U.S. Auto Parts Network, Inc.
Feb 24, 2010

U.S. Auto Parts Network, Inc. Reports Fourth Quarter Results

- Net sales were $45.8 million, up 35.5% year over year. - Adjusted EBITDA $3.4 million. - Gross margin 36.0%.

CARSON, Calif., Feb 24, 2010 /PRNewswire via COMTEX News Network/ -- U.S. Auto Parts Network, Inc. (Nasdaq: PRTS), the largest online provider of automotive aftermarket parts and accessories, today reported record net sales for the fourth quarter ended January 2, 2010 of $45.8 million, an increase of $12.0 million or 35.5% over Q4 2008 net sales of $33.8 million. Q4 2009 net income was $0.6 million or $0.02 per diluted share, an increase of $4.1 million over Q4 2008. The Company generated Adjusted EBITDA of $3.4 million for the quarter compared to $0.6 million for Q4 2008. For further information regarding Adjusted EBITDA, including a reconciliation of Adjusted EBITDA to net income (loss), see non-GAAP Financial Measures below.

For the year, net sales for 2009 were $176.3 million, an increase of 14.9% from $153.4 million for 2008. Net income for the year 2009 was $1.3 million, or $0.04 per diluted share which includes a non-cash charge for stock option forfeitures of $1.3 million net of tax or $0.04 per diluted share. This compares to a net loss of $16.9 million, or $0.57 per diluted share for 2008 which includes a non-cash impairment charge for goodwill and intangibles of $14.0 million or $0.47 per diluted share. Diluted EPS for the years ended January 2, 2010 and December 31, 2008 included amortization expense related to intangibles of $0.7 million or $0.02 per diluted share and $5.0 million or $0.17 per diluted share, respectively. The Company generated adjusted EBITDA of $13.1 million in 2009 compared to $5.2 million in 2008. Adjusted EBITDA excludes share-based compensation expense of $3.3 million in 2009 and $2.9 million in 2008.

"We are pleased to report our second consecutive quarter of strong double digit growth and even more excited that our sales growth percentage continued to accelerate in our seasonally weakest quarter," stated Shane Evangelist, Chief Executive Officer. "We completed the year with quarterly EBITDA of at least $3.0 million in every quarter and added to our cash despite investing to overhaul our back office systems; launch an upgraded order management platform; and open a new East Coast distribution facility. We also made great progress with our strategic growth initiatives: private label parts and AutoMD. At year end, we had approximately 1,800 private label hard parts in our warehouse with another 2,200 SKUs on order and we continue to be pleased with the results so far. Last month, we officially launched AutoMD.com (www.AutoMD.com) with the objective to become the most complete and unbiased free online automotive repair resource designed to empower car owners with the best and most affordable way to repair their vehicles."

"Looking forward, we expect to see more people going online to research and purchase auto parts and DIY market growth trends to continue. We made great progress in 2009 improving our customer experience and from this foundation we will look to leverage our operating results in 2010," continued Evangelist.

Q4 2009 Financial Highlights

Q4 2009 Operating Metrics




                                             Q4 2009     Q4 2008     Q3 2009
    Conversion Rate                             1.47%       1.15%       1.43%
    Customer Acquisition Cost                  $6.48       $6.41       $7.28
    Marketing Spend (% Internet Sales)           6.7%        7.2%        7.5%
    Unique Visitors (millions)                  25.1        22.9        27.1
    Orders (thousands)                           368         264         386
    Revenue Capture (% Sales) *                 83.9%       80.9%       82.2%
    Average Order Value                         $115        $120        $118

    * Revenue capture is the amount of actual dollars retained after taking
      into consideration returns, credit card declines and product
      fulfillment.


Non-GAAP Financial Measures

Regulation G, "Conditions for Use of Non-GAAP Financial Measures," and other provisions of the Securities Exchange Act of 1934, as amended, define and prescribe the conditions for use of certain non-GAAP financial information. We provide "Adjusted EBITDA," which is a non-GAAP financial measure. Adjusted EBITDA consists of net income before (a) interest income (expense), net; (b) income tax provision (benefit); (c) amortization of intangibles and impairment loss; (d) depreciation and amortization; and (e) share-based compensation expense related to stock options.

The Company believes this non-GAAP financial measure provides important supplemental information to management and investors. This non-GAAP financial measure reflects an additional way of viewing aspects of the Company's operations that, when viewed with the GAAP results and the accompanying reconciliation to corresponding GAAP financial measures, provides a more complete understanding of factors and trends affecting the Company's business and results of operations.

