Q2 2021 Carparts.Com Inc Earnings Call

August 5, 2021

Okay.

Welcome to the car parts Dot Com second quarter 2021 conference call.

On the call from the company on.

<unk> Chief Executive Officer.

And David Liang, Chief operating Officer, and Chief Financial Officer on.

Now everyone should have access to the second quarter 2021 earnings release, which went out today at approximately 4.1 P M eastern time.

If you've not be of the release it is available in the Investor Relations section of the company's website at car parts Dot Com Slash investor.

This call the available for replay via the webcast archived of car parts Dot Com slash investor.

Before we begin like to remind everyone that the prepared remarks contain certain forward looking statements.

On the meaning of the federal Securities laws and management May take additional forward looking statements in response to your questions.

The forward looking statements include but are not limited to the statements regarding future events, our future operating and financial results.

Financial expectations.

Expected growth of the strategy key operating metrics.

On current business indicators capital needs and deployment.

Putting the product offerings customers suppliers competitors, the impact of tariffs and on.

Yes, the deal with that will be discussed and explanation of clarifies dot coms use of non-GAAP financial measures and let's call in the reconciliation between GAAP and non-GAAP measures required. The F. C. C regulation of G is included in the car parts Dot Com press release issued today, which again can be found on the investor who likes to set you of the <unk>.

All of these web site.

The non-GAAP information is not a substitute for any performance measures. The lab in accordance with gatlin, such non-GAAP measures have the locations which of detailed on the company's press release with that I would now like to turn on the call over to C O <unk>.

Left speaker.

Thank you order of of good afternoon, everyone.

I would like the bank all of the team members of the car Park Dot com for the hard work and dedication.

Revenue from the corner of crime 32.5 per song from future of last year to accompany a record of 157 and a half million.

Therefore of of fixed on circuit, a quarter of year over year growth.

Of the online penetration growth will continue the picture and during the quarter were on top of our new ground very facility. So better serve continue the levels of high day ma'am.

First of all of us to pull back of marketing expense and achieve of company of I've heard of adjusted EBITDA of $8.3 million.

As well state of before marketing expenses, just 1 of the menu over us we can pull to achieve our of longterm targets of 8 the 10% of adjusted EBITDA margin of.

Of sales continued to grow where confidence on our ability to increase profitability of overtime.

As a reminder, we believe our focus on the right parts price time right place will allow us to achieve of kayser of 20th of 25 per cent topline growth over the long term let.

Let me give you a quick update on each of the 3 pillars of our strategy.

Alright parts means ensuring our customers can find the complete solution that fits the vehicle on our website.

We're seeing customers that would be interested in specific repairs based on products purchase.

And while still early in the testing we received great feedback.

I will now turn it over to David to provide some financial highlights.

Thanks Les.

I too would like to thank the team for working through 1 of the most difficult environments that anyone has ever seen and through it all the team was able to deliver significant topline growth record profitability and continued execution of our mission of getting drivers back on the road, we generated record revenues of $157.5 million up 32.

The 5% versus prior year of $118.9 the increase was primarily driven by continued strong demand the expanded capacity coming from our Texas distribution center and the additional product offering of branded inventory from our partner network.

Gross profit was also a record $53.3 million up 37% from prior year gross margin was 33, 9% versus 34, 3% in the prior year. The difference was in part due to a shift in mix in branded products, which typically carry a higher selling price, but lower gross margin percentage as well as continued.

Pressure from inbound and outbound freight as we've stated before we optimize for gross profit dollars after of customer acquisition and fulfillment costs and we continue to believe that in the long term, we can achieve adjusted EBITDA in the 8% to 10% range given all the levers we have at our disposal.

Total net income from the quarter was $2.1 million compared to $1.6 million in Q2 of last year. The increase was driven primarily by significant sales growth. We also delivered substantially higher adjusted EBITDA in Q2, with a record $8.3 million of 48% from $5.6 million last year now.

Now turning to our balance sheet at the quarter end of our cash position was $33.1 million as we continued to build our inventory position now as a reminder, our ABL remains undrawn with $30 million of potential availability and the option to flex up to $40 million of capacity.

We're also announcing a share repurchase program of up to $30 million. The program gives us the flexible way to return value to our shareholders. When we see unwarranted volatility on our stock and we intend to be opportunistic with repurchases in.

An important driver to our decision, making will of course be the potential ROI of any dollar spent whether it's an investment into our shares inventory supply chain or technology.

