Good afternoon. [Operator Instructions] Please note this call is being recorded. I would now like to pass the conference over to our host, Ryan Lockwood, Chief Financial Officer. Please go ahead.

Hello, everyone, and thank you for joining us for the CarParts.com Second Quarter of 2025 Conference Call. Joining me today is David Meniane, Chief Executive Officer. For David to start the call, I have some important disclosures. Our remarks on this call could contain certain forward-looking statements related to our company and our strategic initiatives under the federal securities laws. Actual results may differ materially from those contained in or implied by these forward-looking statements due to various risks and uncertainties. For a discussion of the material and other important factors that could affect results, please refer to the CarParts.com annual report on Form 10-K and quarterly reports on Form 10-Q, each as filed with the SEC, all of which can be found on our Investor Relations website. On the call, both GAAP and non-GAAP financial measures will be discussed. A reconciliation of GAAP to non-GAAP financial measures is provided in the press release that we issued today. With that, I'd now like to turn the call over to David.

Thank you, Ryan. Thanks, everyone, for joining us today. Earlier this year, we announced a process to explore strategic alternatives to maximize shareholder value. To provide an update, we remain fully engaged in our process and are highly confident that this process is nearing completion. We're currently evaluating several different transaction structures, including a potential sale of the company and strategic investments that we believe have the potential to strengthen our capabilities and unlock new growth. . In all of this, our Board is committed to continuing to operate in a manner that delivers value to our shareholders. We are fully engaged in finalizing our strategic review as quickly as possible. That said, there can be no assurance that we will reach a transaction. We do not intend to provide further updates, unless and until we enter into a definitive agreement with respect to a transaction or otherwise determined that further disclosure is appropriate or required by law. We won't further address our strategic process on this call. Now turning to tariffs. The current situation remains fluid with rates, applications and effective dates changing real time. Specific to our exposure, approximately 20% of our private label products are imported from China, and the rest from Taiwan and other countries. Our team is working on mitigating tariff impact through a variety of actions, including cost concessions from vendor partnerships, dynamic pricing adjustments, and identifying supply chain and operating expenses optimization. Like all importers, we're actively managing rising product costs while maintaining competitive pricing for our customers. As a reminder, automotive products sourced from Taiwan are currently subject to tariffs of approximately 25%. For auto products from China, current tariff rates range from 55% to 75%. Turning to our second quarter performance. We showed measurable sequential progress across the business with the…

Thank you, David. In the second quarter,. we. Reported revenue of $151.9 million, up 5% from $144.3 million last year. The increase was primarily driven by an increase in our e-commerce channel and our off-line channel partially offset by continued softness in our marketplace channel. Gross profit for the quarter was $49.8 million, up 3% compared to the prior year. gross margin was 32.8%, down from 33.5% in the prior year period. The decline in gross margin was primarily driven by product mix and the impact of tariffs, while outbound transportation as a percentage of revenue remained relatively flat year-over-year. GAAP net loss for the quarter was $12.7 million compared to a loss of $8.7 million in the prior year period, primarily driven by lower gross margin and higher marketing costs. The current quarter was also impacted by onetime advisory fees related to our strategic review as well as restructuring costs. . For the second quarter, adjusted EBITDA loss was $3.1 million, down from adjusted EBITDA of $0.1 million in the prior year period, primarily due to lower gross margin and marketing costs. Turning to the balance sheet. We ended the quarter with $19.8 million of cash. During the quarter, we also joined our revolver to provide additional financial flexibility a proactive move to help us manage through near-term uncertainty, including the ongoing impact of tariffs and macro volatility, while continuing to protect our working capital in times of pressure. Earlier this year, in the face of uncertainty, we started proactively investing in inventory ahead of to improve the continuity of our supply chain. This works out to about 2 extra weeks of stock ship cost of goods sold. As a reminder, our inventory has low obsolescence risk and no risk of spoilage and our pre-freight margins are over 50%. Our inventory balance was $94 million at year- end versus $90 million at the end of 2024. I'll now turn it back over to David for final remarks.

Our priorities for the rest of the year include: one, continue to expand our product offering to attract new customers and increase average basket signs. Two, monetize our $100 million annual website visits and customer list with high-margin fee income. Number three, scale our B2B offering with last mile transportation and higher touch sales in key markets. four, continue to grow mobile app business to diversify our marketing mix and deliver greater customer life value. And five, protect our balance sheet with a focus on managing cash flow and inventory levels while navigating the uncertainty of the tariff environment. We know this transformation is a multiyear effort. We're focused on rebuilding the core foundation of CarParts.com, one that can scale, innovate and deliver a seamless, high-quality customer experience, while driving greater discipline in both our cost structure and capital deployment. A lot of work is happening behind the scenes, from realigning our fulfillment network to investing in AI and automation, and we expect these efforts to become more visible over the next year. As come together, we're confident that our financial performance will follow. First, in margin and efficiency gains and then in earnings growth. I want to thank our team across the organization for their commitment to building a stronger, more resilient CarParts.com, one that our customers, employees and shareholders can be proud of. Thank you, everyone, for joining today's call. I'll now turn it back over to the operator.

This concludes today's program. Thank you all for participating. You may now disconnect.