Key Highlights:
- Net revenue for the second quarter of 2020 increased 10% year
over year and 29% on a quarterly sequential basis to $131.0 million
largely due to the impact on consumer behavior from the COVID-19
pandemic, as well as the continued execution of the company’s
growth strategy.
- Increased Customers by approximately 20,000 in the
quarter.
- Average Revenue per Customer increased 25% year over year to
$331, Orders per Customer increased 17% year over year to 5.4 and
Average Order Value increased year over year 5% to approximately
$61, all the highest reported levels since prior to 2015.
- Achieved net income of $1.1 million, or $0.08 diluted earnings
per share, and a 148% year-over-year increase in adjusted EBITDA to
$11.1 million.
- Generated operating cash flow of $15.7 million and free cash
flow of $14.4 million.
Blue Apron Holdings, Inc. (NYSE: APRN) announced today financial
results for the quarter ended June 30, 2020.
“Blue Apron’s strong second quarter 2020 operating results
reflect quarterly sequential and year-over-year double-digit net
revenue growth and marked our return to topline growth sooner than
expected. We also expect to see year-over-year net revenue growth
in the second half of 2020,” said Linda Findley Kozlowski, Blue
Apron Chief Executive Officer. “Our progress with our strategic
growth plan, together with the increase in demand we saw from the
COVID-19 pandemic, resulted in solid and continued year over year
growth in key customer metrics, including Average Revenue per
Customer, which was above $300 for the first time in more than five
years. As a result, we generated strong adjusted EBITDA and free
cash flow in the second quarter, which adds financial flexibility
for Blue Apron to continue executing our strategic growth
plan.”
Second Quarter 2020 Financial Results
- Net revenue in the second quarter of 2020 increased 10%
year-over-year to $131.0 million and increased 29% on a quarterly
sequential basis. The increase in net revenue was primarily due to
an increase in Orders per Customer and Average Order Value during
the three months ended June 30, 2020, as changes in consumer
behavior largely due to the COVID-19 pandemic drove customers to
order more frequently and add more meals per order.
- Cost of goods sold, excluding depreciation and amortization
(COGS), as a percentage of net revenue decreased 60 basis points
year-over-year from 60.0% to 59.4% primarily driven by decreases in
shipping and fulfillment packaging costs due to pricing
improvements and increased use of more cost-effective fulfillment
packaging, and a reduction in food and product packaging driven by
improved planning and process-driven strategies, partially offset
by an increase in labor costs largely due to increased usage of
higher-priced temporary labor, as well as wage increases and
attendance bonuses put in place as incentives for frontline workers
to increase fulfillment center capacity in response to the COVID-19
pandemic.
- Marketing expenses were $11.6 million, or 8.8% as a percentage
of net revenue, in the second quarter of 2020, compared to $9.7
million, or 8.2% as a percentage of net revenue, in the second
quarter of 2019, as the company reaccelerated its marketing
efforts, including an increased focus on brand awareness.
- Product, technology, general and administrative (PTG&A)
expenses decreased 7% year-over-year from $35.1 million in the
second quarter of 2019 to $32.5 million in the second quarter of
2020, reflecting the company’s continued focus on expense
management, optimization of its cost structure and, in part,
savings realized from the Arlington facility closure in May
2020.
- Net income was $1.1 million and diluted earnings per share was
$0.08, in the second quarter of 2020, based on 14.0 million
weighted-average common shares outstanding-diluted, compared to a
net loss of $7.7 million and diluted loss per share of $0.59, in
the second quarter of 2019, based on 13.0 million weighted-average
common shares outstanding-diluted. Sequentially, net income
improved $21.2 million quarter-over-quarter from a net loss of
$20.1 million in the first quarter of 2020.
- Adjusted EBITDA increased 148% year-over-year to $11.1 million
in the second quarter of 2020, compared to $4.5 million in the
second quarter of 2019. Sequentially, adjusted EBITDA improved by
$16.9 million quarter-over-quarter from a loss of $5.8 million in
the first quarter of 2020.
Key Customer Metrics
- Key customer metrics included in the chart below reflect the
company’s deliberate marketing investments while executing on
strategic priorities, as well as trends of the business and
seasonality.
Three Months Ended,
June 30,
March 31,
June 30,
2020
2020
2019
Orders (in thousands)
2,152
1,763
2,048
Customers (in thousands)
396
376
449
Average Order Value
$60.88
$57.68
$58.16
Orders per Customer
5.4
4.7
4.6
Average Revenue per Customer
$331
$271
$265
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 were $45.4 million as of June 30,
2020.