We're incredibly proud of the accomplishments achieved by the team over the last few years and we're excited about delivering on our strategy in the years ahead, we remain committed to our philosophy of financial discipline, we will only deploy capital, where we see opportunities to accelerate our growth while earning a significant return on investment with that I will turn the call back over to the left.

Thanks, David.

It was fully functional to the extent of every.

Item you got an inventory and you were able to get out but I think you are in the process of really stocking. The some of the center of general sort of.

My first question is can you give us an update on that progress.

Hi, Tom It's David Great question, Yes, I think we built an incredible team and we're virtually full in Texas.

I think it's a testament to our the data science team the forecasting process. The logistics team I think even in this environment, we were able to to have a record quarter on outbound and still increased inventory position. The DC is basically full fully operational.

We did a great job of managing the vendors overseas the partners domestically and we feel really good about where we are.

And even more excited about the expansion next door.

Excellent. Thank you for that so for my follow up on the do it for me the opportunity is this something that could meaningfully affect your sales.

Sales and profit.

Later in 'twenty, 1 and 'twenty 2 how should we think about the timeline and then generally speaking.

On the margin opportunity of any different for the do it for me the opportunity.

As for your core doing yourself opportunity.

Yes, Thanks, Tom I think Inc.

Terms of.

The run it will meaningfully impact the results I wouldn't bake anything in this year.

Still kind of analyzing every customer interaction on making sure we get it the right.

And we get it perfect.

And in a real so like to under promise and over the lever so well.

We're really going to start cranking on the us towards the beginning of next year. So.

So I wouldn't bake anything in for this year in terms of margin opportunity I think margins are very similar.

King around brand awareness customer experience logistics technology, but we feel very good about where we are today.

Got it and the Windows.

A follow up.

Talk about being able to pull back on marketing spend a little bit in this quarter.

Just curious like what are you seeing just not enough ROI.

The marketing channels too expensive.

Or was it more of a.

There's the potential to get there.

Or I mean more customers in the funnel longer term if you hold off on marketing now till you get both the Grand Prairie.

Jacksonville up and running early next year.

So we're really have more demand than we can handle in the quarter.

So for us marketing spend he is dynamic.

The SKU level and really at the region level and so what we will look at us not only the ROI would generate but also what is the service levels of the customer and so when we can't meet certain service levels when we're on.

Operating at full capacity and we can get packages out.

I want to make sure that we're still deliver on outstanding customer experience, so that customer keeps coming back more and more so.

So thats really what drove the pull back on the marketing spend we just had the way too much demand.

And we didn't want to sacrifice service levels to acquire new customers and then just deliver about customer experience.

Got it.

Last quick 1 if I may could you share what percentage of sales were the direct e-commerce versus some of your third party partners.

Yes, so for 2021 second quarter E. Comm was about 58% marketplaces was about 36% and then our offline business was about 6% on everything adds up to $157.5 million.

Great. Thank you.

Thank you again I'd like to ask the question. Please press Star then 1 of our next question comes from the mines Doll of Craig Hallum Capital. Your line is open.

Good afternoon, guys. Congrats on the strong results.

Aaron.

Curious really nice operating leverage on the quarter, despite challenging freight environment.

Curious on how you think about investment in the business over the next several quarters and years versus <unk>.

Moving through the operating leverage going forward.

Yes, Ryan it's David Great question.

As we continue to build an exceptional business, it's amazing to see how the business scales. Once you grow the sales on.

Obviously this quarter, we had some great opportunities on marketing spend but that's just 1 of the levers that we can pull if you look at the long term model. There is basically 3 levers and none of these are the moon shots. So you got the channel mix.

Around E Com, you got product mix around the mechanical parts, you've got efficiencies around marketing spend and then you have basically your fixed opex that will grow at a slower pace I think we've been very good over the last 2 and a half years thats kind of.

Pacing, the opex and the investments to stay disciplined and continue to self fund those investments.

Financial discipline is the big 1 for us. So obviously there is investments that we need to make and everything is made.

On the case by case basis, we look at the ROI, but theres plenty of opportunities for us to accelerate the growth and earn a significant return on investment whether it's marketing technology logistics now we're starting to look at automation. So.

We've had a great too on a half years, but I'm even more excited about what comes next the business is just incredible it's a huge opportunity great market lots of cars on the road and what we're building no..1 else is doing we're leading from the front and I couldnt be more excited today.

Great you mentioned product mix of mechanical you talked about that category expansion and how thats going and the opportunity of how many more skus you have coming this year on that.

Yes, so that's going extremely well.

