amounts not separately disclosed after 2011.
2.
Non-GAAP financial measure EBITDA consists of net income before (a) interest expense, net; (b) income tax provisions; (c) amortization of intangible assets; (d) depreciation and
amortization.  Adjusted EBITDA excludes Stock based compensation of $2.9M, $3.3M, $2.7M, $2.6M, $1.7M , $1.3M , $0.4M and $0.6M in 2008, 2009, 2010, 2011, 2012, 2013,
Q1-14 and Q2-14, respectively and restructuring costs and other one time charges of $23.4M, $0.4M, $5.8M, $12.9M, $27.5M, $6.8M, and $1.1 in 2008, 2009, 2010, 2011, 2012,
2013 and Q2-14, respectively. There were no restructuring or one time charges in Q1-14.
$153.4
$176.3
$262.3
$327.1
$304.0
$254.8
$68.0
$76.9
2008
2009
2011
2011
2012
2013
Q1-14
Q2-14
$5.2
$13.5
$19.5
$16.3
$9.4
$6.0
$3.3
$2.2
2008
2009
2011
2011
2012
2013
Q1-14
Q2-14
1
2


Source: Google
eBay Parts Sales Continue to Increase
Source: eBay filings, press releases
Google Queries for Parts Growing
Online Market is Vibrant and Growing
Aftermarket e-Commerce Overview
Online sales of automotive parts and accessories have grown in the high
teens and are expected to grow at 20% going forward
$1.0
$1.1
$1.2
$1.3
$1.4
$1.5
$1.6
$1.7
$1.8
$1.9
$2.0
$2.1
$2.2
$2.3
$1.3
$1.3
$1.2
$1.3
$1.5
$1.6
$1.5 $1.5
$1.8 $1.8
$1.9 $1.9
$2.0
$2.2
$2.1 $2.1
21