- Cash generated from operating activities totaled $15.7 million
for the second quarter of 2020 compared to cash used in operating
activities of $2.9 million in the second quarter of the prior year,
reflecting increased net income and working capital
management.
- Capital expenditures totaled $1.2 million for the second
quarter of 2020, or $0.1 million higher than the second quarter of
2019.
- Free cash flow was $14.4 million for the second quarter of 2020
driven by the improvement in operating cash flow, compared to
negative free cash flow of $(4.0) million in the second quarter of
2019.
- As the company announced in February, its board of directors
continues to evaluate a broad range of strategic alternatives to
maximize shareholder value, including to support the execution of
the company's growth strategy.
Third Quarter 2020 Outlook
Blue Apron today provided an outlook for certain third quarter
2020 financial metrics, reflecting certain assumptions regarding
the company’s business, trends, historical seasonal factors, and
the continuing impact of COVID-19 on its business, including as a
result of changes in consumer behavior and grocery alternatives.
Further, the following guidance assumes that the company will not
experience any significant disruptions in its fulfillment
operations or supply chain as a result of the COVID-19
pandemic.
For the third quarter, the company expects net revenue will grow
year over year to approximately $112.0 million, or approximately
13%, compared to prior year. Assuming similar historical seasonal
demand and cost trends, the company expects to incur a net loss of
no more than $18.0 million and an adjusted EBITDA loss of no more
than $8.0 million.
Update on COVID-19 Pandemic Impact on Blue Apron’s
Business
Throughout the second quarter of 2020, Blue Apron experienced a
significant increase in demand for its meal kits largely as a
result of changes to consumer behavior in response to the COVID-19
pandemic. In order to meet the increased demand, during the second
quarter of 2020 the company took action to increase capacity at its
fulfillment centers, including hiring new employees, increasing
wages for frontline workers, and temporarily reducing menu options,
which limits the need to change production lines and allows for
more time to pack meal kits. During the COVID-19 pandemic, Blue
Apron has experienced hiring and attendance challenges similar to
other companies. As a result, the company has, from time to time,
closed some weekly offering cycles early and delayed the launch of
certain new products. At the same time, the company has implemented
a variety of safety measures following federal, state, and local
guidelines at its fulfillment centers.
Management continues to monitor the impact of the COVID-19
pandemic on the company’s business, including changes to consumer
behavior relating to cooking at home. While the company believes
that a portion of the demand increase it has experienced over the
last few months can be sustained through the end of this year and
potentially beyond, this will likely occur at varying levels as the
impact of the pandemic changes over time.
Conference Call and Webcast
Blue Apron will hold a conference call and webcast today at 8:30
a.m., Eastern Time to discuss its second quarter 2020 results and
business outlook. The conference call can be accessed by dialing
(877) 883-0383 or (412) 902-6506, utilizing the conference ID
9343623. 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, August 5, 2020 by
dialing (877) 344-7529 or (412) 317-0088, utilizing the conference
ID 10145320.
