Welcome to the U.S. Auto Parts Fourth Quarter 2015 Conference Call. On the call from the Company are Shane Evangelist, Chief Executive Officer; and Neil Watanabe, Chief Financial Officer. By now, everyone should have access to the fourth quarter 2015 earnings release, which went out today at approximately 4:00 PM Eastern Time. If you have not received your release, it is available on the Investor Relations portion of the U.S. Auto Parts’ Web site, at usautoparts.net by clicking on the U.S. Auto Parts’ Investor Relations tab. This call is being webcasted, and a replay will be available on the Company’s Web site through March 22, 2016. 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 management may make additional forward-looking statements in response to your questions. The forward-looking statements include but are not limited to statements regarding future events, our future operating and financial results, financial expectations, expected growth and strategies, key operating metrics and current business indicators, capital needs and deployment, liquidity, product offerings, customers and suppliers and competition. The forward-looking statements are based on current information and expectations are subject to uncertainties and changes in circumstances and do not constitute guaranties of future performance. The forward-looking statements involve a number of factors that could cause actual results to differ materially from those statements. We refer all of you to the Risk Factors contained in U.S. Auto Parts’ Annual Report on Form 10-K and quarterly reports on Form 10-Q filed with the Securities and Exchange Commission for a detailed discussion on the factors that can cause actual results to differ materially from those projected in any forward-looking statement. U.S. Auto Parts assumes no obligation to, nor does it intend to update or…

Thank you, Operator. Good afternoon everyone and thank you for joining us today to discuss our fourth quarter 2015 results. Let me provide you with some additional color on the financials reported in our press release today and then I’ll touch on some of the key business metrics and initiatives that are driving our improved profitability. I'd like to remind listeners that all metric discussed are excluded AutoMD unless we specifically note otherwise. Net sales for the fourth quarter decreased 4% and comp sales increased 2% to $67.5 million compared to $70.5 million in the year ago quarter. Our fiscal fourth quarter of 2014 included an extra week as well as sales related to our discontinued west coast wholesale operations. The comparable sales increase was driven by an 11% increase in private label sales partially offset by the expected decline and our lower margin branded business. To breakdown Q4 net sales further, after adjusting for the first week in 2014, online sales were up 2% year-over-year driven by a 6% increase in our online marketplace revenue, which continues to perform well given the strength of our private label business. Fourth quarter gross margins increased 290 basis points to 29.6% compared to 26.7% last year and 27.5% excluding the restructuring charge from closing our west coast operations in the year ago quarter. This improvement was primarily driven by a higher mix of private label sales which were 63% of net sales compared to 58% in the year ago quarter. The increase was also driven by strategic pricing initiatives and freight efficiencies. Our operating expenses decreased 4% to 19.7 million compared to 20.5 million in the year ago quarter and were flat when excluding the extra week in 2014. As a percentage of net sales, operating expenses increased slightly 29.2% compared to…

Thank you, Neil. Before I get into the quarter, I want to take a second to reflect on the year. We started the year guiding just below $8 million in adjusted EBITDA and we ended the year with 10 million in adjusted EBITDA which was on the high end of our guidance from our Q3 earnings call. Additionally, our adjusted EBITDA has increased from 6.4 million in 2013 to 10 million which is a CAGR of over 25%. This is a testament to the hard work and commitment by the team members at U.S. Auto Parts and I want to thank all our team members for their commitment and hard work, we witnessed it pay off in 2015 and we believe it has set a great foundation for even more improvements in 2016. While our comparable revenues for the year were up 6%, our private label business grew 17% and has grown at a 14% CAGR over the last seven years. The growth of this business is critical due to its 18% to 20% incremental adjusted EBITDA margin flow through. When compared to the prior year this has led to a 50 basis points improvement in adjusted EBITDA margin to 3.4% in 2015 and as Neil mentioned earlier up to 3.9% for our latest quarter. Our private label growth is driven by our ability to be a low cost provider in the market place, which is a particularly strong value preposition to cost conscious customers. Additionally, the high profitability of our private label products allow us to outspend others in the marketplace for premium placements in paid acquisition channel, and differently our private label offering allows us to be one of the lowest cost providers in the marketplace with one of the loudest marketing voices, while maintaining strong incremental adjusted…

Thank you. We will now be conducting a question-and-answer session [Operator Instructions]. Our first question comes from the line of Mitch Bartlett with Craig-Hallum Capital Group. Please proceed with your question.

This is Mason on for Mitch, thanks for taking the question. So just first on the investment in customer acquisition there, are there new channels to pursue or is that more spend into the same marketing channel?

Actually customer acquisition looks like it's up a little bit but that’s because you’re seeing a mix shift from paid -- to paid from organic, and in fact [indiscernible] enough our paid spend is actually more efficient this year over last year meaning our actual paid cap is down a little bit. And so what you’re actually seeing is a lift in what we publish as our overall cap, but that’s mainly because of the mix shift to paid versus organic.

