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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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68-0623433
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Large Accelerated Filer
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¨
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Accelerated Filer
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ý
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Non-Accelerated Filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Emerging growth company
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¨
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
o
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Page
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ITEM 1.
|
||
|
||
|
||
|
||
|
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ITEM 2.
|
||
ITEM 3.
|
||
ITEM 4.
|
||
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ITEM 1.
|
||
ITEM 1A.
|
||
ITEM 2.
|
||
ITEM 3.
|
||
ITEM 4.
|
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ITEM 5.
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ITEM 6.
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June 30,
2018 |
|
December 30,
2017 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
6,824
|
|
|
$
|
2,850
|
|
Short-term investments
|
5
|
|
|
9
|
|
||
Accounts receivable, net
|
2,633
|
|
|
2,470
|
|
||
Inventory
|
54,187
|
|
|
54,231
|
|
||
Other current assets
|
3,639
|
|
|
2,972
|
|
||
Total current assets
|
67,288
|
|
|
62,532
|
|
||
Deferred income taxes
|
20,467
|
|
|
21,476
|
|
||
Property and equipment, net
|
14,887
|
|
|
15,085
|
|
||
Intangible assets, net
|
557
|
|
|
651
|
|
||
Other non-current assets
|
1,545
|
|
|
954
|
|
||
Total assets
|
$
|
104,744
|
|
|
$
|
100,698
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
34,156
|
|
|
$
|
35,999
|
|
Accrued expenses
|
13,604
|
|
|
7,363
|
|
||
Current portion of capital leases payable
|
588
|
|
|
579
|
|
||
Customer deposits
|
596
|
|
|
2,500
|
|
||
Other current liabilities
|
3,049
|
|
|
2,457
|
|
||
Total current liabilities
|
51,993
|
|
|
48,898
|
|
||
Capital leases payable, net of current portion
|
8,869
|
|
|
9,173
|
|
||
Other non-current liabilities
|
2,314
|
|
|
2,266
|
|
||
Total liabilities
|
63,176
|
|
|
60,337
|
|
||
Commitments and contingencies
|
|
|
|
||||
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; 2,771 shares issued and outstanding at both June 30, 2018 and December 30, 2017
|
3
|
|
|
3
|
|
||
Common stock, $0.001 par value; 100,000 shares authorized; 34,973 and 34,666 shares issued and outstanding at June 30, 2018 and December 30, 2017 (of which 2,525 are treasury stock)
|
37
|
|
|
37
|
|
||
Treasury stock
|
(7,146
|
)
|
|
(7,146
|
)
|
||
Additional paid-in capital
|
180,641
|
|
|
179,906
|
|
||
Accumulated other comprehensive income
|
604
|
|
|
557
|
|
||
Accumulated deficit
|
(132,571
|
)
|
|
(132,996
|
)
|
||
Total stockholders’ equity
|
41,568
|
|
|
40,361
|
|
||
Total liabilities and stockholders’ equity
|
$
|
104,744
|
|
|
$
|
100,698
|
|
|
Thirteen Weeks Ended
|
|
Twenty-Six Weeks Ended
|
||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||||||
Net sales
|
$
|
76,973
|
|
|
$
|
80,208
|
|
|
$
|
155,358
|
|
|
$
|
161,041
|
|
Cost of sales
(1)
|
55,488
|
|
|
56,964
|
|
|
110,414
|
|
|
114,010
|
|
||||
Gross profit
|
21,485
|
|
|
23,244
|
|
|
44,944
|
|
|
47,031
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Marketing
|
9,818
|
|
|
10,248
|
|
|
19,800
|
|
|
20,562
|
|
||||
General and administrative
|
4,741
|
|
|
4,310
|
|
|
9,626
|
|
|
9,111
|
|
||||
Fulfillment
|
5,394
|
|
|
5,929
|
|
|
11,242
|
|
|
12,011
|
|
||||
Technology
|
998
|
|
|
1,136
|
|
|
2,086
|
|
|
2,409
|
|
||||
Amortization of intangible assets
|
47
|
|
|
112
|
|
|
94
|
|
|
224
|
|
||||
Total operating expenses
|
20,998
|
|
|
21,735
|
|
|
42,848
|
|
|
44,317
|
|
||||
Income from operations
|
487
|
|
|
1,509
|
|
|
2,096
|
|
|
2,714
|
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