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 achieving
its expectations with regards to its expenses and net revenue, its
ability to maintain and grow adjusted EBITDA and to achieve or
maintain profitability, the sufficiency of the company’s cash
resources, the company’s need for additional financing, its ability
to effectively manage expenses and cash flows, and its ability to
remain in compliance with the financial and other covenants under
the company’s indebtedness; its ability, including the timing and
extent, to obtain additional financing and sufficiently manage
costs and to fund investments in operations in amounts necessary to
support the execution of the company’s growth strategy; its
ability, including the timing and extent, to successfully execute
the company’s growth strategy, cost-effectively attract new
customers and retain existing customers, and to expand its
direct-to-consumer product offerings; its ability to sustain the
increase in demand resulting from the COVID-19 pandemic and to
retain new customers; any material and adverse impact of the
COVID-19 pandemic on the company’s operations and results,
including as a result of the loss of adequate labor, whether as a
result of heightened absenteeism or challenges in recruiting and
retention or otherwise, prolonged closures, or series of temporary
closures, of one or more fulfillment centers and supply chain or
carrier interruptions or delays; changes in consumer behaviors that
could lead to declines in demand, both as COVID-19 stay-at-home
orders and restaurant and other restrictions are lifted to varying
degrees across the United States, and/or consumer fears dissipate,
and/or as a result of the COVID-19 pandemic’s impact on financial
markets and economic conditions, including on consumer spending
habits; its ability to identify, consummate and realize the
anticipated benefits of strategic alternatives and the structure,
terms and specific risks and uncertainties associated with any such
potential strategic alternatives; achieving its expectations
regarding the benefits and expected costs and charges associated
with the company’s closure of its Arlington, Texas fulfillment
center; its ability to maintain and grow the value of the company’s
brand and reputation; its expectations regarding, and the stability
of, its supply chain, including potential shortages or
interruptions in the supply or delivery of ingredients, as a result
of COVID-19 or otherwise; its ability to maintain food safety and
prevent food-borne illness incidents; its ability to accommodate
general changes in consumer tastes and preferences or in consumer
spending; its ability to effectively compete; its ability to
attract and retain qualified employees and key personnel in
sufficient numbers; its ability to comply with modified or new laws
and regulations applying to its business; risks resulting from its
vulnerability to adverse weather conditions, natural disasters and
public health crises, including pandemics; its ability to obtain
and maintain intellectual property protection; and other risks more
fully described in the company’s Annual Report on Form 10-K for the
year ended December 31, 2019 filed with the Securities and Exchange
Commission (“SEC”) on February 18, 2020, the company’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2020 filed with
the SEC on April 29, 2020, the company’s Quarterly Report on Form
10-Q for the quarter ended June 30, 2020 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 non-GAAP financial measures,
adjusted EBITDA and free cash flow, that are not prepared in
accordance with, nor an alternative to, financial measures prepared
in accordance with U.S. generally accepted accounting principles
(“GAAP”). In addition, these non-GAAP financial measures are not
based on any standardized methodology prescribed by GAAP and are
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 the company excludes. Accordingly, Blue Apron believes that
adjusted EBITDA provides 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 non-cash impairment charges on
long-lived assets, a non-cash gain, net of termination fee, on
lease termination, and restructuring costs;
- 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.
The company defines free cash flow as net cash from (used in)
operating activities less purchases of property and equipment. The
company presents free cash flow because it is used by the company’s
management and board of directors as an indicator of the amount of
cash the company generates or uses and to evaluate the company’s
ability to satisfy current and future obligations and to fund
future business opportunities. Accordingly, Blue Apron believes
that free cash flow provides useful information to investors and
others in understanding and evaluating its operating results,
enhancing the overall understanding of the company’s ability to
satisfy its financial obligations and pursue business
opportunities, and allowing for greater transparency with respect
to a key financial metric used by its management in its financial
and operational decision making.
There are a number of limitations related to the use of free
cash flow rather than net cash from (used in) operating activities,
which is the most directly comparable GAAP equivalent. Some of
these limitations are:
- free cash flow is not a measure of cash available for
discretionary expenditures since the company has certain
non-discretionary obligations such as debt repayments or capital
lease obligations that are not deducted from the measure; and
- other companies, including companies in the company’s industry,
may calculate free cash flow differently, which reduces its
usefulness as a comparative measure.
Because of these limitations, adjusted EBITDA and free cash flow
should be considered together with other financial information
presented in accordance with GAAP. A reconciliation of these
non-GAAP financial measures to the most directly comparable
measures calculated in accordance with GAAP is set forth below
under the heading “Reconciliation of Non-GAAP Financial
Measures”.
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)
June 30,
December 31,
2020
2019
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
45,430
$
43,531
Accounts receivable, net
209
248
Inventories, net
21,126
25,106
Prepaid expenses and other current
assets
10,994
8,864
Total current assets
77,759
77,749
Property and equipment, net
133,223
181,806
Other noncurrent assets
4,550
6,510
TOTAL ASSETS
$
215,532
$
266,065
LIABILITIES AND STOCKHOLDERS’ EQUITY
(DEFICIT)
CURRENT LIABILITIES:
Accounts payable
$
26,272
$
23,972
Accrued expenses and other current
liabilities
26,478
30,366
Deferred revenue
6,966
6,120
Total current liabilities
59,716
60,458
Long-term debt
53,828
53,464
Facility financing obligation
35,976
71,689
Other noncurrent liabilities
12,143
12,455
TOTAL LIABILITIES
161,663
198,066
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)
53,869
67,999
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
(DEFICIT)
$
215,532
$
266,065
BLUE APRON HOLDINGS,
INC.
