Q4 2020 Carparts.Com Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the car parts Dot Com fourth quarter 2020 earnings release Conference call. At this time, all participants on a listen only mode.
After the speaker presentation that will be a question and answer session to ask a question. During the session you will need to press star one on your telephone.
Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero I.
I would now like to hand, the conference over to your first speaker today to let peak or CEO. Thank you. Please go ahead.
Thank you operator on behalf of the entire car parts Dot Com management team, we'd like to start by thanking on 19 100, plus team members for their hard work dedication and commitment to our mission of getting drivers back on their own.
As you can see in today's release and Twenty-twenty car parts Dot com achieved record sales gross profit and adjusted EBITDA in almost a decade.
Before we turn to our quarterly results I'd like to take a moment to recap our journey over the last two years as long as introduced the vision and long term goals for our company.
As many of you know almost the entire management team joined during 2019, our company was facing numerous challenges, but what we had were amazing frontline team members valuable trademarks and extensive catalog.
Our vendor relationships and lots of historical customer data.
Well laid out our strategy of right parts right time, right place and the mission of getting drivers back on their own.
Alright, part means ensuring our customers can find the complete solution the secondary vehicle on out of upsides.
Our efforts to accomplish the US include us Curating, our proprietary catalog, creating a fast mobile friendly user experience building World class data science on inventory forecasting teams and investing in our logistics and merchandising capabilities.
These efforts resulted in the highest sales the company every quarter from Q1, 'twenty 'twenty before the Covid Lockdown started.
More recently, our flagship upside car parts dotcom was named the fastest growing web site in the industry by similar while we also rolled out a dedicated the electrical vehicle landing page to help customers find the parts they need for their EV or hybrid vehicles and highlight news and information about the EV market as Evs and hybrids become a larger part of the Mark.
We plan to be there for our customers every step on the way.
However, we still have more true in helping our customers get the right part.
At the end of 2020, we began expanding on mechanical parts offering well on global supply chain disruptions have slowed on a rollout of these products were still excited by the initial customer reception and look forward to having these skus fully in stock in the second half of the year.
The total addressable market from mechanical parts are significantly larger non collision replacement parts. However, it's currently only represents about one quarter of our revenues. This is a huge opportunity for us by leveraging our existing core competencies and two step distribution model. We believe we can build a competitive offering of premium mechanical items.
Across a wide spectrum of the value chain like other industries, we can offer our customers premium products at value prices as well as a major brands they might be familiar with.
Overtime, we see car parts dotcom, becoming the number one trusted destination for customers thinking about repair and maintenance with the parts tools and solutions they need to get back on their own.
Alright time getting the customers back on the road quickly obviously quickly is a moving target and our goal is to shorten the click to delivery time, so that we can meet our customers' evolving expectations.
Over the last two years, we have doubled our warehouse footprint to close to 1 million square feet of space and our distribution on logistics operations on all led by a world class team with experience from Walmart home depot, and Amazon are average clip click to ship times have gone from around 36 hours. So now under 12 hours and low.
Continuous proportional endlessly for continuing the program.
In order to better customer experience, we're heavily investing in optimizing last mile delivery.
<unk> logic and packaged selection by utilizing advanced data analytics and machine learning algorithms.
Our inventory turns have also improved by over 40%, while increasing inventory availability.
As we navigate the current global supply chain disruption, we are feeling the impact on both inbound and outbound freight cost.
Constraints on containers on Ocean vessel, seven cases, a cost of importing and slow down the flow of inventory as of today, our new Texas distribution center is up and running and staffed but only about 50 for central on day outbound side, all carriers are running above full capacity slowing down order fulfillment on adding costs.
We expect us to get better over time as carriers add more capacity and our company adds regional partners.
Our goal is to continue getting closer to our customers to get on the parts they need to get back on the road as quickly as possible.
Alright place means empowering our customers to choose how they want to repair and maintain their vehicle.
Whether they're a do it yourself or do it from your customer we're committed to offering them the resources tools and turnkey solutions and services to get them back on their own.
The total automotive aftermarket is approximately 300 billion, however, still very underpenetrated online compared to other verticals on industries.