||||||||
Other, net
|
(7
|
)
|
|
19
|
|
|
(6
|
)
|
|
35
|
|
||||
Interest expense
|
(421
|
)
|
|
(469
|
)
|
|
(854
|
)
|
|
(847
|
)
|
||||
Total other expense, net
|
(428
|
)
|
|
(450
|
)
|
|
(860
|
)
|
|
(812
|
)
|
||||
Income from continuing operations before income taxes
|
59
|
|
|
1,059
|
|
|
1,236
|
|
|
1,902
|
|
||||
Income tax provision
|
544
|
|
|
(25,859
|
)
|
|
986
|
|
|
(25,832
|
)
|
||||
(Loss) income from continuing operations
|
(485
|
)
|
|
26,918
|
|
|
250
|
|
|
27,734
|
|
||||
Discontinued operations
(2)
|
|
|
|
|
|
|
|
||||||||
Loss from operations and disposal of discontinued AutoMD operations
|
—
|
|
|
—
|
|
|
—
|
|
|
(558
|
)
|
||||
Income tax provision
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Loss on discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
(559
|
)
|
||||
Net (loss) income
|
(485
|
)
|
|
26,918
|
|
|
250
|
|
|
27,175
|
|
||||
Other comprehensive income (loss):
|
|
|
|
|
|
|
|||||||||
Foreign currency translation adjustments
|
23
|
|
|
(1
|
)
|
|
42
|
|
|
(3
|
)
|
||||
Total other comprehensive income (loss)
|
23
|
|
|
(1
|
)
|
|
42
|
|
|
(3
|
)
|
||||
Comprehensive (loss) income
|
$
|
(462
|
)
|
|
$
|
26,917
|
|
|
$
|
292
|
|
|
$
|
27,172
|
|
(Loss) income from continuing operations per share:
|
|
|
|
|
|
|
|
||||||||
Basic (loss) income from continuing operations per share
|
$
|
(0.02
|
)
|
|
$
|
0.76
|
|
|
$
|
0.00
|
|
|
$
|
0.79
|
|
Diluted (loss) income from continuing operations per share
|
$
|
(0.02
|
)
|
|
$
|
0.67
|
|
|
$
|
0.00
|
|
|
$
|
0.69
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Shares used in computation of basic (loss) income from continuing operations per share
|
34,972
|
|
|
35,332
|
|
|
34,896
|
|
|
34,921
|
|
||||
Shares used in computation of diluted (loss) income from continuing operations per share
|
34,972
|
|
|
39,933
|
|
|
35,258
|
|
|
40,079
|
|
|
(1)
|
Excludes depreciation and amortization expense which is included in marketing, general and administrative and fulfillment expense.
|
(2)
|
During March 2017, AutoMD filed for dissolution and the AutoMD operating segment has been classified as discontinued operations.
|
|
Twenty-Six Weeks Ended
|
||||||
|
June 30,
2018 |
|
July 1,
2017 |
||||
Operating activities
|
|
|
|
||||
Net income
|
$
|
250
|
|
|
$
|
27,175
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization expense
|
2,993
|
|
|
3,270
|
|
||
Amortization of intangible assets
|
94
|
|
|
224
|
|
||
Deferred income taxes
|
920
|
|
|
(25,881
|
)
|
||
Share-based compensation expense
|
1,137
|
|
|
1,633
|
|
||
Stock awards issued for non-employee director service
|
7
|
|
|
5
|
|
||
Amortization of deferred financing costs
|
2
|
|
|
30
|
|
||
Gain from disposition of assets
|
—
|
|
|
(8
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(163
|
)
|
|
568
|
|
||
Inventory
|
44
|
|
|
(1,291
|
)
|
||
Other current assets
|
(1,270
|
)
|
|
(86
|
)
|
||
Other non-current assets
|
1
|
|
|
166
|
|
||
Accounts payable and accrued expenses
|
4,560
|
|
|
7,261
|
|
||
Other current liabilities
|
(929
|
)
|
|
(764
|
)
|
||
Other non-current liabilities
|
195
|
|
|
168
|
|
||
Net cash provided by operating activities
|
7,841
|
|
|
12,470
|
|
||
Investing activities
|
|
|
|
||||
Additions to property and equipment
|
(2,940
|
)
|
|
(2,494
|
)
|
||
Proceeds from sale of property and equipment
|
—
|
|
|
39
|
|
||
Net cash used in investing activities
|
(2,940
|
)
|
|
(2,455
|
)
|
||
Financing activities
|
|
|
|
||||
Borrowings from revolving loan payable
|
3,189
|
|
|
3,645
|
|
||
Payments made on revolving loan payable
|
(3,189
|
)
|
|
(3,645
|
)
|
||
Proceeds from stock options
|
—
|
|
|
238
|
|
||
Minority shareholder redemption
|
—
|
|
|
(2,485
|
)
|
||
Payments on capital leases
|
(293
|
)
|
|
(278
|
)
|
||
Treasury stock repurchase
|
—
|
|
|
(2,272
|
)
|
||
Statutory tax withholding payment for share-based compensation
|
(430
|
)
|
|
(1,644
|
)
|
||
Payment of liabilities related to financing activities
|
(100
|
)
|
|
(100
|
)
|
||
Preferred stock dividends paid
|
(80
|
)
