Key Highlights:
- Net loss for the fourth quarter of 2018
improved 39%, or $15.4 million, year-over-year from $39.1 million
to $23.7 million; adjusted EBITDA improved 60%, or $11.9 million,
year-over-year from a loss of $19.7 million to a loss of $7.8
million, driven by expense management and operational
efficiencies.
- In the fourth quarter of 2018 COGS
improved 930 basis points year-over-year to 60.8% as a percentage
of net revenue, resulting from operational efficiencies created
through enhanced fulfillment center processes.
- Subsequent to the fourth quarter, Blue
Apron is:
- Transferring substantial production
volume from its Arlington, Texas facility to its Linden, New Jersey
facility, driven by strong efficiency gains in Linden.
- Seeing favorable consumer response and
interest to date from its WW partnership, launched in late
December.
- Introducing a new product innovation
designed for online and brick-and-mortar retail, with its first
partner to be announced imminently.
Blue Apron Holdings, Inc. (NYSE: APRN) announced today financial
results for the quarter and full year ended December 31, 2018. Blue
Apron also announced today the transfer of production volume from
its Arlington facility to its Linden facility with additional
information available in the company’s Current Report on Form 8-K.
Blue Apron will hold its scheduled earnings call and webcast
tomorrow, January 31, at 8:30 a.m. Eastern Time to discuss its
fourth quarter and full year 2018 results and business outlook.
“As we sharpen our focus on attracting and engaging consumers
who represent high value to the business, we are seeing early,
encouraging trends in our customer metrics, most notably average
revenue per customer, which increased year-over-year,” said Brad
Dickerson, Chief Executive Officer, Blue Apron. “We are also
pleased with our stronger-than-expected bottom-line results as our
business becomes increasingly efficient. Following an assessment of
our operational structure in light of this progress, we identified
an opportunity to further optimize our processes by transferring a
substantial portion of our production volume from our Arlington,
Texas facility to our largest and most efficient facility in
Linden, New Jersey.”
Dickerson continued, “We are entering 2019 with confidence in
our strategic direction. We believe our newest product innovations
and new strategic partnerships with WW and Jet have great potential
as we enter the year with a deliberate focus on expanding our
offerings to strategically and thoughtfully serve a strong base of
loyal customers and attract new, high affinity consumers, as well
as continuing to prioritize operational optimization and expense
management. We believe our commitment to achieving profitability on
an adjusted EBITDA basis in the first quarter and for full year
2019 will provide a strong foundation for future growth.”
Fourth Quarter 2018 Financial Results
- Net revenue decreased 25%
year-over-year to $140.7 million in the fourth quarter of 2018,
compared to the fourth quarter of 2017, driven primarily by a
decrease in Customers as the company deliberately reduced marketing
spend and strategically invested in consumers who have high
potential to be valuable to the business. Net revenue decreased 7%
quarter-over-quarter largely reflecting seasonal trends in the
business.
- Cost of goods sold, excluding
depreciation and amortization (COGS), as a percentage of net
revenue improved 930 basis points year-over-year from 70.1% to
60.8% and improved 720 basis points from the third quarter of 2018.
These improvements, led by the company’s Linden facility, were
primarily driven by efficiencies gained in labor and food costs as
a result of improved planning and process-driven strategies.
- Marketing expense was $20.3 million, or
14.4% as a percentage of net revenue, in the fourth quarter of
2018, compared to $25.2 million, or 13.4% as a percentage of net
revenue, in the fourth quarter of 2017. This change was primarily
driven by the company's deliberate reduction in investment in
marketing spend while sharpening focus on consumers with high
affinity and retention within its direct-to-consumer platform.
- Product, technology, general, and
administrative (PTG&A) costs decreased 15% year-over-year from
$53.3 million in the fourth quarter of 2017 to $45.4 million in the
fourth quarter of 2018, as the company remained focused on expense
management and optimization of its cost structure.
- Other operating expense was $2.2
million in the fourth quarter of 2018, representing restructuring
costs, including primarily employee-related expenses and other
costs associated with the reduction in personnel in November 2018.
Other operating expense for the fourth quarter of 2017 was $6.8
million, resulting from impairment charges and employee-related
expenses associated primarily with the personnel realignment
implemented in October 2017.
- Net loss was $23.7 million, and diluted
loss per share was $0.12, in the fourth quarter of 2018 based on
194.0 million weighted average common shares outstanding, compared
to a net loss of $39.1 million, and diluted loss per share of
$0.20, in the fourth quarter of 2017 based on 191.0 million
weighted average common shares outstanding. The net loss of $23.7
million in the fourth quarter of 2018 was an improvement of $10.2
million quarter-over-quarter, compared to a net loss of $33.9
million in the third quarter of 2018.
- Adjusted EBITDA improved 60%
year-over-year to a loss of $7.8 million in the fourth quarter of
2018, compared to a loss of $19.7 million in the fourth quarter of
2017, reflecting the company’s continued focus on expense
management and operational efficiencies. Sequentially, adjusted
EBITDA loss improved by $11.0 million quarter-over-quarter from a
loss of $18.8 million in the third quarter of 2018.
