Key Highlights:
- Net loss improved 61% or $53.3 million
year-over-year from $87.2 million to $33.9 million; adjusted EBITDA
improved 61% or $29.2 million year-over-year from a loss of $48.0
million to a loss of $18.8 million driven by expense management and
operational efficiencies.
- COGS improved 1,010 basis points
year-over-year resulting from operational efficiencies created
through enhanced fulfillment center processes.
- Subsequent to the third quarter, Blue
Apron refinanced its revolving credit facility and extended the
maturity date to February 2021.
Blue Apron Holdings, Inc. (NYSE: APRN) announced today financial
results for the quarter ended September 30, 2018. Blue Apron
accelerated the disclosure of its third quarter financial results
following actions announced today by the Company, including a
reduction in personnel to closely align internal resources with the
strategic priorities of the business. Blue Apron will hold its
scheduled earnings call and webcast tomorrow, November 14, at 8:30
a.m. Eastern Time to discuss its third quarter 2018 results and
business outlook.
“In the third quarter, we outperformed our previously stated
adjusted EBITDA outlook, with a 61% year-over-year improvement.
While net revenue was in line with our guidance range, we are
taking actions to address our top-line performance,” said Brad
Dickerson, Chief Executive Officer, Blue Apron. “As we look ahead,
we are confident in our disciplined approach to pursue initiatives
that will enable us to realize the results we expect, with a
deliberate emphasis on reaching profitability on an adjusted EBITDA
basis next year.”
Tim Bensley, Blue Apron Chief Financial Officer, stated, “We
continue to drive bottom-line performance with a strong focus on
expense management and gaining efficiencies across the business.
Our progress is a reflection of the accomplishments in our largest,
most automated facility in Linden, New Jersey which is now also our
most efficient fulfillment center, with the other facilities
relatively close behind. This represents our fourth successive
quarter of significant year-over-year adjusted EBITDA progress and
we expect to continue building on this momentum.”
Third Quarter 2018 Financial Results
- Net revenue decreased 28%
year-over-year to $150.6 million in the third quarter of 2018,
compared to the third quarter of 2017, driven primarily by a
decrease in Customers as the Company remains deliberate in its
marketing spend while methodically implementing its multi-product,
multi-channel strategy. Net revenue decreased 16%
quarter-over-quarter reflecting seasonal trends in the
business.
- Cost of goods sold, excluding
depreciation and amortization (COGS), as a percentage of net
revenue, improved 1,010 basis points year-over-year from 78.1% to
68.0%. This improvement, led by the Company’s Linden fulfillment
center, was primarily driven by efficiencies gained in food and
labor costs as a result of improved planning and process-driven
strategies and more favorable pricing with suppliers. COGS
increased by 330 basis points as a percentage of net revenue
quarter-over-quarter largely from expected seasonal increases in
fulfillment packaging and food costs.
- Marketing expense was $23.3 million, or
15.4% as a percentage of net revenue, in the third quarter of 2018,
compared to $34.2 million, or 16.3% as a percentage of net revenue,
in the third quarter of 2017, as the Company remains deliberate in
its marketing investments with a focus on its most efficient
acquisition channels.
- Product, technology, general, and
administrative (PTG&A) costs decreased 26% year-over-year from
$65.7 million in the third quarter of 2017 to $48.3 million in the
third quarter of 2018 as the Company focused on expense management
and optimization of its cost structure.
- Net loss was $33.9 million and diluted
loss per share was $0.18 in the third quarter of 2018 based on
193.2 million weighted average common shares outstanding, compared
to a net loss of $87.2 million and diluted loss per share of $0.47
in the third quarter of 2017 based on 184.7 million weighted
average common shares outstanding. Sequentially, net loss increased
$1.1 million quarter-over-quarter from a net loss of $32.8 million
in the second quarter of 2018.
- Adjusted EBITDA improved 61%
year-over-year to a loss of $18.8 million in the third quarter of
2018, compared to a loss of $48.0 million in the third quarter of
2017, reflecting improved expense management and operational
efficiencies. Sequentially, adjusted EBITDA loss increased $1.3
million quarter-over-quarter from a loss of $17.5 million in the
second quarter of 2018, reflecting the seasonal cadence of the
business.
Key Customer Metrics
- Key customer metrics included in the
chart below reflect the Company’s deliberate marketing investments
while progressing through the aforementioned strategy as well as
trends of the business and seasonality.
Three Months Ended, September 30,
June 30, September 30, 2017
2018 2018 Orders (in
thousands) 3,605 3,122 2,647 Customers (in thousands) 856 717 646
Average Order Value $ 58.16 $ 57.34 $ 56.79 Orders per Customer 4.2
4.4 4.1 Average Revenue per Customer $ 245 $ 250 $ 233
For a description of how Blue Apron defines and uses these key
customer metrics, please see “Use of Key Customer Metrics”
below.