As consumers become more comfortable buying on line, we anticipate continued growth acceleration was.
The right tools and solutions and by leveraging our core competencies, we see a great opportunity to disrupt an industry that hasn't really evolved in decades.
We understand that customers may or may not have a local mechanics, they trust, but want a cost competitive solution in an industry with limited pricing transparency. We also know some customers will prefer and that flex type experience, where they can order very pairs or maintain their vehicle and never leave their house.
Whether it was on the mobile mechanic to you or refer you to a trusted shop car parts dot com will be there to solve the customers' needs and we're working hard behind the scenes to bring this vision to reality.
Today car parts Dot com is the fastest growing web site in the industry and tomorrow as we empower drivers have more tools around diagnostics maintenance and repair options. We believe we will continue to enhance our competitive moat and disrupt the industry I'd now like to turn it over to David.
Thanks, a lot.
And I too would like to thank the more than 1900 team members that car parts dotcom, who work through these challenging times to help get our customers back on the road.
Revenues were a record $119 7 million in the fourth quarter and $443 9 million for the full year of 2020 that is up 90% and 58% year over year, respectively, 89% of our sales warehouse brand products and on a year over year basis, our ecommerce channel car parts Dot com grew at.
Twice the rate of online marketplaces.
Gross margin was 34, 8% for the quarter and 35% for the full year, that's up from $33 seven in Q4 of 2019 and 30% for the full year of 2019.
The higher gross margin reflects the shift of the shifts to Morehouse brands and favorable channel and product mix, partially offset by higher inbound and outbound freight costs as well as seasonal surcharges from our carriers.
Net loss was $3 5 million in the fourth quarter compared to a loss of $25. One in the prior year period for the full year 2020, the net loss was $1 5 million compared to a net loss of $31 $5 million in 2019 now if you recall our prior loss included a noncash tax valuation allowance of $23 million.
Adjusted EBITDA for the quarter was $1 million down 700000 from last year. The decline was partially due to approximately $1 million in startup expenses associated with the opening of our Texas distribution center as well as increased receiving across the network.
We would caution with reading too much into the fourth quarter operating profitability, which seasonally is our slowest quarter of the year due to the increased receiving expense prior to the first quarter.
When combined with the investments we made it on new distribution center and the global supply chain disruption it can create some noise for.
For the year adjusted EBITDA grew from $4 5 million in 2000 $19 million to $16 million in 2020 as indicated in the past, we don't manage our business in quarters and instead, we will continue to focus on our company mission, which ultimately should generate superior returns for our shareholders.
On the balance sheet side at yearend cash and inventory combined was $125 1 million with net current assets at $67 4 million. We also ended the year with no outstanding debt or trade Lcs on our line of credit, which as a reminder, can be flexed up to $40 million, thereby giving us access to additional liquidity.
We can use to fund our operation.
On the Capex side, our total spend for 2020 was $9 7 million, including $1 6 million for a new Texas distribution Center and $6 4 million of software development of which a substantial portion was used to develop new customer centric features such as our completely revamped car parts dot com front and.
Our new search technology self service returns product options and much more.
I would like to now take a moment to elaborate on our financial long term goals, we believe that over the long run we can achieve top line revenue growth at a CAGR of 20% to 25% with 8% to 10% EBITDA margins.
Now going from the top of the P&L to the bottom. We believe we can gain of 100 to 200 basis points of gross margin, so improving product and channel mix as well as getting closer to the customers on the marketing and customer service side. We believe we can achieve 200 to 300 basis points of margin improvement by increasing our brand awareness and continuously improving our mix.
A free to paid traffic.
Finally, we believe that in the out years of the plan. We can drive 200 to 300 basis points of operating leverage through efficiencies as well as improvements to our supply chain now we're not interested in moonshot targets, rather we're looking to drive incremental improvements that we have a long term visibility on.
Our plan is to continue building our company optimizing whenever possible, but most importantly, investing in the business to drive growth through improved customer experience and a world class supply chain.
The last two years have been incredible for our team and long term shareholders. Our balance sheet is at its strongest point in over a decade and with five distribution centers as well as our ongoing expansion and new product categories, such as mechanical parts and EV parts. We're excited about the long term prospects, we remain committed to our core.