|
|
(169
|
)
|
||
Net cash used in financing activities
|
(903
|
)
|
|
(6,710
|
)
|
||
Effect of exchange rate changes on cash
|
(24
|
)
|
|
(20
|
)
|
||
Net change in cash and cash equivalents
|
3,974
|
|
|
3,285
|
|
||
Cash and cash equivalents, beginning of period
|
2,850
|
|
|
6,643
|
|
||
Cash and cash equivalents, end of period
|
$
|
6,824
|
|
|
$
|
9,928
|
|
Supplemental disclosure of non-cash investing and financing activities:
|
|
|
|
||||
Accrued asset purchases
|
$
|
680
|
|
|
$
|
712
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid during the period for income taxes
|
$
|
44
|
|
|
$
|
42
|
|
Cash paid during the period for interest
|
869
|
|
|
711
|
|
|
|
|
June 30, 2018
|
|
December 30, 2017
|
||||||||||||||||||||
|
Useful Life
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amort. and
Impairment
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amort. and
Impairment
|
|
Net
Carrying
Amount
|
||||||||||||
Intangible assets subject to amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Product design intellectual property
|
4 years
|
|
$
|
2,750
|
|
|
$
|
(2,750
|
)
|
|
$
|
—
|
|
|
$
|
2,750
|
|
|
$
|
(2,750
|
)
|
|
$
|
—
|
|
Patent license agreements
|
3 - 5 years
|
|
462
|
|
|
(404
|
)
|
|
$
|
58
|
|
|
462
|
|
|
(360
|
)
|
|
$
|
102
|
|
||||
Domain and trade names
|
10 years
|
|
1,407
|
|
|
(908
|
)
|
|
$
|
499
|
|
|
1,407
|
|
|
(858
|
)
|
|
$
|
549
|
|
||||
Total
|
|
|
$
|
4,619
|
|
|
$
|
(4,062
|
)
|
|
$
|
557
|
|
|
$
|
4,619
|
|
|
$
|
(3,968
|
)
|
|
$
|
651
|
|
2018
|
$
|
142
|
|
2019
|
100
|
|
|
2020
|
100
|
|
|
2021
|
100
|
|
|
2022
|
62
|
|
|
Thereafter
|
53
|
|
|
Total
|
$
|
557
|
|
|
Shares
|
|
Weighted
Average Exercise Price |
|
Weighted Average
Remaining Contractual Term (in years) |
|
Aggregate
Intrinsic Value |
|||||
Awards outstanding, December 30, 2017
|
1,113
|
|
|
$
|
—
|
|
|
|
|
|
||
Awarded
|
1,033
|
|
|
$
|
—
|
|
|
|
|
|
||
Vested
|
(488
|
)
|
|
$
|
—
|
|
|
|
|
|
||
Forfeited
|
(348
|
)
|
|
$
|
—
|
|
|
|
|
|
||
Awards outstanding, June 30, 2018
|
1,310
|
|
|
$
|
—
|
|
|
1.10
|
|
$
|
1,965
|
|
Vested and expected to vest at June 30, 2018
|
1,310
|
|
|
$
|
—
|
|
|
1.10
|
|
$
|
1,965
|
|
|
Thirteen Weeks Ended
|
|
Twenty-Six Weeks Ended
|
||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||||||
Net (loss) income per share:
|
|
|
|
|
|
|
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
(Loss) income from continuing operations
|
$
|
(485
|
)
|
|
$
|
26,918
|
|
|
250
|
|
|
27,734
|
|
||
Dividends on Series A Convertible Preferred Stock
|
40
|
|
|
49
|
|
|
80
|
|
|
108
|
|
||||
(Loss) income from continuing operations available to common shares
|
$
|
(525
|
)
|
|
$
|
26,869
|
|
|
$
|
170
|
|
|
$
|
27,626
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding (basic)
|
34,972
|
|
|
35,332
|
|
|
34,896
|
|
|
34,921
|
|
||||
Common equivalent shares from common stock options, restricted stock, preferred stock and warrants
|
—
|
|
|
4,601
|
|
|
362
|
|
|
5,158
|
|
||||
Weighted-average common shares outstanding (diluted)
|
34,972
|
|
|
39,933
|
|
|
35,258
|
|
|
40,079
|
|
||||
Basic net (loss) income from continuing operations per share
|
$
|
(0.02
|
)
|
|
$
|
0.76
|
|
|
$
|
0.00
|
|
|
$
|
0.79
|
|
Diluted net (loss) income from continuing operations per share
|
$
|
(0.02
|
)
|
|
$
|
0.67
|
|
|
$
|
0.00
|
|
|
$
|
0.69
|
|
|
Thirteen Weeks Ended
|
|
Twenty-Six Weeks Ended
|
||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||
Common stock warrants
|
—
|
|
|
5
|
|
|
—
|
|
|
13
|
|
Performance stock units
|
343
|
|
|
225
|
|
|
384
|
|
|
375
|
|
Restricted stock units
|
504
|
|
|
—
|
|
|
515
|
|
|
—
|
|
Series A Convertible Preferred Stock
|
2,771
|
|
|
—
|
|
|
2,771
|
|
|
—
|
|
Options to purchase common stock
|
5,477
|
|
|
3,042
|
|
|
5,611
|
|
|
2,754
|
|
Total
|
9,095
|
|
|
3,272
|
|
|
9,281
|
|
|
3,142
|
|
2018
|
$
|
783
|
|
2019
|
1,223
|
|
|
2020
|
541
|
|
|
Total
|
$
|
2,547
|
|
2018
|
$
|
1,279
|
|
2019
|
1,296
|
|
|
2020
|
966
|
|
|
2021
|
963
|
|
|
2022
|
978
|
|
|
Thereafter
|
10,488
|
|
|