If you look at the product mix the engine parts of hard parts mechanical was the fastest growing segment of our business.

Historically, we were 70% <unk>, but if you look at it on the dollar basis, which is how we manage it last year mechanical parts was about $30 million and this year was $42 million, so thats growing faster than any other segments, obviously theres still a lot of of work to do the.

The space is big it's the $250 billion.

Addressable market and we're just scratching the surface, but I think we have a good foundation, we're still building out the team, we're still making those investments around customer experience, but I think the mechanical parts as well as EV parts is probably 1 of the biggest opportunities we have for the next decade.

And David just for clarification on that is that comparing.

Branded and private label last year versus this year as well, presumably with greater growth coming from the private label parts.

It's both.

We're starting to move away from differentiating private label versus branded.

We're trying to do us leverage both our data and catalog piece and our supply chain there's opportunities on both now 1 thing to remember is that sometimes the margin percentage is lower on a branded parts, but the selling price of significantly higher so the way we run the business and manage it internally as we maximized for gross profit dollars.

After a customer acquisition cost and fulfillment and there's opportunities both on private label and branded ultimately we're trying to solve the customer problem and generate as much dollars as possible and that's what we're doing.

And then Inc.

States, where you have 1 day shipping versus 2 day shipping today, we're able to bifurcate those on on sales growth.

If either were growing faster in the quarter.

Yes, not to get too granular in terms of state by state, but what I can tell you is that shipping expectation, which is how long the customer is expected to wait for the parts. Once they place. The order has a huge impact on conversion and obviously, it's common sense. The faster you can fill the order the more likely you are to close the sale in.

And over time, as we get closer to the customer obviously, it's a twofer 1 youre going to get more capacity for storage and more capacity for outbound, but you also get the freight savings and an opportunity to convert at a higher rate.

And I'll, just just to add 1 more to that Brian.

We are operating at capacity and so.

If you are going to add more capacity to your existing network.

For Jacksonville was scheduled to take possession in Q4, but we've already started to work and started ordering the inventory. So right now everything is on track everything is on budget and I couldnt be more excited.

Fantastic nicely done guys I'll hop back in the queue of good luck.

Thanks.

Thank you.

Ladies and gentlemen, showing no further questions at this time.

Okay.

Ladies and gentlemen, this does conclude today's conference. Thank you all participating.

Disconnect have a great day.

[music].

Walk us through the car parts Dot Com second quarter 2021 conference call on the call from the company of last Speaker Chief Executive Officer.

And David Magee on Chief operating Officer, and Chief Financial Officer.

I know everyone's sort of access the second quarter 2021 earnings release, which went out today at approximately 4.1 P M eastern time.

If you have not the what the release it is available in the Investor Relations section of the company's website at Corp, parts Dot com, but some of that.

Sure.

It's called the available for replay via the webcast archived of car parts of Dot Com Slash investor.

Before we begin we would like to remind everyone that the prepared remarks contain certain forward looking statements within the meaning of the federal securities laws and the.

As of May take additional forward looking statements in response to your questions.

The forward looking statements include but are not limited to the statements regarding future events, our future operating and financial results on it.

That's the expectation.

The growth in strategies key operating metrics, Inc.

The business indicators capital needs and deployment.

Or do they call that the offering customers suppliers competitors, the impact of tariffs and our tariff mitigation efforts and the potential impact of Corona virus, a lot of supply chain and operating results.

The forward looking statements are based on current information and the expectations are subject to uncertainties of changes the circumstance and the not constituent scared.

Guarantees of future performance.

Forward looking statements involve several factors that could cause actual results to differ materially from those statements.

Well for all of us to the risk factors contained in the car parts of Dot Com annual report on form 10-K and quality of reports on form 10-Q filed with the Securities and Exchange Commission for a detailed discussion on the factors that could cause actual results to differ materially from those projected in any forward looking statements.

Car parts of Dot Com assumes no obligation to nor does it intend to update or revise any forward looking projections. The navy made in today's release all calls the update all of the positive reasons. The actual results could differ materially from those anticipated on these forward looking statements.

Even if the information becomes available in the future.

Please note that on today's call. In addition to discussing GAAP financial measures and the outlook for the company non-GAAP financial measures such as adjusted EBITDA will be discussed in the.

Explanation of car parts of Dotcoms, the use of non-GAAP financial measures, the let's call and the reconciliation between GAAP and non-GAAP measures required by SEC regulation G is included in the car parts Dotcom press release issued today, which again can be found on the Investor Relations section of the company's website.