Liquidity and Capital Resources
- Cash and cash equivalents was $162.9
million as of September 30, 2018.
- Subsequent to the third quarter, the
Company amended and refinanced its existing revolving credit
facility to, among other things, extend the final maturity date of
the facility from August 2019 to February 2021, reduce
the aggregate lender commitments to $85.0 million, and increase the
applicable interest rate spread currently paid by the Company by
200 basis points. In connection with the refinancing, the Company
repaid $41.4 million of indebtedness.
- Capital expenditures, including amounts
in accounts payable, totaled $3.2 million for the third quarter of
2018. This represents a reduction of $8.3 million in capital
expenditures from the third quarter of 2017.
Conference Call and Webcast
Blue Apron will hold a conference call and webcast tomorrow at
8:30 a.m., Eastern Time to discuss its third quarter 2018 results
and business outlook. The conference call can be accessed by
dialing (877) 883-0383 or (412) 902-6506, utilizing the conference
ID 6785890. Alternatively, participants may access the live webcast
on Blue Apron’s Investor Relations website at
investors.blueapron.com.
A recording of the webcast will also be available on Blue
Apron’s Investor Relations website at investors.blueapron.com
following the conference call. Additionally, a replay of the
conference call can be accessed until Wednesday, November 21, 2018
by dialing (877) 344-7529 or (412) 317-0088, utilizing the
conference ID 10124511.
About Blue Apron
Blue Apron’s mission is to make incredible home cooking
accessible to everyone. Launched in 2012, Blue Apron is reimagining
the way that food is produced, distributed, and consumed, and as a
result, building a better food system that benefits consumers, food
producers, and the planet. Blue Apron has developed an integrated
ecosystem that enables the Company to work in a direct, coordinated
manner with farmers and artisans to deliver high-quality products
to customers nationwide at compelling values.
Forward-Looking Statements
This press release includes statements concerning Blue Apron
Holdings, Inc. and its future expectations, plans and prospects
that constitute "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. For this
purpose, any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements. In
some cases, you can identify forward-looking statements by terms
such as "may," "should," "expects," "plans," "anticipates,"
"could," "intends," "target," "projects," "contemplates,"
"believes," "estimates," "predicts," "potential," or "continue," or
the negative of these terms or other similar expressions. Blue
Apron has based these forward-looking statements largely on its
current expectations and projections about future events and
financial trends that it believes may affect its business,
financial condition and results of operations. These
forward-looking statements speak only as of the date of this press
release and are subject to a number of risks, uncertainties and
assumptions including, without limitation, the Company’s
anticipated growth strategies, including its decision to prioritize
customer segments within the direct-to-consumer business; the
Company’s ability to achieve the benefits associated with the
workforce reduction; risks resulting from the workforce reduction,
including, but not limited to, further employee attrition and
adverse effects on the Company’s operations; the Company’s ability
to execute on its multi-product, multi-channel growth strategy; its
expectations regarding competition and its ability to effectively
compete; its ability to expand its product offerings and
distribution channels; its ability to cost-effectively attract new
customers, retain existing customers and increase the number of
customers it serves; its amount of indebtedness and ability to
fulfill its debt-related obligations; its ability to comply with
the covenants in its revolving credit facility; seasonal trends in
customer behavior; its expectations regarding, and the stability
of, its supply chain; the size and growth of the markets for its
product offerings and its ability to serve those markets; federal
and state legal and regulatory developments; other anticipated
trends and challenges in its business; and other risks more fully
described in the Company’s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2018 filed with the U.S. Securities and
Exchange Commission (“SEC”), the Company’s Quarterly Report on Form
10-Q for the fiscal quarter ended September 30, 2018 to be filed
with the SEC, and in other filings that the Company may make with
the SEC in the future. The Company assumes no obligation to update
any forward-looking statements contained in this press release as a
result of new information, future events or otherwise.
Use of Non-GAAP Financial Information
This press release includes adjusted EBITDA, a non-GAAP
financial measure, that is not prepared in accordance with, nor an
alternative to, financial measures prepared in accordance with U.S.
generally accepted accounting principles (“GAAP”). In addition,
adjusted EBITDA is not based on any standardized methodology
prescribed by GAAP and is not necessarily comparable to
similarly-titled measures presented by other companies.