Polls of operational excellence financial discipline and outstanding customer service, we will continue to leverage our positive unit economics offered by our house brands as well as make additional investments in supply chain technology data science and machine learning, which we believe will overtime solidify our competitive advantage.
While the last two years, we're focused on building a foundation for the future. We're now entering the next chapter of our company's story. We're excited to continue leveraging our core competencies to offer the customers the tools and resources and solutions they need.
As the only public pure play E Commerce auto parts retailer with global sourcing and domestic logistics, we're uniquely positioned to disrupt the way people have both shopped and repair their car for the last 100 years. We're excited to continue our investments in the business and look to widen our technological moat to leverage our first mover.
Our advantage now we will of course continue to be disciplined in our investment philosophy and deploy capital only where we see opportunities to accelerate our growth and earn a significant return on investment and with that I would like to turn the call back over to Lev.
Thank you David we're very proud of what our team has accomplished over the last two years before I on the call I would like to congratulate Michael Mcdowell on his first Daytona 501.
In 2020, we had a very successful partnership with his team front or on Motorsports, and we're happy to announce that we're renewing this partnership for 2021.
So we recently announced a partnership with a professional fighters leak that fastest growing mixed martial arts league and our partner who is the audience aligns closely with our current customer demographic.
We believe these partnerships will continue to build consumer awareness of the car part of Dotcom brand.
The last day will continue to improve our overall customer experience by increasing site speed, providing more accurate shipping times, improving our service levels by getting the product out of our distribution centers faster Inc.
Introducing no household returns on line and providing customers the ability to choose how to best repair or maintained our car.
We believe our investments in delighting the customer will allow us to become the number one trusted destination for auto maintenance and repair.
Thank you for joining us today, and with that I would like to hand, it over to the operator to open it up for questions.
Thank you Sir as a reminder to ask a question you would need to press star one on your telephone to withdraw your question. Please press the pound key.
Please stand by while we compile the Q&A roster.
I show. Our first question comes from the line of Thomas Forte from D. A Davidson. Please go ahead.
Great. Thanks, sure 11, David Congrats on a wonderful fourth quarter and fantastic 2020.
Thank you I wanted to hear your thoughts on adding future distribution centers.
And the potential overtime as you build out your fulfillment center network to shorten ship miles to the consumer.
So the benefit on a near term basis as you add more distribution centers.
Moving more square footage and just having more inventory and then on long term basis on your ability to potentially shorten ship miles.
Save some money on shipping costs.
Thank you.
Hi, Tom It's David Great question, So I think from a supply chain standpoint, you hit it on the head inventory availability and speed to customers. How we win so inventory availability is having the right inventory close to the customer and speed to customer is ultimately how we're going to win is the faster.
We can ship the part or the faster the customer can receive those parts.
The more chances we have to compete with the brick and mortar players. So.
Overtime, we are definitely going to try to get closer to the customer.
Two years ago, we had two distribution centers today, we have five the goal is for us to get to call it 80% to 90% of our customers within one day and that's that's the ultimate goal now from a capital deployment standpoint, we want to be disciplined and we don't want to jump the gun. So we want to see the sales come in as <unk>.
We opened one distribution center before we open the next one so Dallas right now is half full it's fully operational but it's not fully stocked. So that's the way we did it with Vegas, we opened it we got to full capacity then we decided to open. The next one and then Dallas, we want to do the same thing before deciding on the next one so we have.
Good sense of where theyre going to be.
But right now we want to see the sales come in once Dallas is at full capacity.
Great and then one quick follow up you made some tremendous comments on.
Do it for me opportunity for car parts.
It's intended to be 2021 comments long term, how should we think about the potential for you to rollout some of the services you talked about on the do it for me side.
Yeah. So we're testing on vessels left we're testing a few things now on the site.
But we don't like kind of announcing things before they're fully baked and.
So we are testing some things, but we should think about us more longer term.
We will continue testing from 2021, and then really hit us hard in 2022.
Great. Thanks, a lot thanks, David Thanks for taking my questions.