And then on the mix shift in revs, when do you expect to lap the declines in the branded and see that segment stabilize?

I don’t know if we’ll see it grow positive on an annualized basis in the near future, we’re not guiding to that, what we’re guiding to there is certainly good private label growth, double-digit private label growth. As we indicated over the last seven years we’ve seen a 14% PL growth and the branded business while a good business for us and profitable business for us, it has been declining and truth be told most recently we’ve seen some positive trends in the branded business, but not enough for us to stay right now that we think it will be positive long-term. So, while we’ve seen the positive trends in the branded business we’re still really focused around private label.

And then I guess just follow up to that on the gross margin side. Obviously some nice improvements year-over-year, but you’re relatively flat sequentially. Is there more room to go there and shift mix more is more towards the private label side or is that relatively flat going forward?

I think to be on the conservative side, I think where we’re at right now is positive right trend we’ve been on that trend for the last couple of quarters and I think that’s probably what we’re seeing going forward. That’s not to say that we won’t see some optimization and that’s not to say that we won’t see more PL mix shift growth which will certainly -- will help the overall percentage. But at this point this trend we have around this 30 number where we’re trending at we think a pretty good number.

[Operator Instructions] Our next question comes from the line of Jeff Martin with ROTH Capital Partners. Please proceed with your question.

Wondering if Shane can you give us an update on the lifetime value of the customer. How are you measuring that and how are you tracking it and then finally how is it trending?

Yes, so good news is it's trending up for us and both conversion and gross margin dollars per customer per annum, we’re seeing positive trends there, and excited about that. So certainly that measurement is good and you’ve seen that as a result of increased marketing spend. So as our LTV is increased we’ve been able to be more aggressive on the marketing side. Two areas that we got opportunity one is in bundles and so we’re starting to see some progress on bundles and we just recently launched a bundle builder Auto Parts Warehouse and we’re seeing descent pick up there. And so we’re excited about where we can start to move the needle this year on the other leg of LTV. But for us LTV is looking good and then on a repeat purchase perspective we haven’t seen a lot of movement on the repeat purchase perspective and we’ll keep pushing on that. I think probably the most upside we’ll see this year though is in the continued trends of GP dollars per transaction and conversion and then also in bundles, meaning larger basket size.

I would imagine, email marketing is a big part of your repeat purchase initiative. Could you touch on that, or any new initiatives there, if that’s an active part of your program, or is that something you planned do more of?

Yes, so certainly a big part of our mix is email. What we continue to do is make it more personalized to the individual, down to the year, make and model. car and then specific products that they want and will continue to push through that email, but still email is an overall part of our acquisition channel is in the single digit. So it's not as if email is a huge revenue driver, but certainly a very strong revenue driver for us and one that we continue to optimize.

Okay. And then wondering if you can give us an update on your manufacturing partners in Asia, the new partners added, maybe remind us how many manufacturing partners you have and then second part of that question would be have you experienced any margin benefit from a strong U.S. dollar?

Yes. So we continue to operate out of Asia and as you can tell push more and more product there so certainly growth happening in Asia for us. We've got over 350 core suppliers and that number grows as we add new products some of the margin expansion is reflected in the dollar and our ability to negotiate the dollar. I also think as we see improvement in our balance sheet and our P&L, our suppliers are willing to give us some more terms. So it certainly will help out our debt position as we strengthen our financial position. So I think there is lots of good things happening on the front, our Asian supply chain is as healthy as it's ever been.

Okay, great. And then I noticed in your earnings release you mentioned cash and equivalent was 1.5 million, on the balance sheet it shows 5.5 million, I was wondering if that 4 million difference is what's tied up in AutoMD?

That's correct that difference is the amount and AutoMD is part of the cash that was raised to help build that business.

Okay. And then can you remind us what your current credit facility is and how much is currently drawn on that?

Yes we just actually increased our facility the 30 million from 25 million through a recent bank amendment reducing our interest rate and so we have an availability that's actually increased based on some suppressed availability that we had so our bank line and the revolver is now adding $30 million line and that last 5 million we’re actually not being charged for through our bank, so it’s just extra capacity.

And what was the change in interest rate with the amended facility?

The change in the interest rate was really kind of a premium of off LIBOR, where we’re currently LIBOR plus 150 going to 1.25 based on our ratios. So we basically accelerated our ability to get lower interest rates based on that LIBOR tier.

Great, thanks for taking my questions. Good luck in 2016.

There are no further questions at this time. I would like to turn the floor back over to management for closing comments.

I'd like to thank you all for joining the call today. Please note that we’ll be presenting at the Roth conference on March 14th, and hope to see some of you there. If not, we’ll look forward to speaking with you next when we report our first quarter results in May.