The Company defines adjusted EBITDA as net earnings (loss)
before interest income (expense), net, other operating expense,
other income (expense), net, benefit (provision) for income taxes
and depreciation and amortization, adjusted to eliminate
share-based compensation expense. The Company presents adjusted
EBITDA because it is a key measure used by the Company’s management
and board of directors to understand and evaluate the Company’s
operating performance, generate future operating plans and make
strategic decisions regarding the allocation of capital. In
particular, the Company believes that the exclusion of certain
items in calculating adjusted EBITDA can produce a useful measure
for period-to-period comparisons of the Company’s business.
Further, Blue Apron uses adjusted EBITDA to evaluate its operating
performance and trends and make planning decisions, and it believes
that adjusted EBITDA helps identify underlying trends in its
business that could otherwise be masked by the effect of the items
that Company excludes. Accordingly, Blue Apron believes that
adjusted EBITDA provide useful information to investors and others
in understanding and evaluating its operating results, enhancing
the overall understanding of the Company’s past performance and
future prospects, and allowing for greater transparency with
respect to key financial metrics used by its management in its
financial and operational decision-making.
There are a number of limitations related to the use of adjusted
EBITDA rather than net income (loss), which is the most directly
comparable GAAP equivalent. Some of these limitations are:
- adjusted EBITDA excludes share-based
compensation expense, as share-based compensation expense has
recently been, and will continue to be for the foreseeable future,
a significant recurring expense for the Company’s business and an
important part of its compensation strategy;
- adjusted EBITDA excludes depreciation
and amortization expense and, although these are non-cash expenses,
the assets being depreciated may have to be replaced in the
future;
- adjusted EBITDA excludes other
operating expense, as other operating expense represents impairment
losses;
- adjusted EBITDA excludes other expense,
as other expense represents a one-time loss on the extinguishment
of convertible notes;
- adjusted EBITDA does not reflect
interest expense, or the cash requirements necessary to service
interest, which reduces cash available to us;
- adjusted EBITDA does not reflect income
tax payments that reduce cash available to us; and
- other companies, including companies in
the Company’s industry, may calculate adjusted EBITDA differently,
which reduces its usefulness as a comparative measure.
Because of these limitations, adjusted EBITDA should be
considered together with other operating and financial performance
measures presented in accordance with GAAP. A reconciliation of
adjusted EBITDA to net income (loss), the most directly comparable
measure calculated in accordance with GAAP, is set forth below
under the heading “Reconciliation of Non-GAAP Financial
Measures”.
In addition, the Company will be presenting certain guidance
regarding future operating results, including forward-looking
non-GAAP measures, on today’s call and webcast. Reconciliations of
these forward-looking non-GAAP measures to the most directly
comparable measures calculated in accordance with GAAP will be
posted on the Company’s investor relations section of its website,
located at investors.blueapron.com under “Events and
Presentations”.
Use of Key Customer Metrics
This press release includes various key customer metrics that we
use to evaluate our business and operations, measure our
performance, identify trends affecting our business, project our
future performance, and make strategic decisions. You should read
these metrics in conjunction with our financial statements. We
define and determine our key customer metrics as follows:
Orders
We define Orders as the number of paid orders by our Customers
across our meal, wine and market products sold on our e-commerce
platforms in any reporting period, inclusive of orders that may
have eventually been refunded or credited to customers.
Customers
We determine our number of Customers by counting the total
number of individual customers who have paid for at least one Order
from Blue Apron across our meal, wine or market products sold on
our e-commerce platforms in a given reporting period.
Average Order Value
We define Average Order Value as our net revenue from our meal,
wine and market products sold on our e-commerce platforms in a
given reporting period divided by the number of Orders in that
period.
Orders per Customer
We define Orders per Customer as the number of Orders in a given
reporting period divided by the number of Customers in that
period.
Average Revenue per Customer
We define Average Revenue per Customer as our net revenue from
our meal, wine and market products sold on our e-commerce platforms
in a given reporting period divided by the number of Customers in
that period.
BLUE APRON HOLDINGS, INC. Condensed Consolidated
Balance Sheets (In thousands) (Unaudited)
September 30, December 31, 2018
2017 ASSETS CURRENT ASSETS: Cash and cash equivalents
$ 162,902 $ 228,514 Accounts receivable, net 769 1,945 Inventories,
net 33,393 41,927 Prepaid expenses and other current assets 9,851
7,824 Other receivables 979 2,539 Total current
assets 207,894 282,749 Restricted cash 1,691 2,371 Property and
equipment, net 216,838 230,828 Other noncurrent assets 1,786
1,761 TOTAL ASSETS $ 428,209 $ 517,709
LIABILITIES AND
STOCKHOLDERS’ EQUITY (DEFICIT) CURRENT LIABILITIES: Accounts
payable $ 27,056 $ 30,448 Accrued expenses and other current
liabilities 36,251 32,615 Current portion of long-term debt 41,324
— Deferred revenue 21,584 27,646 Total current
liabilities 126,215 90,709 Long-term debt 83,504 124,687 Facility
financing obligation 71,868 70,347 Other noncurrent liabilities
6,551 8,116 TOTAL LIABILITIES 288,138
293,859 TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) 140,071
223,850 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) $
428,209 $ 517,709
BLUE APRON HOLDINGS, INC.