Thanks.
Thank you on next question comes from the line of Darren <unk> from Roth Capital Partners. Please go ahead.
Yeah, Hey, guys. Thanks for taking my questions congrats on the quarter.
I'm kind of curious did you guys come up against the inventory constraints.
Quarter.
Hey, Darrin, it's David Yes, we were inventory constraints.
We manage the business that SKU level. So I can't give you kind of a dollar amount because thats not the way we manage it we have 65000 individual skus and for sure the global supply chain disruption has impacted the business.
We thought that by now the Texas facility would be full full of inventory call. It 85% to 90% full and right now we're closer to 50, so there's definitely some room for improvement in terms of inventory position and assortment.
Great. So great segue into my next question, so as we think about Texas.
You know and I know you don't like to manage the quarters and years and whatnot.
How do we think about the right sort of.
Marginal growth from Texas I. Appreciate this slight chain constraints et cetera, but is this something we should sort of assume as that 100% capacity by the second half of this year or is that being too aggressive in terms of mindset.
Yes. It is.
Hard to say exactly when it's going to be at full capacity because right now we're receiving as much as we can but we're also shipping out of there.
Our inventory levels are just not going up.
Now the good news is we're going to be announcing Q1 and call. It seven to eight weeks. So we'll have a much more detailed update on but right now it's about 50% capacity. We do have some new skus, we do have incremental inventory. So at the end of the year, we had call it $90 million worth of inventory on the books, which is more than.
We've ever had in company history.
The challenges at the SKU level, so sometimes it's a fast moving items gets impacted your sales get impacted if it's a slower moving items. It doesn't so it's really a SKU level and it's hard to give you kind of an exact number.
Got it.
On the EV and hybrid side.
How much of either on a small amount, but how much of your mix in 2020 was from that category and then how should we think about that that mix in 2021.
Yeah, So typically reflects kind of the.
The car park so about.
2%, 2% to 4% of the vehicles today.
Today on their old our eds on hybrids and so on a 2% to 4% of our sales are for.
For Evs and hybrids, so it tends to mirror or kind of what's out there on their own.
Okay.
Great and then just last one from me I know in the past you guys have talked about.
Getting more aggressively into the accessory category I'm, just kind of curious what the update us on that strategy and how much of a needle mover could be in the next 12 months. Thanks.
Yes, right now, we're really focused on mechanical parts.
So we started the initiative on.
In Q3 of last year, it's taking us a little bit longer than we would've liked.
Again, because of the supply chain problems and longer lead times.
It is taking a little bit longer. So we're really focused on the mechanical parts side of the business not really not really calling us accessories, just yet and then if I can add to that Darrin one of the reasons why we're really focused on mechanical parts is because the total addressable market is the largest.
The Tam from mechanical parts is close to 250 billion now performance on accessories is really interesting.
But it's closer to 40 or $50 billion.
Our business in our supply chain is really built.
For replacement parts, but the natural evolution from a user experience standpoint as mechanical parts. So for us. It's it's the most immediate opportunity with the biggest upside.
Great. Thank you.
Thank you. Our next question comes from the line of Ryan Macdonald from Greg Cowan Group. Please go ahead.
Good afternoon, David Loeb, Congrats on the transformation of the business Q4 results and the trends here to start the year.
Thanks.
I'm curious.
David You said, 20% to 25% sales growth CAGR going forward I know youre, not giving guidance don't want to reach over the head here, but.
Can we assume that's a reasonable expectation kind of starting this year or are there reasons why with the supply chain and other reasons why.
That's not necessarily the right expectation this year.
Yeah, Ryan listen we've talked many times and I know you know me I think.
Assumptions I wouldn't assume anything and I wouldn't read into what I'm, saying, either a positive or negative.
On to stay away from guidance, we don't have a crystal ball again, the global supply chain disruption is impacting everyone.
Can't tell you exactly what's going to happen because I don't know.
What I can tell you is that we are committed to our long term targets. We just released our investor deck that has a lot of great information as to where we're going and how we're going to get there.