Non-GAAP information is not a substitute for any performance measures derived in accordance with GAAP of such non-GAAP measures have limitations, which are detailed on the company's press release.

With that I would now like to turn the call over to CEO left acre.

Thank you operator on the good afternoon, everyone.

I would like the thank all of the team members of the car parts of Dot com for their hard work and dedication.

Revenues in the quarter climbed 32, 5% from Q2 last year the company of our CAD $157.5 million.

This was the sixth consecutive quarter of year over year growth.

As the online penetration growth will continue to take share and during the quarter, where on the top of our new Grand Prairie facility to better serve continued levels of high demand.

That's allowed us to pull back on marketing spend and achieve a company of our adjusted EBITDA of $8.3 million.

As we have stated before marketing spend is just 1 of the many levers we can pull to achieve our long term targets of 8% to 10% adjusted EBITDA margin.

Sales continued to grow were confident in our ability to increase profitability overtime.

As a reminder, we believe our focus on the right parts right time, right place will allow us to achieve a CAGR of 20% to 25% topline growth over the long term.

So let me give you a quick update on each of the 3 pillars of our strategy.

Alright, part means ensuring our customers can find the complete solution that sets us on a vehicle on our website.

We completed the rollout of our new search technology that makes it easier and faster for our customers to find parts and get back on the road.

We also completed the rollout of sales force and I'm very excited with the results, allowing price increase scalability was more self service tools that simplify the entire customer journey.

As you know our strategy has been the focus on stockpiles of them, but our model is flexible enough to adapt the changes in the environment.

We will continue to experience the extremely strong levels of demand for our products, we were able to leverage our vertically integrated supply chain to serve our customers as well as supplement our offering with ramp of inventory from our partners.

Alright assignment of getting our customers back on the road quickly by expanding our footprint and fulfillment capabilities.

Our Grand Prairie facility in Texas is almost full and we are excited about getting our newly contracted of extended space on the building operational at.

As previously announced while the expanding of the space by 156000 square feet. So on a total of 366000 as well as opening up of New 180000 square foot facility in Jacksonville, Florida.

This will give us over $1.2 million square feet and warehouse distribution capacity and gives us the ability to reach 99% of the country in 2 days and 55% and 1 day transit time.

We expect the Grand Prairie expansion to the operational in Q1 of 2022 and the Jackson on the warehouse to the operational by the end of Q2.2022.

We're also evaluating different options for automation for the implemented throughout the distribution network to help us increase capacity on boost the operational efficiencies.

Alright placement of the empowering our customers to choose how they want the repair and maintain their vehicle whether the.

Is there a do it yourself or do it for me customer or can pace kind of committed to offering them the resources tools and turnkey solutions and services to get them back on the road.

During the quarter, we worked on improving our mobile mechanics data to identify existing customers that would be interested in the specific repairs based on product purchase.

And while still early in the testing we received great feedback.

I will now turn it over to David to provide some financial highlights.

Thanks, a lot of.

I too would like to thank the team for working through 1 of the most difficult environments that anyone has ever seen and through it all the team was able to deliver significant topline growth and record profitability and continued execution of our mission of getting drivers back on the road, we generated record revenues of $157.5 million up 32.

5% versus prior year of $118.9 the increase was primarily driven by continued strong demand the expanded capacity coming from our Texas distribution center and the additional product offering of branded inventory from our partner network.

Now turning to our balance sheet at the quarter end of our cash position was $33.1 million as we continued to build on inventory position now as a reminder, our ABL remains undrawn with $30 million of potential availability and the option to flex up to $40 million of capacity we're on.

Also announcing a share repurchase program of up to $30 million. The program gives us the flexible way to return value to our shareholders. When we see unwarranted volatility in our stock and we intend to be opportunistic with repurchases.

An important driver to our decision, making will of course be the potential ROI of any dollar spent whether it's an investment into our shares inventory supply chain or technology.

Thanks, David.

During the quarter, we made significant progress on burning car part of Dot com with partnerships of highly overlap with our customer base, such as NASCAR and Daytona 501 on Michael Mcdowell Professional fight League Major league fishing and our Youtube Influencer campaign was Donuts media.

In closing new and used cars remain in short supply with rising price is reducing our productivity for many drivers as the rig.

Adult the average age of cars on the relative has increased as well as miles driven the requiring more maintenance and repairs were committed to our mission of getting the average back on the road for our strategy of right parts right time, right place and delivering superior returns for our long term shareholders and with that I would like to hand, it over to the operator to open it up for questions.