Condensed Consolidated Statement of Operations (In
thousands, except share and per-share data) (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30, 2018
2017 2018 2017 Net revenue $ 150,621 $
210,638 $ 526,867 $ 693,538 Operating expenses: Cost of goods sold,
excluding depreciation and amortization 102,406 164,444 347,894
496,495 Marketing 23,251 34,244 97,161 129,368 Product, technology,
general, and administrative 48,345 65,744 148,933 194,627
Depreciation and amortization 8,599 8,774 25,688 18,337 Other
operating expense — 5,934 —
5,934 Total operating expenses 182,601
279,140 619,676 844,761
Income (loss) from operations (31,980 ) (68,502 ) (92,809 )
(151,223 ) Interest income (expense), net (1,943 ) (1,281 ) (5,568
) (4,803 ) Other income (expense), net —
(17,551 ) — (14,984 ) Income (loss) before
income taxes (33,923 ) (87,334 ) (98,377 ) (171,010 ) Benefit
(provision) for income taxes (19 ) 133
(66 ) (13 ) Net income (loss) $ (33,942 ) $ (87,201 ) $
(98,443 ) $ (171,023 ) Net income (loss) per share – basic $
(0.18 ) $ (0.47 ) $ (0.51 ) $ (1.60 ) Net income (loss) per share –
diluted $ (0.18 ) $ (0.47 ) $ (0.51 ) $ (1.60 ) Weighted average
shares outstanding – basic 193,194,248 184,737,720 192,248,756
106,836,062 Weighted average shares outstanding – diluted
193,194,248 184,737,720 192,248,756 106,836,062
BLUE APRON HOLDINGS, INC. Condensed Consolidated
Statement of Cash Flows (In thousands)
(Unaudited) Nine Months Ended
September 30, 2018 2017 CASH FLOWS FROM
OPERATING ACTIVITIES: Net income (loss) $ (98,443 ) $ (171,023
) Adjustments to reconcile net income (loss) to net cash from (used
in) operating activities: Depreciation and amortization of property
and equipment 25,688 18,337 Loss (gain) on disposal of property and
equipment 1,048 (30 ) Loss on impairment — 5,934 Changes in
reserves and allowances (382 ) 1,364 Share-based compensation
13,555 8,752 Non-cash interest expense 1,662 2,459 Loss (gain) on
convertible notes — 14,984 Changes in operating assets and
liabilities 2,872 (3,542 ) Net cash from (used
in) operating activities (54,000 ) (122,765 )
CASH
FLOWS FROM INVESTING ACTIVITIES: Cash paid for acquisition (250
) (1,177 ) Decrease (increase) in restricted cash 680 1,595
Purchases of property and equipment (12,903 ) (116,094 ) Proceeds
from sale of property and equipment 858 —
Net cash from (used in) investing activities (11,615
) (115,676 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from debt issuances — 144,349 Proceeds from exercise
of stock options 219 816 Principal payments on capital lease
obligations (216 ) (145 ) Net proceeds from public offering —
283,500 Payments of public offering costs —
(5,253 ) Net cash from (used in) financing activities 3
423,267 NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (65,612 ) 184,826 CASH AND CASH EQUIVALENTS —
Beginning of period 228,514 81,468 CASH
AND CASH EQUIVALENTS — End of period $ 162,902 $ 266,294
BLUE APRON HOLDINGS, INC.
Reconciliation of Non-GAAP Financial Measures (In
thousands) (Unaudited) Three Months Ended
September 30, June 30, September
30, 2018 2018 2017 Reconciliation of
net income (loss) to adjusted EBITDA Net income (loss) $
(33,942 ) $ (32,836 ) $ (87,201 ) Share-based compensation 4,569
4,771 5,760 Depreciation and amortization 8,599 8,685 8,774 Other
operating expense — — 5,934 Interest (income) expense, net 1,943
1,848 1,281 Other (income) expense, net — — 17,551 Provision
(benefit) for income taxes 19 22
(133 ) Adjusted EBITDA $ (18,812 ) $ (17,510 ) $ (48,034 )
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version on businesswire.com: https://www.businesswire.com/news/home/20181113006095/en/
Blue ApronInvestors:Felise Glantz
Kissellfelise.kissell@blueapron.comorMedia:Nisha
Devarajannisha.devarajan@blueapron.com
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