Management uses Adjusted EBITDA as a measurement of the Company's operating performance because it assists in comparisons of the Company's operating performance on a consistent basis by removing the impact of items not directly resulting from core operations. Internally, this non-GAAP measure is also used by management for planning purposes, including the preparation of internal budgets; for allocating resources to enhance financial performance; for evaluating the effectiveness of operational strategies; and for evaluating the Company's capacity to fund capital expenditures and expand its business. The Company also believes that analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of companies in our industry. Additionally, lenders or potential lenders use Adjusted EBITDA to evaluate the Company's ability to repay loans.

This non-GAAP financial measure is used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. Management strongly encourages investors to review the Company's consolidated financial statements in their entirety and to not rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. In addition, the Company expects to continue to incur expenses similar to the non-GAAP adjustments described above, and exclusion of these items from the Company's non-GAAP measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring.

The table below reconciles net income (loss) to Adjusted EBITDA for the periods presented (in thousands):



                                      Thirteen   Three   Fifty-Two  Twelve
                                       Weeks    Months     Weeks    Months
                                       Ended     Ended     Ended     Ended
                                      -------   --------  -------   --------
                                      January   December  January   December
                                         2,        31,       2,        31,
                                      -------   --------  -------   --------
                                        2010      2008      2010      2008

    Net income (loss)                   $586   $(3,477)   $1,317  $(16,906)
    Interest income, net                 (17)     (222)     (189)     (962)
    Income tax provision (benefit)       687    (2,854)    3,123   (11,822)
    Amortization of intangibles           81       398       661     4,958
    Depreciation and amortization      1,455     1,001     4,910     3,674
                                       -----     -----     -----     -----
    EBITDA                             2,792    (5,154)    9,822   (21,058)
    Impairment loss on intangibles         -     4,923         -    23,368
    Share-based compensation             569       834     3,270     2,901
                                       -----     -----     -----     -----
    Adjusted EBITDA                   $3,361      $603   $13,092    $5,211
                                      ======      ====   =======    ======


Conference Call

As previously announced, the Company will conduct a conference call with analysts and investors to discuss the results today, Thursday, at 6:00 am Pacific Time (9:00 am Eastern Time). The conference call will be conducted by Shane Evangelist, Chief Executive Officer and Ted Sanders, Chief Financial Officer. Participants may access the call by dialing 877-941-4778 (domestic) or 480-629-9763 (international). In addition, the call will be broadcast live over the Internet and accessible through the Investor Relations section of the Company's website at www.usautoparts.net where the call will be archived for two weeks. A telephone replay will be available through March 11, 2010. To access the replay, please dial (800) 406-7325 (domestic) or (303) 590-3030 (international), passcode 4243187.

To view the press release or the financial or other statistical information required by SEC Regulation G, please visit the Investor Relations section of the U.S. Auto Parts website at investor.usautoparts.net.

About U.S. Auto Parts Network, Inc.

Established in 1995, U.S. Auto Parts is a leading online provider of automotive aftermarket parts, including body parts, engine parts, performance parts and accessories. Through the Company's network of websites, U.S. Auto Parts provides individual consumers with a broad selection of competitively priced products that are mapped by a proprietary product database to product applications based on vehicle makes, models and years. U.S. Auto Parts' flagship websites are located at www.autopartswarehouse.com, www.partstrain.com and www.AutoMD.com and the Company's corporate website is located at www.usautoparts.net.

U.S. Auto Parts is headquartered in Carson, California.

Safe Harbor Statement

This press release contains statements which are based on management's current expectations, estimates and projections about the Company's business and its industry, as well as certain assumptions made by the Company. These statements are forward looking statements for the purposes of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended and Section 27A of the Securities Act of 1933, as amended. Words such as ''anticipates,'' "could," ''expects,'' ''intends,'' ''plans,'' "potential," ''believes,'' "predicts," "projects," ''seeks,'' "estimates," "may,'' ''will,'' "would," "will likely continue" and variations of these words or similar expressions are intended to identify forward-looking statements. These statements include, but are not limited to, the Company's expectations regarding its future operating results and financial condition, impact of changes in our key operating metrics, our potential growth, our liquidity requirements, and the status of our auction rate preferred securities. We undertake no obligation to revise or update publicly any forward-looking statements for any reason. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors.