Total minimum payments required
|
15,970
|
|
|
Less amount representing interest
|
6,512
|
|
|
Present value of minimum capital lease payments
|
$
|
9,458
|
|
|
|
Thirteen Weeks Ended
|
|
Twenty-Six Weeks Ended
|
||||
|
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
Private Label
|
|
|
|
|
|
|
|
|
Collision
|
|
57%
|
|
55%
|
|
58%
|
|
55%
|
Engine
|
|
18%
|
|
17%
|
|
17%
|
|
17%
|
Performance
|
|
1%
|
|
1%
|
|
1%
|
|
1%
|
|
|
|
|
|
|
|
|
|
Branded
|
|
|
|
|
|
|
|
|
Collision
|
|
1%
|
|
1%
|
|
1%
|
|
1%
|
Engine
|
|
11%
|
|
10%
|
|
11%
|
|
10%
|
Performance
|
|
12%
|
|
16%
|
|
12%
|
|
16%
|
|
|
|
|
|
|
|
|
|
Total
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
|
Thirteen Weeks Ended
|
|
Twenty-Six Weeks Ended
|
||
|
|
July 1, 2017
|
|
July 1, 2017
|
||
Net Sales
|
|
—
|
|
|
37
|
|
Loss from operations and disposal of discontinued AutoMD operations
|
|
—
|
|
|
(558
|
)
|
Income tax provision (benefit)
|
|
—
|
|
|
1
|
|
Loss from discontinued operations
|
|
—
|
|
|
(559
|
)
|
|
Thirteen Weeks Ended
|
|
Twenty-Six Weeks Ended
|
||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||||||
Unique Visitors (millions)
(1)
|
16.3
|
|
|
24.7
|
|
|
36.4
|
|
|
53.6
|
|
||||
E-commerce Orders (thousands)
|
443
|
|
|
494
|
|
|
903
|
|
|
1,012
|
|
||||
Online Marketplace Orders (thousands)
|
414
|
|
|
460
|
|
|
855
|
|
|
891
|
|
||||
Total Online Orders (thousands)
|
857
|
|
|
954
|
|
|
1,758
|
|
|
1,903
|
|
||||
E-commerce Average Order Value
|
$
|
102
|
|
|
$
|
103
|
|
|
$
|
100
|
|
|
$
|
103
|
|
Online Marketplace Average Order Value
|
$
|
74
|
|
|
$
|
67
|
|
|
$
|
73
|
|
|
$
|
67
|
|
Total Online Average Order Value
|
$
|
88
|
|
|
$
|
85
|
|
|
$
|
87
|
|
|
$
|
86
|
|
Revenue Capture
(1)
|
87.7
|
%
|
|
85.3
|
%
|
|
87.9
|
%
|
|
85.2
|
%
|
||||
Conversion
(1)
|
2.7
|
%
|
|
2.0
|
%
|
|
2.5
|
%
|
|
1.9
|
%
|
•
|
We believe we can return to positive e-commerce growth by continuing to focus on making the auto parts purchasing process as easy and seamless as possible. We plan to continue to provide unique catalog content and provide better content on our websites with the goal of improving our ranking on the search results.
|
•
|
We continue to work to improve the website purchase experience for our customers by (1) helping our customers find the parts they want to buy by reducing failed searches and increasing user purchase confidence; (2) implementing guided navigation and custom buying experiences specific to strategic part names; (3) increasing order size across our sites through improved recommendation engines; (4) improving our site speed; and (5) creating a frictionless checkout experience for our customers. In addition, we intend to continue to improve our mobile enabled websites to take advantage of shifting consumer behaviors. These efforts are intended to increase the conversion rate of our visitors to customers, the total number of orders and average order value, and the number of repeat purchases, as well as contribute to our revenue growth.
|
•
|
We continue to work towards becoming one of the preferred low price options in the market for aftermarket auto parts and accessories. We also continue to offer lower prices by increasing foreign sourced private label products as they are generally less expensive and we believe provide better value for the consumer. We believe our product offering will improve the conversion rate of visitors to our website, grow our revenues and improve our margins.
|
•
|
We continue to increase product selection by being the first to market with many new SKUs. We currently have over 55,000 private label SKUs and over
1.0 million
branded SKUs in our product selection. We will seek to add new categories and expand our existing specialty categories. We believe continued product expansion will increase the total number of orders and contribute to our revenue growth. Additionally, we plan to continue to maintain certain in-stock inventory throughout the year to ensure consistent service levels and improve customer experience.
