Carson online auto parts seller US Auto Parts Network Inc. has traveled a rough road over the last couple of years, but thanks to better margins on parts and some cost-cutting moves, it’s now ready for a smoother ride.
US Auto Parts reported a net loss of $1.3 million (-4 cents a share) in the fourth quarter of 2013, compared with a loss of $30.8 million (-99 cents a share) in the same period a year earlier. Analysts had expected a net loss equal to 10 cents a share.
The company’s stock rose 30 percent to close at $3 for the week ended March 12, making it the biggest gainer on the LABJ Stock Index. (See page 36.)
Shane Evangelist, chief executive of US Auto Parts said that beating analyst expectations gave investors confidence in the company. But more importantly, renewed strength in the overall auto industry has also helped.
“We’ve got a business that’s now growing,” Evangelist told the Business Journal. The company sells aftermarket car parts and accessories over the Internet, and Evangelist pointed out that the average age of a car is now more than 11 years, creating not only demand for new cars but for parts to repair or modify older ones.
In a conference call with analysts, Evangelist said he was optimistic about the company’s current position and prospects.
“US Auto Parts is currently in the strongest position we’ve been in the last two years,” he said. “And I believe we are back in a position to be aggressive and gain market share.”
A large part of US Auto Parts’ reduced net loss can be attributed to a slight improvement in margin rates on parts combined with an aggressive cost-cutting campaign including the closure of several of its websites.
On the call, Evangelist said he expected US Auto Parts to grow at double-digit rates next year and beyond. He mentioned that the firm’s private-label business, which sources products directly from manufacturers in Asia, is already growing at more than 10 percent year over year. The private-label unit makes up 55 percent of US Auto Parts’ business.
Adding to the brighter picture: At the end of last year, the company had $900,000 in cash and securities, and revolving debt of $6.8 million, compared with $1.1 million in cash and securities, and debt of $16.2 million at the end of 2012.
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