PARTS iD, Inc. (NYSE American: ID) (“PARTS iD” or “Company”),
the owner and operator of, among other verticals, “CARiD.com,” a
leading digital commerce platform for the automotive aftermarket,
today announced results for the second quarter ended June 30,
2022.
Second Quarter 2022 Financial Summary (Comparisons versus
Second Quarter 2021 and First Quarter 2022)
Net revenue was $104.3 million, a decrease of 20.1% as compared
to Q2 2021 and an increase of 9.9% as compared to Q1 2022.
- Gross margin was 19.7% as compared to 20.0% in Q2 2021 and
19.5% in Q1 2022.
- Operating expenses as a percent of net revenue were 20.6% as
compared to 19.4% in Q2 2021 and 24.6% in Q1 2022.
- Operating loss was $(0.9) million as compared to operating
income of $0.8 million in Q2 2021 and an operating loss of $(4.8)
million in Q1 2022.
- Net loss was $(0.9) million as compared to net income of $0.6
million in Q2 2021 and net loss of $(4.0) million in Q1 2022.
- Adjusted EBITDA was $1.3 million compared to $4.2 million in Q2
2021 and $(1.7) million in Q1 2022.
- Net cash from profit and loss account was $1.0 million compared
with $3.7 million in Q2 2021 and $(1.8) million in Q1 2022.
Management Commentary
“We made good progress advancing certain key growth initiatives
during the second quarter, in particular, expanding our automotive
repair and original equipment categories, and enhancing the product
catalog and margins for our adjacent verticals,” said Nino
Ciappina, Chief Executive Officer of PARTS iD. “Unfortunately,
these positive results were offset by inflationary pressures and
unfavorable vehicle sales trends that are pressuring our core
accessories business, especially when compared to last year’s
stimulus fueled demand. In response to the current operating
environment, which also includes continued supply chain challenges,
we’ve taken important steps towards protecting profitability. We
recently made difficult decisions to reduce our workforce, further
optimized our advertising spend and eliminated certain other
non-essential expenses. We also moderated capital expenditures and
increased our gross margin target. We believe these actions will
yield approximately $12 million in annualized savings and provide
us with the financial flexibility to navigate the current
macroeconomic headwinds. We continue to be optimistic about the
long-term potential of our technology driven, capital-efficient
business model and our ability to expand our share of the $440
billion automotive aftermarket and the multiple adjacent industry
verticals in which we operate.”
Second Quarter 2022 Financial Results
Second quarter 2022 revenue decreased 20.1% to $104.3 million,
compared to $130.4 million in the second quarter of 2021. This
decreased was attributable to a 15.5% decline in traffic and a
15.4% decrease in the conversion rate, partially offset by a 10.3%
increase in average order value.
Gross profit for the second quarter of 2022 decreased to $20.6
million compared to $26.1 million in the same prior year period.
Gross margin was 19.7% for the second quarter 2022 compared to
20.0% in the second quarter of 2021. The decrease in gross margin
was attributable to a change in product category revenue mix
combined with a year-over-year increase in product and shipping
costs associated with the ongoing global supply chain
disruptions.
Operating expenses were $21.5 million for the second quarter of
2022 compared to $25.3 million for the second quarter of 2021. The
decrease in operating expenses was primarily attributable to a $1.5
million decrease in advertising expenses due to lower traffic and
number of clicks, combined with a decrease in non-cash share-based
expenses. Operating expenses as a percent of net revenue were 20.6%
compared to 19.4% in the same prior year period.
Operating loss for the second quarter of 2022 was $(0.9) million
compared to operating income of $0.8 million for the second quarter
of 2021.
Net loss for the second quarter of 2022 was $(0.9) million
compared to net income of $0.6 million in the same prior year
period.
Adjusted EBITDA was $1.3 million in the second quarter of 2022
compared to $4.2 million in the same prior year period.
Balance Sheet
As of June 30, 2022, the company had cash of $7.3 million
compared to $23.2 million at December 31, 2021. The decrease in
cash was driven primarily by the impact of a net cash loss of $0.8
million and a negative net change in operating assets and
liabilities of $11.5 million, primarily comprising of a decrease in
accounts payables and customer deposits. Cash used in investing
activities was $3.6 million, primarily related to website and
software development expenditures.
Conference Call
PARTS iD’s Chief Executive Officer, Nino Ciappina, and Chief
Financial Officer, Kailas Agrawal, will host a live conference call
to discuss financial results on August 8, 2022 at 4:30 p.m. Eastern
Time. Investors and analysts interested in participating in the
call are invited to dial (877) 407-9129 (domestic) or (201)
493-6753 (international).