Important factors that may cause such a difference include, but are not limited to, economic downturn that could adversely impact retail sales; marketplace illiquidity; demand for the Company's products; increases in commodity and component pricing that would increase the Company's per unit cost and reduce margins; the competitive and volatile environment in the Company's industry; the Company's ability to expand and price its product offerings, control costs and expenses, and provide superior customer service; the mix of products sold by the Company; the effect and timing of technological changes and the Company's ability to integrate such changes and maintain, update and expand its infrastructure and improve its unified product catalog; the Company's ability to improve customer satisfaction and retain, recruit and hire key executives, technical personnel and other employees in the positions and numbers, with the experience and capabilities, and at the compensation levels needed to implement the Company's business plans both domestically and internationally; the Company's cash needs; any changes in the search algorithms by leading Internet search companies; the Company's need to assess impairment of intangible assets and goodwill; and the Company's ability to comply with Section 404 of the Sarbanes-Oxley Act and maintain an adequate system of internal controls; any remediation costs or other factors discussed in the Company's filings with the Securities and Exchange Commission (the "SEC"), including the Risk Factors contained in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which are available at www.usautoparts.net and the SEC's website at www.sec.gov. You are urged to consider these factors carefully in evaluating the forward-looking statements in this release and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. Unless otherwise required by law, the Company expressly disclaims any obligation to update publicly any forward-looking statements, whether as result of new information, future events or otherwise.



                         U.S. AUTO PARTS NETWORK, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                    (in thousands except per share amounts)

                                               January 2,      December 31,
                                                 2010              2008
                                               ----------      ------------
    ASSETS
    Current assets:
      Cash and cash equivalents                 $26,251           $32,473
      Short-term investments                     11,071                 -
      Accounts receivable, net                    3,383             1,353
      Inventory, net                             18,610            10,910
      Deferred income taxes                       1,513             2,095
      Other current assets                        3,148             2,090
                                                  -----             -----
        Total current assets                     63,976            48,921

    Property and equipment, net                  12,405             8,203
    Intangible assets, net                        3,114             3,028
    Goodwill                                      9,772             9,772
    Deferred income taxes                        10,985            14,061
    Investments                                   4,264             6,351
    Other non-current assets                         98                94
                                                    ---               ---
         Total assets                          $104,614           $90,430
                                               ========           =======

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
      Accounts payable                          $11,371            $5,702
      Accrued expenses                            8,038             5,663
      Capital leases payable, current portion         -                47
      Other current liabilities                   2,518             1,496
                                                  -----             -----
        Total current liabilities                21,927            12,908

    Commitments and contingencies                     -                 -

    Stockholders' equity:
      Common stock, $0.001 par value;
       100,000,000 shares authorized at
       January 2, 2010 and December 31, 2008;
       29,893,631  and 29,846,757 shares
       issued and outstanding as of
       January 2, 2010 and December 31, 2008
       respectively                                  30                30
      Additional paid-in capital                150,084           146,408
      Accumulated other comprehensive
       income (loss)                                 84               (88)
      Accumulated deficit                       (67,511)          (68,828)
                                                 ------            ------
        Total stockholders' equity               82,687            77,522
                                                 ------            ------
          Total liabilities and
           stockholders' equity                $104,614           $90,430
                                               ========           =======


                       U.S. AUTO PARTS NETWORK, INC.
          UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (in thousands, except share and per share data)

                                    Thirteen    Three    Fifty-Two   Twelve
                                      Weeks     Months     Weeks     Months
                                      Ended      Ended     Ended      Ended
                                     January   December   January   December
                                        2,        31,        2,        31,
                                    --------     ------    ------    ------
                                      2010        2008      2010      2008
                                    --------     ------    ------    ------