|
•
|
We continue to implement cost saving measures.
|
|
Thirteen Weeks Ended
|
|
Twenty-Six Weeks Ended
|
||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||||||
(Loss) income from continuing operations
|
$
|
(485
|
)
|
|
$
|
26,918
|
|
|
$
|
250
|
|
|
$
|
27,734
|
|
Depreciation & amortization
|
1,489
|
|
|
1,637
|
|
|
2,993
|
|
|
3,270
|
|
||||
Amortization of intangible assets
|
47
|
|
|
112
|
|
|
94
|
|
|
224
|
|
||||
Interest expense, net
|
421
|
|
|
466
|
|
|
852
|
|
|
842
|
|
||||
Taxes
|
544
|
|
|
(25,859
|
)
|
|
986
|
|
|
(25,832
|
)
|
||||
EBITDA
|
$
|
2,016
|
|
|
$
|
3,274
|
|
|
$
|
5,175
|
|
|
$
|
6,238
|
|
Stock comp expense
|
$
|
161
|
|
|
$
|
544
|
|
|
$
|
1,137
|
|
|
$
|
1,608
|
|
Customs Costs
(1)
|
609
|
|
|
—
|
|
|
740
|
|
|
—
|
|
||||
Adjusted EBITDA
|
$
|
2,786
|
|
|
$
|
3,818
|
|
|
$
|
7,052
|
|
|
$
|
7,846
|
|
|
Thirteen Weeks Ended
|
|
Twenty-Six Weeks Ended
|
||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||
Net sales
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of sales
|
72.1
|
|
|
71.0
|
|
|
71.1
|
|
|
70.8
|
|
Gross profit
|
27.9
|
|
|
29.0
|
|
|
28.9
|
|
|
29.2
|
|
Operating expenses:
|
|
|
|
|
|
|
|
||||
Marketing
|
12.8
|
|
|
12.8
|
|
|
12.7
|
|
|
12.8
|
|
General and administrative
|
6.1
|
|
|
5.4
|
|
|
6.2
|
|
|
5.7
|
|
Fulfillment
|
7.0
|
|
|
7.4
|
|
|
7.2
|
|
|
7.5
|
|
Technology
|
1.3
|
|
|
1.4
|
|
|
1.3
|
|
|
1.5
|
|
Amortization of intangible assets
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
Total operating expenses
|
27.3
|
|
|
27.1
|
|
|
27.5
|
|
|
27.6
|
|
Income from operations
|
0.6
|
|
|
1.9
|
|
|
1.4
|
|
|
1.6
|
|
Other income (expense):
|
|
|
|
|
|
|
|
||||
Other income, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Interest expense
|
(0.5
|
)
|
|
(0.6
|
)
|
|
(0.5
|
)
|
|
(0.5
|
)
|
Total other expense, net
|
(0.5
|
)
|
|
(0.6
|
)
|
|
(0.5
|
)
|
|
(0.5
|
)
|
Income from continuing operations before income taxes
|
0.1
|
|
|
1.3
|
|
|
0.9
|
|
|
1.1
|
|
Income tax provision
|
0.7
|
|
|
(32.2
|
)
|
|
0.6
|
|
|
(16.0
|
)
|
Income from continuing operations
|
(0.6
|
)%
|
|
33.5
|
%
|
|
0.3
|
%
|
|
17.1
|
%
|
|
Thirteen Weeks Ended
|
|
Twenty-Six Weeks Ended
|
||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||||||
|
(in thousands)
|
|
|
|
|
||||||||||
Net sales
|
$
|
76,973
|
|
|
$
|
80,208
|
|
|
$
|
155,358
|
|
|
$
|
161,041
|
|
Cost of sales
|
55,488
|
|
|
56,964
|
|
|
110,414
|
|
|
114,010
|
|
||||
Gross profit
|
$
|
21,485
|
|
|
$
|
23,244
|
|
|
$
|
44,944
|
|
|
$
|
47,031
|
|
Gross margin
|
27.9
|
%
|
|
29.0
|
%
|
|
28.9
|
%
|
|
29.2
|
%
|
|
Thirteen Weeks Ended
|
|
Twenty-Six Weeks Ended
|
||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||||||
|
(in thousands)
|
|
|
|
|
||||||||||
Marketing expense
|
$
|
9,818
|
|
|
$
|
10,248
|
|
|
$
|
19,800
|
|
|
$
|
20,562
|
|
Percent of net sales
|
12.8
|
%
|
|
12.8
|
%
|
|
12.7
|
%
|
|
12.8
|
%
|
|
Thirteen Weeks Ended
|
|
Twenty-Six Weeks Ended
|
||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||||||
|
(in thousands)
|
||||||||||||||
General and administrative expense
|
$
|
4,741
|
|
|
$
|
4,310
|
|
|
$
|
9,626
|
|
|
$
|
9,111
|
|
Percent of net sales
|
6.1
|
%
|
|
5.4
|
%
|
|
6.2
|
%
|
|
5.7
|
%
|
|
Thirteen Weeks Ended
|
|
Twenty-Six Weeks Ended
|
||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||||||
|
(in thousands)
|
||||||||||||||
Fulfillment expense
|
$
|
5,394
|
|
|
$
|
5,929
|
|
|
$
|
11,242
|
|
|
$
|
12,011
|
|
Percent of net sales
|
7.0
|
%
|
|
7.4
|
%
|
|
7.2
|
%
|
|
7.5
|
%