Condensed Consolidated
Statement of Operations
(In thousands, except share
and per-share data)
(Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2020
2019
2020
2019
Net revenue
$
131,040
$
119,166
$
232,897
$
261,056
Operating expenses:
Cost of goods sold, excluding depreciation
and amortization
77,868
71,473
138,506
154,177
Marketing
11,561
9,713
26,593
23,947
Product, technology, general, and
administrative
32,493
35,118
66,710
74,266
Depreciation and amortization
6,175
8,372
12,928
16,976
Other operating expense
269
—
3,467
230
Total operating expenses
128,366
124,676
248,204
269,596
Income (loss) from operations
2,674
(5,510)
(15,307)
(8,540)
Interest income (expense), net
(1,541)
(2,226)
(3,696)
(4,458)
Income (loss) before income taxes
1,133
(7,736)
(19,003)
(12,998)
Benefit (provision) for income taxes
(19)
(12)
(28)
(25)
Net income (loss)
$
1,114
$
(7,748)
$
(19,031)
$
(13,023)
Net income (loss) per share – basic
$
0.08
$
(0.59)
$
(1.42)
$
(1.00)
Net income (loss) per share – diluted
$
0.08
$
(0.59)
$
(1.42)
$
(1.00)
Weighted average shares outstanding –
basic
13,432,872
13,034,913
13,369,338
13,007,558
Weighted average shares outstanding –
diluted
13,999,755
13,034,913
13,369,338
13,007,558
BLUE APRON HOLDINGS,
INC.
Condensed Consolidated
Statement of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended
June 30,
2020
2019
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss)
$
(19,031)
$
(13,023)
Adjustments to reconcile net income (loss)
to net cash from (used in) operating activities:
Depreciation and amortization of property
and equipment
12,928
16,976
Loss (gain) on disposal of property and
equipment
—
252
Loss (gain) on build-to-suit accounting
derecognition
(4,936)
—
Loss on impairment
7,603
—
Changes in reserves and allowances
(493)
(1,035)
Share-based compensation
4,249
4,457
Non-cash interest expense
364
250
Changes in operating assets and
liabilities
2,385
(5,659)
Net cash from (used in) operating
activities
3,069
2,218
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of property and equipment
(2,840)
(2,824)
Proceeds from sale of property and
equipment
113
123
Net cash from (used in) investing
activities
(2,727)
(2,701)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Payments of debt issuance costs
—
(24)
Proceeds from exercise of stock
options
483
94
Principal payments on capital lease
obligations
(117)
(120)
Net cash from (used in) financing
activities
366
(50)
NET INCREASE (DECREASE) IN CASH, CASH
EQUIVALENTS, AND RESTRICTED CASH
708
(533)
CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH — Beginning of period
46,443
97,307
CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH — End of period
$
47,151
$
96,774
BLUE APRON HOLDINGS,
INC.
Reconciliation of Non-GAAP
Financial Measures
(In thousands)
(Unaudited)
Three Months Ended
June 30,
March 31,
June 30,
2020
2020
2019
Reconciliation of net income (loss) to
adjusted EBITDA
Net income (loss)
$
1,114
$
(20,145)
$
(7,748)
Share-based compensation
2,009
2,240
1,622
Depreciation and amortization
6,175
6,753
8,372
Other operating expense
269
3,198
—
Interest (income) expense, net
1,541
2,155
2,226
Provision (benefit) for income taxes
19
9
12
Adjusted EBITDA
$
11,127
$
(5,790)
$
4,484
Three Months Ended
Six Months Ended
June 30,
June 30,
2020
2019
2020
2019
Reconciliation of net cash from (used
in) operating activities to free cash flow
Net cash from (used in) operating
activities
$
15,673
$
(2,920)
$
3,069
$
2,218
Purchases of property and equipment
(1,229)
(1,090)
(2,840)
(2,824)
Free cash flow
$
14,444
$
(4,010)
$
229
$
(606)
Third Quarter 2020 Outlook
Three Months Ended
September 30, 2020
Low
Reconciliation of net income (loss) to
adjusted EBITDA
Net income (loss)
$
(18,000)
Share-based compensation
2,000
Depreciation and amortization
6,500
Interest (income) expense, net
1,500
Provision (benefit) for income taxes
0
Adjusted EBITDA
$
(8,000)
View source
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Media Contact press@blueapron.com
Investor Contact investor.relations@blueapron.com
aprn@jcir.com
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