We have an exceptional business, we've built a great team we have some amazing competencies, we have a vertically integrated supply chain. We have a great website, we have a great catalog, we have our own brands. So we have a lot of things going for us, but again, we have more of a long term view and I wouldn't really feel comfortable giving you kind of a number for next year, but I do think like.
CAGR of 20% to 25% over the next over the long term that's a good number to think about.
And then just on the margin side.
I know you guys are reinvesting in kind of building the infrastructure I know ERP system, I think youre upgrading this year. Some other costs flowing through so I guess help me with the cadence of kind of getting to those long term margin targets should we assume kind of reinvestment. This year and then start seeing that operating leverage in 2022 and beyond or any help there would be a.
Okay.
Yes, that's a fair question I think to hit our long term model and in our industry I think some of the investments have to be frontloaded.
Historically, our company was very aggressive in terms of cost cutting but everyone understands that there is a balance between sales and net margin. So I think we're in a unique position to disrupt the space, but again thats going to take some investments some of it is through the P&L. Some of it is through the balance sheet, but.
At least for the next couple of years I think it's safe to assume that we're going to be more aggressive with the investments now I think it's important to remember our personal investment philosophy like we only deploy capital when we see an opportunity to accelerate the growth and earn a return on investment and we are going to look at every.
Single project on a standalone basis, and it has to make economic sense, otherwise, we're not going to do it. So it's not investing for the sake of investing.
The long term target is our next checkpoint what are the investments that we're going to make and win is really project by project.
And then it works.
Specifically I know you'd mentioned kind of supply chain challenges, which have been ongoing for a while but more recently here, we've heard shipping container shortages port congestion et cetera across the number of the ecommerce importers from China, Taiwan et cetera.
You guys felt and outsized pressure here in Q1 or is manageable and things are getting better I guess youre kind of current supply chain relative to how it was on the second half of last year.
I think Q1 has actually been a little bit better but not by much.
So we have visibility about 12 weeks out in terms of.
Getting space on on ships for containers.
Right now its still pretty difficult.
Out 12 weeks and it also cost us more to get containers.
Taiwan, and China to the us so the spot rate.
They are about double what they were in the fourth quarter. So.
It's easing up.
Leave but we.
We don't expect for us to return to.
Quote unquote normal until probably the second half of this year.
And then last question from me.
Early sales and the mechanical kind of product category expansions are you seeing.
<unk> majority of the greater proportion of retention sales there from existing customers also buy and they're coming back or what's kind of the customer mix.
It's early but any early indications there.
Yes, it's pretty similar to what we saw on the replacement parts.
So remember we still.
That's where we're aiming to have in Q1 and it's also not the season from mechanical right now when it's really cold outside people aren't working on their cars. So.
In spring and summer is when we expect.
To see a better pickup in mechanical parts and on our Q1 call we will share.
Kind of some of those numbers on what we're seeing in terms of customary Pete.
<unk>.
Yes.
Great. That's it from me Thanks, guys. Good luck. Thanks.
Thanks.
Thank you.
Our next question comes from the line of Scott Zuccarelli from RBC capital markets. Please go ahead.
Good afternoon, guys Scot Ciccarelli RBC.
So historically a lot of autopart customers tend to want to go to the store auto parts store from both speed purposes, and customer service reasons. The timeline, you think you need to get to to really satisfy customer requirement or a speed of private acquisition to basically.
We addressed the bulk of customer needs.
Yes, I think.
Our goal is to get to 80 or 90% of the country in one day or less.
But I think how customers shop is going to evolve and it started evolving already.
I don't think customers want to go shopping for parts the way that they used to 2030 years ago.
There hasnt been a better alternative up until now we have a easier to use website.
<unk> parts to you for most customers within 253 days.
We'll make it really easy to find because we have a curated catalog. So we reduce the paradox of choice, which kind of mirrors them going into a store and talking to our counterman and on setting out one parts. So we'll make it really easy to find the right parts for their vehicle.
And they never have to leave their house or however, they want to shop. They never have to leave their mobile device. So I think we're very well positioned and not already Paris has to be done.
On immediately so a lot of the repairs are planned.
If you look at kind of the average in the industry when customers make appointments.