The conference call will also be available to interested parties
through a live webcast at https://www.partsidinc.com/. A telephone
replay of the call will be available until August 15, 2022, by
dialing (877) 660-6853 (domestic) or (201) 612-7415 (international)
and entering the conference identification number: 13731823
About PARTS iD, Inc.
PARTS iD is a technology-driven, digital commerce company
focused on creating custom infrastructure and unique user
experiences within niche markets. Founded in 2008 with a vision of
creating a one-stop eCommerce destination for the automotive parts
and accessories market, we believe that PARTS iD has since become a
market leader and proven brand-builder, fueled by its commitment to
delivering a revolutionary shopping experience; comprehensive,
accurate and varied product offerings; and continued digital
commerce innovation.
Non-GAAP Financial Measures
This press release includes non-GAAP financial measures that
differ from financial measures calculated in accordance with U.S.
generally accepted accounting principles (“GAAP”). These non-GAAP
financial measures may not be comparable to similar measures
reported by other companies and should be considered in addition
to, and not as a substitute for, or superior to, other measures
prepared in accordance with GAAP. Management uses non-GAAP
financial measures internally to evaluate the performance of the
business. Additionally, management believes certain non-GAAP
measures provide meaningful incremental information to investors to
consider when evaluating the performance of the Company.
To this end, we provide EBITDA and Adjusted EBITDA, which are
non-GAAP financial measures. EBITDA consists of net income (loss)
plus (a) interest expense; (b) income tax provision (or less
benefit); and (c) depreciation expense. Adjusted EBITDA consists of
EBITDA plus stock compensation expense and other costs, fees,
expenses, write offs and other items that do not impact the
fundamentals of our operations, as described further below
following the reconciliation of these metrics. Management believes
these non-GAAP measures provide useful information to investors in
their assessment of the performance of our business. The exclusion
of certain expenses in calculating EBITDA and Adjusted EBITDA
facilitates operating performance comparisons on a period-to-period
basis as these costs may vary independent of business performance.
Accordingly, we believe that EBITDA and Adjusted EBITDA provide
useful information to investors and others in understanding and
evaluating our operating results in the same manner as our
management and board of directors.
EBITDA and Adjusted EBITDA have limitations as an analytical
tool, and you should not consider these measures in isolation or as
a substitute for analysis of our results as reported under GAAP.
Some of these limitations are:
- Although depreciation is a non-cash charge, the assets being
depreciated may have to be replaced in the future, and EBITDA and
Adjusted EBITDA do not reflect cash capital expenditure
requirements for such replacements or for new capital expenditure
requirements;
- EBITDA and Adjusted EBITDA do not reflect changes in our
working capital;
- EBITDA and Adjusted EBITDA do not reflect income tax payments
that may represent a reduction in cash available to us;
- EBITDA and Adjusted EBITDA do not reflect depreciation and
interest expenses associated with the lease financing obligations;
and
- Other companies, including companies in our industry, may
calculate Adjusted EBITDA differently, which reduces its usefulness
as a comparative measure.
Because of these limitations, you should consider EBITDA and
Adjusted EBITDA alongside other financial performance measures,
including various cash flow metrics, net income (loss) and our
other GAAP results.
Reconciliations of these non-GAAP financial measures to the most
directly comparable GAAP financial measures are included in this
press release.
Cautionary Note Regarding Forward-Looking Statements
All statements made in this press release relating to future
financial or business performance, conditions, plans, prospects,
trends, or strategies and other such matters, including without
limitation, expected future performance, consumer adoption,
anticipated success of our business model or the potential for long
term profitable growth, are forward-looking statements within the
meaning of the U.S. Private Securities Litigation Reform Act of
1995. In addition, when or if used in this press release, the words
“may,” “could,” “should,” “anticipate,” “believe,” “estimate,”
“expect,” “intend,” “plan,” “predict,” “potential,” “confident,”
“look forward,” “optimistic” and similar expressions and their
variants, as they relate to us may identify forward-looking
statements. We operate in a changing environment where new risks
emerge from time to time and it is not possible for us to predict
all risks that may affect us, particularly those associated with
the COVID-19 pandemic and the conflict in Ukraine, which have had
wide-ranging and continually evolving effects. We caution that
these forward-looking statements are subject to numerous
assumptions, risks, and uncertainties, which change over time,
often quickly and in unanticipated ways.