|
|
Thirteen Weeks Ended
|
|
Twenty-Six Weeks Ended
|
||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||||||
|
(in thousands)
|
||||||||||||||
Technology expense
|
$
|
998
|
|
|
$
|
1,136
|
|
|
$
|
2,086
|
|
|
$
|
2,409
|
|
Percent of net sales
|
1.3
|
%
|
|
1.4
|
%
|
|
1.3
|
%
|
|
1.5
|
%
|
|
Thirteen Weeks Ended
|
|
Twenty-Six Weeks Ended
|
||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||||||
|
(in thousands)
|
||||||||||||||
Other expense, net
|
$
|
(428
|
)
|
|
$
|
(450
|
)
|
|
$
|
(860
|
)
|
|
$
|
(812
|
)
|
Percent of net sales
|
(0.5
|
)%
|
|
(0.6
|
)%
|
|
(0.5
|
)%
|
|
(0.5
|
)%
|
|
Thirteen Weeks Ended
|
|
Twenty-Six Weeks Ended
|
||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||||||
|
(in thousands)
|
||||||||||||||
Income tax provision
|
$
|
544
|
|
|
$
|
(25,859
|
)
|
|
$
|
986
|
|
|
$
|
(25,832
|
)
|
Percent of net sales
|
0.7
|
%
|
|
(32.2
|
)%
|
|
0.6
|
%
|
|
(16.0
|
)%
|
|
Twenty-Six Weeks Ended
|
||||||
|
June 30, 2018
|
|
July 1, 2017
|
||||
Net cash provided by operating activities
|
$
|
7,841
|
|
|
$
|
12,470
|
|
Net cash used in investing activities
|
(2,940
|
)
|
|
(2,455
|
)
|
||
Net cash used in financing activities
|
(903
|
)
|
|
(6,710
|
)
|
||
Effect of exchange rate changes on cash
|
(24
|
)
|
|
(20
|
)
|
||
Net change in cash and cash equivalents
|
$
|
3,974
|
|
|
$
|
3,285
|
|
•
|
Accounts receivable
increased
to
$2,633
at
June 30, 2018
from
$2,470
at
December 30, 2017
, resulting in a
increase
in operating assets and reflecting a cash
outflow
of
$163
for the
twenty-six weeks
ended
June 30, 2018
. Accounts receivable
increased
primarily due to timing of payments at the end of the quarter. For the
twenty-six weeks
ended
July 1, 2017
, cash
inflow
related to the change in accounts receivable was
$568
.
|
•
|
Inventory
decreased
to
$54,187
at
June 30, 2018
from
$54,231
at
December 30, 2017
, resulting in a
decrease
in operating assets and reflecting a cash
inflow
of
$44
for the
twenty-six weeks
ended
June 30, 2018
. For the
twenty-six weeks
ended
July 1, 2017
, cash
outflow
related to the change in inventory was
$1,291
.
|
•
|
Accounts payable and accrued expenses
increased
to
$47,760
at
June 30, 2018
compared to
$43,362
at
December 30, 2017
, resulting in
an increase
in operating liabilities and reflecting a cash
inflow
of
$4,560
for the
twenty-six weeks
ended
June 30, 2018
. Accounts payable and accrued expenses
increased
primarily due to the
increase
in accrued expenses of
$6,241
. Accounts payable and accrued expenses fluctuates from period-to-period due to the amount of our revenues and the related purchases and the timing of our payments. For the
twenty-six weeks
ended
July 1, 2017
, cash
inflow
related to the change in accounts payable and accrued expenses was
$7,261
.
|
|
Payment Due By Period (in thousands)
|
||||||||||||||||||
Contractual Obligations:
|
Total
|
|
Less than
1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than
5 years
|
||||||||||
Operating lease obligations
(1)
|
$
|
2,547
|
|
|
$
|
1,573
|
|
|
$
|
974
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Capital lease obligations
(2)
|
15,970
|
|
|
1,279
|
|
|
2,262
|
|
|
1,941
|
|
|
10,488
|
|
(1)
|
Commitments under operating leases relate primarily to our leases on our corporate offices in Carson, California, our distribution centers in Chesapeake, Virginia and our call center in the Philippines.
|
(2)
|
Commitments under capital leases primarily relate to sale-leaseback of our LaSalle, Illinois facility.