Through the mechanics, it usually takes three five days between.
Issuance at times, they make their appointments on the time to actually go in so a lot of the repairs are planned.
Now a few days of battery our starter alternator like those will probably stay on the store because thats an immediate need.
But we are working on some things Stephen on transplant problem. So.
We think we're pretty well positioned right now.
Interesting and then just a follow up on he led you cited the higher growth rate for car price dotcom than the industry average do you have a feel for where those share gains may be coming from us is it other websites is it coming from the bricks.
Bricks and mortar retailers do you have any data on that.
Yes, it is coming from from both brick and mortar as well as other pure play.
We can probably share some data around that and we get us from similar web.
You can look that up there as well.
Got it alright, thanks, a lot guys.
Thanks.
Thank you. Our next question comes from the line of Josh Goldberg from <unk>. Please go ahead.
Hey, guys.
Hey, Josh can you hear me okay.
Yes, two questions.
Helpful. As we set the stage from 'twenty one.
I think going into Covid. The expectation was you can do $330 million of revenue. This year, you've ended up doing 443, which has been a fantastic result, and I think the concern from some investors is that that was a non sustainable level in that.
Regardless of whether you are.
Able to grow on a CAGR.
This artificial high growth was led by Covid and not by your internal it.
<unk>.
Maybe if you could just spend a minute on that and then I have a follow up about the inventory about what youre seeing just in terms of conversion rate site traffic and others that make you feel that this is not just the COVID-19 beneficiary.
Yes.
Yes, I'll take the first question.
So if you look at the Q1 of last year before Covid hit.
We are growing our private label on 44% something like 44%.
And that on fluids two weeks when the whole country went into lockdown.
And when when demand was basically diminished and then if you look at it every quarter after that with pretty much sustained the same sales through.
Through the whole year sales basically about $120 million, which is our capacity and so what we're what we've always said is that we're limited non weather demand caused by the supply of inventory wherever we're bringing in we're really good at forecasting where to put the inventory and what inventories are out there in order to accelerate sales.
So that was our belief going into opening Texas. Unfortunately, we can keep us stocks, we can't get enough inventory in there in order to fully socket to see the full potential of that DC.
But thats you know thats temporary at some point.
Maybe second half of this year.
On the supply chain problems as well will ease up and we'll be we'll be able to fully socket.
But you know we wouldn't be putting on our long term model.
How confident are you that the demand will be there if your supply there post the COVID-19.
Where things are reopening I guess, that's my question.
So again, we do forecasting at the SKU level and we are really encouraged by what we're seeing today in the market in terms of.
Traffic gains that we're having in terms of our conversion rates on the website.
And we still have a lot of work through we're just getting started and remember we are not really a big player on mechanical parts today.
And that's where a lot of opportunity for us as.
A lot of our customers are working on their car and we don't have been on an offering for them. So we have a lot of work through in terms of merchandising in terms of our assortment strategy.
We're still we're just getting started on mechanical parts and we have a lot of.
A lot of room to grow there.
And then on the inventory I mean, you have increased your inventory dramatically in the last 12 months. It went up again in the fourth quarter up to $89 million extra day again, it's probably even higher now in the first quarter. It seems like that will edge up your capacity of sales.
Throughout this year as your inventory goes up is there a number that you feel comfortable.
<unk> the inventory to get to could you get to 120 on your $30 million of inventory.
Feel comfortable.
Convey the sense of optimism.
Obsolete and the reason why it's increasingly just based on demand. Thanks again.
Yes, so remember.
In Q4 so.
For us the way the year breaks out does that.
Q1 is kind of a collision on replacement parts Q2, and Q3 on mechanical parts and on Q4, you start getting into collision on replacement again, and so we stock up in Q4 in anticipation of a bigger Q1, and then that kind of set the stage for what Q2 and Q3 of <unk>.
I think the most inventory we can hold is maybe a 105.
Across all of our Dcs I don't think we can hold any more than 105 us.
So 89 us a lot.
It's not the Max because it's like I said text us is only 50% Paul but we can probably only holds another $10 million to $15 million.
Okay, great. Congrats again, thanks, thanks, guys.