Thank you again, ladies and gentlemen, if you'd like to ask the question. Please press Star then 1 when you touched on telephone.

Again to ask the question. Please press Star then 1 our first question constantly Thomas Forte of D. A Davidson your line is open.

Great 1 question on 1 follow up.

And congrats on the quarter.

Well I think as the year progressed, you've talked about your ability to fully inventory and the new Grand Prairie, Texas Fulfillment Center I think last quarter, you indicated that it was fully functional to the extent of every.

Items, you got in inventories and you were able to get out but I think you are in the process of fully stocking some of the center of general sort of my first question is can you give us an update on that progress.

Hi, Tom It's David Great question, Yes, I think we built an incredible team and we're virtually full in Texas I think it's a testament to our the data science team the forecasting process. The logistics team I think even in this environment, we were able to to have a record quarter on outbound and still increased inventory position the.

<unk> is basically full fully operational.

We did a great job of managing the vendors overseas the partners domestically and we feel really good about where we are.

And even more excited about the expansion next door.

Excellent. Thank you for that so for my follow up on the do it for me opportunity is there.

This is something that can meaningfully affect your.

Sales and profit.

Later in 'twenty, 1 and 'twenty 2 how should we think about the timeline and then generally speaking do you.

Take the margin opportunity is any different for the do it for me the opportunity.

As for your core doing yourself opportunity.

Yes, Thanks, Tom I think.

In terms of.

1 of it will meaningfully impact the results I wouldn't bake anything in this year.

We're still kind of analyzing every customer interaction on making sure we get it right.

We get it perfect.

And in a real so like to under promise and over deliver so we're.

We're really going to start cranking on the us towards the beginning of next year. So.

So I wouldn't bake anything in for this year in terms of margin opportunity I think margins are very similar.

Regardless of whether it's a DIY customer of the diverse from a customer because what we're trying to us we're trying to solve a problem and.

And we wanted the agnostic to how the customer wants to install the part so whether the customer buys us on they bring it through the shop or they buy it on they do the repair themselves on the ship and store shop on the shop by the US I think to US, we're really agnostic to that channel.

I want to sell more parts and the margin profile will be very similar.

Great. Thank you Bob Thank you David Great quarter.

Thanks.

Thank you. Our next question comes from Darren <unk> of.

I have Roth capital partners. Your line is open.

Hey, guys. This is Dylan on for Darren Thanks for taking my questions.

First 1 for me.

Talking about Graham Parry, the virtually fully operational.

How long was that like.

Blake lives during the quarter.

Just reached their towards maybe the end of June and then sort of.

Is the are you still seeing enough demand there.

I know you guys mentioned in the passenger basically like capping out on the inventories so.

I mean are you still seeing that same I guess like demand outstripping your ability to get inventory in there.

Yes, we feel really good about where we are.

We're operating at full capacity on the outbound side, we were virtually at full capacity during the whole quarter Theres continued demand out there and we're focusing on fulfilling that demand.

We have long term targets of growth of call it 20%, 25% compounded.

There's a lot of investments that we're making around brand awareness customer experience logistics technology, but we feel very good about where we are today.

Got it and then the follow up.

<unk> talked about being able to pull back on marketing spend a little bit in this quarter.

Just curious like what are you seeing just not enough ROI.

We're marketing channels to expenses.

Or was it more of.

Theres the potential to get.

Better I mean more customers in the funnel longer term if you hold off on marketing now till you get both of the Grand Prairie in.

Jacksonville up and running early next year.

So we really have more demand than we could handle in the quarter and so for us marketing spend is dynamic.

The SKU level and really at the region level and so what we will look at us not only the ROI would generate but also what is the service levels of the customer and so on we can meet certain service levels when we're on.

Operating at full capacity and we can get packages out.

Want to make sure that we're still delivering an outstanding customer experience of that customer keeps coming back more and more so.

So that's really what drove the pull back on the marketing spend we just have the way too much demand.

And we didn't want to sacrifice service levels to acquire new customers and then we just deliver about customer experience.

Got it 1 last quick 1 if I may could you share of what percentage of sales where the.

Direct e-commerce versus some of your third party partners.

Yes, so for 2021 second quarter E. Comm was about 58% marketplaces was about 36% and then our offline business was about 6% and everything is up to $157.5 million.

Great. Thank you.

Thank you again, if you'd like to ask the question. Please press Star then 1 of our next question comes from minus the Dol of Craig Hallum Capital. Your line is open.

Good afternoon, guys. Congrats on the strong results.