Important factors that may cause actual results to differ
materially from the results discussed in the forward-looking
statements include risks and uncertainties, including without
limitation: the ongoing conflict between Ukraine and Russia has
affected and may continue to affect our business; competition and
our ability to counter competition, including changes to the
algorithms of Google and other search engines and related impacts
on our revenue and advertisement expenses; the impact of health
epidemics, including the COVID-19 pandemic, on our business and the
actions we may take in response thereto; disruptions in the supply
chain and associated impacts on demand, product availability, order
cancellations and cost of goods sold including inflation;
difficulties in managing our international business operations,
particularly in the Ukraine, including with respect to enforcing
the terms of our agreements with our contractors and managing
increasing costs of operations; changes in our strategy, future
operations, financial position, estimated revenues and losses,
product pricing, projected costs, prospects and plans; the outcome
of actual or potential litigation, complaints, product liability
claims, or regulatory proceedings, and the potential adverse
publicity related thereto; the implementation, market acceptance
and success of our business model, expansion plans, opportunities
and initiatives, including the market acceptance of our planned
products and services; developments and projections relating to our
competitors and industry; our expectations regarding our ability to
obtain and maintain intellectual property protection and not
infringe on the rights of others; our ability to maintain and
enforce intellectual property rights and ability to maintain
technology leadership; our future capital requirements; our ability
to raise capital and utilize sources of cash; our ability to obtain
funding for our operations; changes in applicable laws or
regulations; the effects of current and future U.S. and foreign
trade policy and tariff actions; disruptions in the marketplace for
online purchases of aftermarket auto parts; costs related to
operating as a public company; and the possibility that we may be
adversely affected by other economic, business, and/or competitive
factors.
Further information on the factors and risks that could cause
actual results to differ from any forward-looking statements are
contained in our filings with the United States Securities and
Exchange Commission (SEC), which are available at
https://www.sec.gov (or at https://www.partsidinc.com). The
forward-looking statements represent our estimates as of the date
hereof only, and we specifically disclaim any duty or obligation to
update forward-looking statements.
PARTS iD, INC.
Condensed Consolidated Balance
Sheets
As of June 30, 2022 and
December 31, 2021
June 30, 2022
December 31, 2021
Unaudited
Audited
ASSETS
Current assets
Cash
$
7,317,070
$
23,203,230
Accounts receivable
2,518,879
2,157,108
Inventory
5,384,467
5,754,748
Prepaid expenses and other current
assets
6,095,608
4,874,704
Total current assets
21,316,024
35,989,790
Property and equipment, net
14,083,440
13,700,876
Intangible assets
262,966
262,966
Deferred tax assets
3,236,618
2,314,907
Operating lease right-of-use
1,493,603
-
Other assets
267,707
267,707
Total assets
$
40,660,358
$
52,536,246
LIABILITIES AND SHAREHOLDERS’
DEFICIT
Current liabilities
Accounts payable
$
35,459,245
$
40,591,938
Customer deposits
10,828,002
15,497,857
Accrued expenses
6,667,828
6,221,330
Other current liabilities
3,227,123
3,930,841
Operating lease liabilities
766,367
-
Total current liabilities
56,948,565
66,241,966
Other non-current liabilities
Operating lease, net of current
portion
727,236
-
Total liabilities
57,675,801
66,241,966
COMMITMENTS AND CONTINGENCIES (Note
6)
SHAREHOLDERS’ DEFICIT
Preferred stock, $0.0001 par value per
share;
1,000,000 shares authorized and 0 issued
and outstanding
-
-
Common stock, $0.0001 par value per
share;
10,000,000 Class F shares authorized and 0
issued and outstanding
-
-
100,000,000 Class A shares authorized and
34,062,616 and 33,965,804 issued and outstanding, as of June 30,
2022 and December 31, 2021, respectively
3,406
3,396
Additional paid in capital
8,516,706
6,973,541
Accumulated deficit
(25,535,555
)
(20,682,657
)
Total shareholders’ deficit
(17,015,443
)
(13,705,720
)
Total liabilities and shareholders’
deficit
$
40,660,358
$
52,536,246
PARTS iD, INC.