Thank you.
As a reminder to ask a question you would need to press star one on your telephone to withdraw your question. Please press the pound key.
I show. Our next question comes from the line of Stephen Cornell from Diamond financial Mr. Come out your line is open.
Yes. Thank you I have a strategic question for you how do you prevent a large online competitive from coming in and pre empting one of your key suppliers.
When you say a large online competitor.
Like could you like a brick and mortar you mean.
No online like an Amazon.
They've been non to do that wave yes.
Yes, Hi, hi, the wayfarer hide what where the parts are coming from by so I'm just curious if.
That's something that.
You went you experience or anticipate.
So on the on the replacement parts side.
We don't really experienced that now if you think about kind of what Amazon likes to sell its nice square boxes.
They don't really like <unk>.
Looks like ours on they also liked the amount to be concentrated.
In a few skus and this is a really long tail business.
The 80 20 rule doesn't really apply here.
Yes.
Call. It 800000, skus on the fastest selling SKU, probably sells 10000 units a year or so.
Really literally a long tail business and if you think about how many different cars on the road today.
Youll understand why because each car requires different parts.
So we're not really that concerned on the replacement side on the mechanical parts side Amazon does sell a lot of branded merchandize on we think we're well when there is and being able to present, the customer with a better experience to buy parts and what I mean by that is.
Amazons product detail pages has to look the same whether you are buying on auto parts or milk or or a T shirt, whereas we can tailor our experienced selling auto parts and so we think long term.
That's how we win against Amazon now they may be able to source parts, but.
We think that you said it well.
Choose us over Amazon.
Did I hear you say you actually send mechanics too.
Housing.
We are testing that right now and a few in a few markets yes.
And.
How's that going.
So we don't like talking about stuff, that's not fully baked it's going pretty well on our testing.
But.
We're going to continue testing probably through 2021 and have a big rollout in <unk> in 2022.
What percent of your current revenues are still legacy sales.
What do you mean by legacy sales.
Not on line.
So on 5%.
About 5% do you still sell to the Philippines.
Now, we only sell in the us, but we do sell to shops.
So the 5% us wholesale revenue and Thats us selling two.
The various shops.
Right.
What kind of competitive response are you seeing from retailers like Riley.
So I think back.
The brick and mortar are really focused on buy online pickup in store.
Which makes sense.
For them because they have to utilize the assets that they have so they have to utilize the stores.
And they're not really focused on online and if.
If you look at pricing you can buy a headlight from.
Brick and mortar for call it $300. The same highlight on our website. There's a 140 box. So we do have a pricing advantage because of our sourced products.
So.
And they couldnt match that.
They can do and that is that.
I can't really imagine that for two reasons one.
They buy it from another brand.
The importance of product.
And so we source directly from the factory and on top of that they sell to shops.
And they have channel conflict and so for us.
Yes.
It's not currently.
We don't have the same channel conflict.
Alright, one final question.
And this is the stock market question.
Mechanical parts are viewed as the declining industry because of the ryzen easy.
How do you respond to that.
So we wanted to increase you want to increase that business, but at the same time going into quote unquote, a dying industry. So what are your thoughts on that.
Yeah. So if you look at our deck because that was just published today.
We have a slide on that.
90% of our revenue today is agnostic to the powertrain.
Whether it's on ice or on EV, it doesn't really matter to us 90% of our revenue is on.
Ignostic to the powertrain and a lot of the parts on at the same like think about on electric vehicles, like Tesla and on and on ice.
Car.
You still have bumper covers mirrors headlights window regulator as door handles like you still have a lot of the same parts and then all the channel.
Okay.
They're not mechanical.
And intent to go into mechanical mechanical with where youre not going to have that 90% anymore.
So the chassis parts are also the same you still have the same shocks and struts control arms.
So a lot of the parts are actually the same so what you don't have us fuel pumps on things like that but.
A lot of the parts are actually the same.
Thank you very much.
Yep.
Okay.
Thank you.
I show no further questions in the queue at this time, ladies and gentlemen, this concludes our Q&A session and today's conference call.
Thank you for participating you may all now disconnect.
Okay.
[music].