|
•
|
Revenue Recognition;
|
•
|
Inventory;
|
•
|
Website and Software Development Costs;
|
•
|
Income Taxes; and
|
•
|
Share-Based Compensation.
|
•
|
concerns about buying auto parts without face-to-face interaction with sales personnel;
|
•
|
the inability to physically handle, examine and compare products;
|
•
|
delivery time associated with Internet orders;
|
•
|
concerns about the security of online transactions and the privacy of personal information;
|
•
|
delayed shipments or shipments of incorrect or damaged products;
|
•
|
increased shipping costs; and
|
•
|
the inconvenience associated with returning or exchanging items purchased online.
|
•
|
incur additional debt;
|
•
|
make certain investments and acquisitions;
|
•
|
enter into certain types of transactions with affiliates;
|
•
|
use assets as security in other transactions;
|
•
|
pay dividends on our capital stock or repurchase our equity interests, excluding payments of preferred stock dividends which are specifically permitted under our credit facility;
|
•
|
sell certain assets or merge with or into other companies;
|
•
|
guarantee the debts of others;
|
•
|
enter into new lines of business;
|
•
|
pay or amend our subordinated debt; and
|
•
|
form any joint ventures or subsidiary investments.
|
•
|
we would have to dedicate a portion of our cash flow to making payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions or other general corporate purposes;
|
•
|
certain levels of indebtedness may make us less attractive to potential acquirers or acquisition targets;
|
•
|
certain levels of indebtedness may limit our flexibility to adjust to changing business and market conditions, and make us more vulnerable to downturns in general economic conditions as compared to competitors that may be less leveraged; and
|
•
|
as described in more detail above, the documents providing for our indebtedness contain restrictive covenants that may limit our financing and operational flexibility.
|
•
|
political, social and economic instability and the risk of war or other international incidents in Asia or abroad;
|
•
|
fluctuations in foreign currency exchange rates that may increase our cost of products;
|
•
|
tariffs and protectionist laws and business practices that favor local businesses;
|
•
|
difficulties in complying with import and export laws, regulatory requirements and restrictions;
|
•
|
natural disasters and public health emergencies;
|
•
|
import shipping delays resulting from foreign or domestic labor shortages, slow downs, or stoppage; and
|
•
|
the failure of local laws to provide a sufficient degree of protection against infringement of our intellectual property.
|
•
|
difficulties and costs of staffing and managing foreign operations, including any impairment to our relationship with employees caused by a reduction in force;
|
•
|
restrictions imposed by local labor practices and laws on our business and operations;
|
•
|
exposure to different business practices and legal standards;
|
•
|
unexpected changes in regulatory requirements;
|
•
|
the imposition of government controls and restrictions;
|
•
|
political, social and economic instability and the risk of war, terrorist activities or other international incidents;
|
•
|
the failure of telecommunications and connectivity infrastructure;
|
•
|
natural disasters and public health emergencies;
|
•
|
potentially adverse tax consequences; and
|
•
|
fluctuations in foreign currency exchange rates and relative weakness in the U.S. dollar.
|
•
|
national auto parts retailers such as Advance Auto Parts, AutoZone, Napa Auto Parts, CarQuest, O’Reilly Automotive and Pep Boys;
|
•
|
large online marketplaces such as Amazon.com and eBay;
|
•
|
other online retailers of automotive products websites;
|
•
|
local independent retailers or niche auto parts online retailers;
|
•
|
wholesale aftermarket auto parts distributors such as LKQ Corporation; and
|
•
|
manufacturers, brand suppliers and other distributors selling online directly to customers.
|
•
|
prevent customers from accessing our websites;
|
•
|
reduce our ability to fulfill orders or bill customers;
|
•
|
reduce the number of products that we sell;
|
•
|
cause customer dissatisfaction; or
|
•
|
damage our brand and reputation.
|
•
|
fluctuations in the demand for aftermarket auto parts;
|
•
|
price competition on the Internet or among offline retailers for auto parts;
|
•
|
our ability to attract visitors to our websites and convert those visitors into customers, including to the extent based on our ability to successfully work with different search engines to drive visitors to our websites;
|
•
|
our ability to successfully sell our products through third-party online marketplaces or the effects of any price increases in those marketplaces;
|
•
|
competition from companies that have longer operating histories, larger customer bases, greater brand recognition, access to merchandise at lower costs and significantly greater resources than we do, like third-party online market places and our suppliers;
|
•
|
our ability to maintain and expand our supplier and distribution relationships without significant price increases or reduced service levels;
|
•
|
our ability to borrow funds under our credit facility;
|
•
|
the effects of seasonality on the demand for our products;
|
•
|
our ability to accurately forecast demand for our products, price our products at market rates and maintain appropriate inventory levels;
|
•
|
our ability to build and maintain customer loyalty;
|
•
|
our ability to successfully integrate our acquisitions;
|
•
|
infringement actions that could impact the viability of the auto parts aftermarket or portions thereof;
|
•
|
the success of our brand-building and marketing campaigns;
|
•
|
our ability to accurately project our future revenues, earnings, and results of operations;
|
•
|
government regulations related to use of the Internet for commerce, including the application of existing tax regulations to Internet commerce and changes in tax regulations;
|
•
|
technical difficulties, system downtime or Internet brownouts;
|
•
|
the amount and timing of operating costs and capital expenditures relating to expansion of our business, operations and infrastructure; and
|
•
|
macroeconomic conditions that adversely impact the general and automotive retail sales environment.