Thanks Aaron.

Curious really nice operating leverage in the <unk>.

Quarter, despite challenging freight environment.

So how do you think about investment in the business over the next several quarters and years versus <unk>.

Flowing through the operating leverage going forward.

Yes, Ryan it's David Great question.

Thank you know as we continue to build an exceptional business, it's amazing to see how the business scales. Once you grow the sales of.

Around E com, you've got product mix around the mechanical parts. He got efficiencies around marketing spend and then you have basically your fixed opex that will grow at a slower pace I think we've been very good over the last 2 on a half year is thats kind of.

Pacing, the opex and the investments to stay disciplined and continue to self fund those investments.

Financial discipline is the big 1 for us. So obviously there is investments that we need to make and everything is made.

On on case by case basis, we look at the ROI, but theres plenty of opportunities for us to accelerate the growth and earn a significant return on investment whether it's marketing technology logistics now we're starting to look at automation. So.

We've had a great 2 and a half years, but.

But I'm even more excited about what comes next the <unk>.

This is just incredible it's a huge opportunity great market lots of cars on the road and we're building no..1 else is doing we're leading from the front and I couldnt be more excited today.

Great you mentioned product mix mechanical you talked about that category expansion and how that's going end of the opportunity how many more skus you have coming this year index.

Yes, so that's going extremely well.

You look at the product mix the engine parts of hard parts mechanical was the fastest growing segment of our business.

Historically, we were 70% already but if you look at it on the dollar basis, which is how we manage it.

Last year mechanical parts was about $30 million and this year was $42 million, so thats growing faster than any other segments, obviously theres still a lot of of work to do.

The space is big it's the $250 billion.

And David just for clarification on that is that comparing.

Branded and private label last year versus this year as well, presumably with greater growth coming from the private label parts.

It's both.

We're starting to move away from differentiating private label versus branded.

We're trying to do us leverage both our data and catalog piece and our supply chain. There is opportunities on both now 1 thing to remember is that sometimes the margin percentage is lower on a branded parts, but the selling price of significantly higher so the way we run the business and manage it internally as we maximized for gross profit dollars.

After a customer acquisition cost and fulfillment and the result of opportunities both on private label and branded ultimately we're trying to solve the customer problem and generate as much dollars as possible and that's what we're doing.

And then Inc.

States, where you have 1 day shipping versus 2 day shipping today are you able to bifurcate those on sales growth and.

Either we're growing faster in the quarter.

Yes, not to get too granular in terms of state by state, but what I can tell you is that shipping expectation, which is how long of the customer is expected to wait for the parts. Once they place. The order has a huge impact on conversion and obviously, it's common sense. The faster you can fill the order the more likely you are to close the sale in.

And over time, as we get closer to the customer obviously, it's the 2 for 1 youre going to get more capacity for storage and more capacity for outbound, but you also get the freight savings and an opportunity to convert at a higher rate.

And I'll, just just to add 1 more to the Brian.

We are operating at capacity and so.

If you are going to add more capacity to your existing network.

Youre not going to add it on the same state as you are so regardless, we want to get the closer to the customer, but regardless of that value proposition, we need to open more distribution centers just to add more capacity on our network. So.

We don't really analyze of state by state I mean, we'll have that analysis, but.

It doesn't really play into the equation of opening more Dcs because.

We already know the 20 to expand capacity.

1 more for me and then I'll hop back in the queue.

But can.

Can you talk through further DC expansion and how you think about it as well as really and.

And if you can quantify it or at least where the heavy lifting will come in from Q3 Q4 versus Q1 on Jack or on the Texas expansion as well as the Florida opening.

Yes, obviously, we're happy about the last 3 Dcs all 3 exceeded expectation and we got the full capacity quickly the financing that we have on the Capex is extremely attractive. So a lot of times, we get a very fast return on investment. The key is just the stock the the DC with the right inventory.

Right now, we just took possession of the D C. The DC expansion in Texas.

And we've already laid out we have the lay out we've already placed the opening orders and we're already starting to build up the team for.

Jackson Ville was scheduled to take possession in Q4, but we've already started to work and starting to ordering the inventory. So right now everything is on track everything is on budget.

And I couldnt be more excited.

Fantastic nicely done guys I'll hop back in the queue. Good luck.

Thanks.

Thank you.

Ladies and gentlemen, showing no further questions at this time.

Okay.

Ladies and gentlemen, this does conclude today's conference. Thank you all participating you may now disconnect have a great day.

Q2 2021 Carparts.Com Inc Earnings Call

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