Consolidated Condensed
Statements of Operations
For the three and six months
ended June 30, 2022 and 2021 (Unaudited)
Three months ended June 30,
Six months ended June 30,
2022
2021
2022
2021
Net revenue
$
104,257,478
$
130,409,332
$
199,149,626
$
239,482,960
Cost of goods sold
83,674,247
104,270,051
160,072,167
190,510,070
Gross profit
20,583,231
26,139,281
39,077,459
48,972,890
Operating expenses:
Advertising
9,437,657
10,907,319
19,138,949
21,406,705
Selling, general and administrative
9,940,889
12,603,017
21,613,616
23,961,724
Depreciation
2,142,433
1,819,581
4,096,895
3,593,354
Total operating expenses
21,520,979
25,329,917
44,849,460
48,961,783
(Loss) income from operations
(937,748
)
809,364
(5,772,001
)
11,107
Interest expense
-
395
-
6,885
(Loss) income before income taxes
(937,748
)
808,969
(5,772,001
)
4,222
Income tax (benefit) expense
(38,037
)
182,857
(919,103
)
22,923
Net (loss) income
$
(899,711
)
$
626,112
$
(4,852,898
)
$
(18,701
)
(Loss) income available to common
shareholders
$
(899,711
)
$
626,112
$
(4,852,898
)
$
(18,701
)
(Loss) income per common share
(Loss) income per share (basic and
diluted)
$
(0.03
)
$
0.02
$
(0.14
)
$
(0.00
)
Weighted average number of shares (basic
and diluted)
33,983,680
33,130,599
33,974,791
33,002,738
PARTS iD, INC.
Condensed Consolidated
Statements of Cash Flows
For the six months ended June
30, 2022 and 2021 (Unaudited)
Six months ended June 30,
2022
2021
Cash Flows from Operating Activities:
Net loss
$
(4,852,898
)
$
(18,701
)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:
Depreciation
4,096,895
3,593,354
Deferred income tax benefit
(921,711
)
-
Share based compensation expense
686,841
1,321,428
Amortization of right-of-use asset
194,526
-
Changes in operating assets and
liabilities:
Accounts receivable
(361,771
)
(501,531
)
Inventory
370,281
(1,440,606
)
Prepaid expenses and other current
assets
(1,220,904
)
1,252,952
Accounts payable
(5,132,693
)
(32,202
)
Customer deposits
(4,669,856
)
3,351,055
Accrued expenses
446,498
1,024,590
Operating lease liabilities
(194,526
)
-
Other current liabilities
(703,718
)
500,584
Net cash (used in) provided by operating
activities
(12,263,036
)
9,050,923
Cash Flows from Investing Activities:
Purchase of property and equipment
(45,360
)
(283,786
)
Website and software development costs
(3,577,764
)
(3,611,451
)
Net cash used in investing activities
(3,623,124
)
(3,895,237
)
Cash Flows from Financing Activities:
Principal paid on notes payable
-
(10,473
)
Net cash used in financing activities
-
(10,473
)
Net change in cash
(15,886,160
)
5,145,213
Cash, beginning of period
23,203,230
22,202,706
Cash, end of period
$
7,317,070
$
27,347,919
Supplemental disclosure of cash flows
information:
Cash paid for interest
$
-
$
6,885
Cash paid for income taxes
$
2,608
$
4,000
The following table reflects the reconciliation of net income
(loss) to EBITDA and Adjusted EBITDA for each of the periods
indicated.
Three months ended June 30,
Six months ended June 30,
2022
2021
2022
2021
Net income (loss)
$
(899,711
)
$
626,112
$
(4,852,898
)
$
(18,701
)
Interest expense
-
395
-
6,885
Income taxes (benefits)
(38,037
)
182,857
(919,103
)
22,923
Depreciation
2,142,433
1,819,581
4,096,895
3,593,354
EBITDA
1,204,685
2,628,945
(1,675,106
)
3,604,461
Stock compensation expenses
(180,529
)
1,292,604
686,841
1,321,428
Legal & settlement expenses (1)
316,743
243,426
596,385
483,186
Adjusted EBITDA Total
$
1,340,899
$
4,164,975
$
(391,880
)
$
5,409,075
% to revenue
1.3
%
3.2
%
-0.2
%
2.3
%
(1)
Represents legal and settlement expenses
related to significant matters that do not impact the fundamentals
of our operations, pertaining to: (i) causes of action between
certain of the Company’s shareholders and which involves claims
directly against the Company seeking the fulfillment of alleged
indemnification obligations with respect to these matters, and (ii)
trademark and intellectual property (“IP”) protection cases. We are
involved in routine IP litigation, commercial litigation and other
various litigation matters. We review litigation matters from both
a qualitative and quantitative perspective to determine if
excluding the losses or gains will provide our investors with
useful incremental information. Litigation matters can vary in
their characteristics, frequency and significance to our operating
results.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220808005500/en/
Investors: Brendon Frey ICR ir@partsidinc.com
Media Erin Hadden FischTank PR
partsid@fischtankpr.com
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