    Net sales                        $45,776    $33,756   $176,288   $153,424
    Cost of sales                     29,309     21,607    112,415    100,869
                                      ------     ------    -------    -------
    Gross profit                      16,467     12,149     63,873     52,555
    Operating expenses:
      Marketing (1)                    6,053      5,124     23,419     22,965
      General and administrative (1)   4,933      4,852     19,640     18,234
      Fulfillment (1)                  3,051      2,329     11,437      9,116
      Technology (1)                   1,093      1,130      4,467      3,642
      Amortization of intangibles
       and impairment loss                81      5,321        661     28,326
                                      ------     ------    -------    -------
    Total operating expenses          15,211     18,756     59,624     82,283
    Income (loss) from operations      1,256     (6,607)     4,249    (29,728)
    Other income:
      Other income (loss)                  -         54          2         38
      Interest income, net                17        222        189        962
                                      ------     ------    -------    -------
    Other income, net                     17        276        191      1,000
    Income (loss) before income
     taxes                             1,273     (6,331)     4,440    (28,728)
    Income tax provision (benefit)       687     (2,854)     3,123    (11,822)
                                      ------     ------    -------    -------
    Net income (loss)                   $586    $(3,477)    $1,317   $(16,906)
                                      ======     =======   =======   ========
    Basic net income (loss)
     per share                         $0.02     $(0.12)     $0.04     $(0.57)
    Diluted net income (loss)
     per share                         $0.02     $(0.12)     $0.04     $(0.57)
    Shares used in computation
     of basic net income (loss)
     per share                    29,865,452 29,846,757 29,851,873 29,846,757
    Shares used in computation
     of diluted net income (loss)
     per share                    31,245,893 29,846,757 30,811,636 29,846,757


                                    Thirteen    Three    Fifty-Two   Twelve
                                      Weeks     Months     Weeks     Months
                                      Ended      Ended     Ended      Ended
                                     January   December   January   December
                                       2,         31,        2,        31,
                                    --------     ------    ------    ------
                                      2010        2008      2010      2008
                                    --------     ------    ------    ------
     (1) Includes share-based
         compensation expense
         as follows:
        Marketing                       $114       $87      $436      $344
        General and administrative       384       636     2,276     2,181
        Fulfillment                       60        50       213       149
        Technology                        11        61       345       227
                                         ---       ---       ---       ---
          Total share-based
           compensation expense         $569      $834    $3,270    $2,901
                                        ====      ====    ======    ======


                          U.S. AUTO PARTS NETWORK, INC.
           UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (in thousands)


                                            Fifty-Two Weeks   Twelve Months
                                                 Ended            Ended
                                                January 2,     December 31,
                                                  2010            2008
                                              -----------------------------
    Operating activities
      Net income/(loss)                          $1,317          $(16,906)
      Adjustments to reconcile net
       income to net cash provided by
       operating activities:
        Depreciation and amortization             4,910             3,674
        Amortization of intangibles                 661             4,958
        Impairment loss on intangibles                -            23,368
        Loss from disposition of assets               -                26
        Share-based compensation expense          3,270             2,901
        Deferred taxes                            3,658           (11,703)
    Changes in operating assets and
     liabilities:
        Accounts receivable, net                 (2,030)            1,553
        Inventory, net                           (7,700)              280
        Prepaid expenses and other current
         assets                                  (1,055)             (300)
        Other non current assets                     (3)               15
        Accounts payable and accrued expenses     8,011            (5,000)
    Other current liabilities                     1,023               130
                                                  -----               ---
    Net cash provided by operating activities    12,062             2,996

    Investing activities
      Additions to property and equipment        (8,850)           (4,331)
      Proceeds from the sale of marketable
       securities                                 2,150            21,650
      Purchases of marketable securities        (11,114)           (5,500)
      Cash paid for intangible assets              (739)             (641)
                                                  -----               ---
    Net cash (used in) provided by
     investing activities                       (18,553)           11,178

    Financing activities
      Payments made on notes payable                  -            (1,000)
      Payments on short-term financing              (47)              (75)
      Proceeds from exercise of stock options       162                 -
                                                  -----               ---
    Net cash used in financing activities           115            (1,075)
                                                  -----               ---
    Effect of changes in foreign currencies         154               (25)

    Net  (decrease) increase in cash and
     cash equivalents                            (6,222)           13,074
    Cash and cash equivalents at beginning
     of period                                   32,473            19,399
                                                 ------            ------
    Cash and cash equivalents at
     end of period                              $26,251           $32,473
                                                =======           =======



    Investor Contacts:

    Ted Sanders, Chief Financial Officer
    U.S. Auto Parts Network, Inc.
    tsanders@usautoparts.com
    (424) 702-1455

    Budd Zuckerman, President
    Genesis Select Corporation
    bzuckerman@genesisselect.com
    (303) 415-0200




SOURCE U.S. Auto Parts Network, Inc.

Copyright (C) 2010 PR Newswire. All rights reserved