|
•
|
our Board of Directors are authorized, without prior stockholder approval, to create and issue preferred stock which could be used to implement anti-takeover devices;
|
•
|
advance notice is required for director nominations or for proposals that can be acted upon at stockholder meetings;
|
•
|
our Board of Directors is classified such that not all members of our board are elected at one time, which may make it more difficult for a person who acquires control of a majority of our outstanding voting stock to replace all or a majority of our directors;
|
•
|
stockholder action by written consent is prohibited except with regards to an action that has been approved by the Board;
|
•
|
special meetings of the stockholders are permitted to be called only by the chairman of our Board of Directors, our chief executive officer or by a majority of our Board of Directors;
|
•
|
stockholders are not permitted to cumulate their votes for the election of directors; and
|
•
|
stockholders are permitted to amend certain provisions of our bylaws only upon receiving at least 66 2/3% of the votes entitled to be cast by holders of all outstanding shares then entitled to vote generally in the election of directors, voting together as a single class.
|
Period
|
|
Total Number of Shares Purchased
(1)
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs
|
|||||
Apr 1 - Apr 28, 2018
|
|
17,290
|
|
|
$
|
2.01
|
|
|
—
|
|
|
—
|
|
Apr 29 - May 26, 2018
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
May 27 - Jun 30, 2018
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
Exhibit No.
|
Description
|
|
|
10.1+
|
|
|
|
10.2+
|
|
|
|
10.3+
|
|
|
|
31.1
|
|
|
|
31.2
|
|
|
|
32.1
|
|
|
|
32.2
|
|
|
|
101.INS
|
XBRL Instance Document
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
+
|
Indicates a management contract or compensatory plan or arrangement.
|
Date:
|
August 8, 2018
|
U.S. AUTO PARTS NETWORK, INC.
|
|
|
|
|
|
|
|
By:
|
/s/ Aaron Coleman
|
|
|
|
Aaron Coleman
|
|
|
|
Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
By:
|
/s/ Neil T. Watanabe
|
|
|
|
Neil T. Watanabe
|
|
|
|
Chief Financial Officer
|
|
|
|
(Principal Financial Accounting Officer)
|
|
|
|
|
|
|
|
To the Company:
|
|
U.S. Auto Parts Network, Inc.
16941 Keegan Ave.
|
|
|
|
|
Carson, California 90746
|
|
|
|
|
Attn: Chief Executive Officer
|
|
|
|
||
|
|
To Executive:
|
|
At Executive’s last residence as provided by
|
|
|
|
|
Executive to the Company for payroll records.
|
|
|
|
|||
U.S. AUTO PARTS NETWORK, INC.
|
|
||||
|
|
|
|||
By:
|
|
/s/ Aaron Coleman
|
|
||
Print Name:
|
|
Aaron Coleman
|
|
||
Title:
|
|
Chief Executive Officer
|
|
||
Address:
|
|
16941 Keegan Avenue
Carson, CA 90746
|
|
||
|
|
||||
EXECUTIVE
|
|
||||
|
|
||||
/s/ David Eisler
|
|
||||
David Eisler
|
|
Participant:
|
|
|
Date of Grant:
|
|
|
Vesting Commencement Date:
|
|
|
Number of RSUs Subject to Award:
|
|
|
Vesting Schedule:
|
Subject to Section 2 of the Agreement, this Award will vest as follows: the RSUs shall vest in full at the 2019 annual meeting of stockholders, subject to Participant’s Continuous Service with the Company through such vesting date. Each installment of RSUs that vests under this Award is a “separate payment” for purposes of Treasury Regulations Section 1.409A-2(b)(2).
|
Issuance Schedule:
|
Subject to any change upon a Capitalization Adjustment, one share of Common Stock will be issued for each RSU that vests at the time set forth in Section 6 of the Agreement.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of U.S. Auto Parts Network, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
|
|
/s/ Aaron Coleman
|
|
Aaron Coleman
|
|
Chief Executive Officer
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of U.S. Auto Parts Network, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
|
|
/s/ Neil T. Watanabe
|
|
Neil T. Watanabe
|
|
Chief Financial Officer
|
|
(Principal Financial Officer)
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ Aaron Coleman
|
|
Aaron Coleman
|
|
Chief Executive Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ Neil T. Watanabe
|
|
Neil T. Watanabe
|
|
Chief Financial Officer
|