Full Year 2018 Financial Results
- Net revenue for full year 2018
decreased 24% to $667.6 million from $881.2 million for full year
2017, driven primarily by a decrease in Customers as the company
remained focused on efficient marketing channels while implementing
its multi-product, multi-channel strategy. The decrease in net
revenue also resulted, in part, from the company’s decision in the
second half of 2017 to deliberately prioritize operational
stability and effectiveness.
- Net loss for full year 2018 was $122.1
million, and diluted loss per share was $0.63, based on 192.7
million weighted average common shares outstanding, compared to net
loss of $210.1 million, and diluted loss per share of $1.64, based
on 128.1 million weighted average shares outstanding for full year
2017.
- Adjusted EBITDA for full year 2018 was
a loss of $61.4 million, compared to a loss of $137.9 million for
full year 2017, reflecting improved expense management and
operational efficiencies.
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, December 31,
September 30, December 31, 2017
2018 2018 Orders (in
thousands) 3,196 2,647 2,418 Customers (in thousands) 746 646 557
Average Order Value $ 57.99 $ 56.79 $ 58.12 Orders per Customer 4.3
4.1 4.3 Average Revenue per Customer $ 248 $ 233 $ 252
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 $95.6
million as of December 31, 2018.
- In the fourth quarter of 2018, the
company amended and refinanced its existing revolving credit
facility to, among other things, extend the 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 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 $1.9 million for the fourth quarter of
2018. This represents a reduction of $3.5 million in capital
expenditures from the fourth quarter of 2017.
- Full year 2018 capital expenditures,
including amounts in accounts payable, totaled $13.8 million,
representing a reduction of $96.7 million from the prior year
following the substantial completion of the construction of the
company’s Linden fulfillment center.
Conference Call and Webcast
Blue Apron will hold a conference call and webcast tomorrow at
8:30 a.m., Eastern Time to discuss its fourth quarter and full year
2018 results and business outlook. The conference call can be
accessed by dialing (877) 883-0383 or (412) 902-6506, utilizing the
conference ID 8804128. 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 Thursday, February 7, 2019 by
dialing (877) 344-7529 or (412) 317-0088, utilizing the conference
ID 10127237.
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 execute on its multi-product, multi-channel
growth strategy; the company’s ability to achieve the benefits
associated with the company’s workforce reductions; risks resulting
from the company’s workforce reductions, including, but not limited
to, further employee attrition and adverse effects on the company’s
operations; its ability to efficiently transition production volume
between its facilities and maintain its production efficiency; its
expectations regarding competition and its ability to effectively
compete; its ability to expand its product offerings, strategic
partnerships 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 September 30,
2018 filed with the U.S. Securities and Exchange Commission (“SEC”)
on November 14, 2018, the company’s Annual Report on Form 10-K for
the year ended December 31, 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 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 impairment
losses and restructuring costs;
- 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)
December 31, December 31, 2018
2017 ASSETS CURRENT ASSETS: Cash and cash equivalents
$ 95,615 $ 228,514 Accounts receivable, net 494 1,945 Inventories,
net 33,634 41,927 Prepaid expenses and other current assets 11,116
7,824 Other receivables 1,143 2,539 Total current
assets 142,002 282,749 Restricted cash 1,692 2,371 Property and
equipment, net 209,515 230,828 Other noncurrent assets 1,690
1,761 TOTAL ASSETS $ 354,899 $ 517,709
LIABILITIES AND
STOCKHOLDERS’ EQUITY (DEFICIT) CURRENT LIABILITIES: Accounts
payable $ 22,573 $ 30,448 Accrued expenses and other current
liabilities 32,594 32,615 Deferred revenue 12,372
27,646 Total current liabilities 67,539 90,709 Long-term debt
82,603 124,687 Facility financing obligation 71,696 70,347 Other
noncurrent liabilities 13,759 8,116 TOTAL LIABILITIES
235,597 293,859 TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)
119,302 223,850 TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY (DEFICIT) $ 354,899 $ 517,709
BLUE APRON
HOLDINGS, INC. Condensed Consolidated Statement of
Operations (In thousands, except share and per-share
data) (Unaudited) Three Months
Ended Year Ended December 31, December 31,
2018 2017 2018
2017 Net revenue $ 140,733 $ 187,653 $ 667,600
$ 881,191 Operating expenses: Cost of goods sold, excluding
depreciation and amortization 85,602 131,469 433,496 627,964
Marketing 20,294 25,161 117,455 154,529 Product, technology,
general, and administrative 45,407 53,280 194,340 247,907
Depreciation and amortization 8,829 8,501 34,517 26,838 Other
operating expense 2,170 6,779
2,170 12,713 Total operating expenses
162,302 225,190 781,978
1,069,951 Income (loss) from operations (21,569 ) (37,537 )
(114,378 ) (188,760 ) Interest income (expense), net (2,115 )
(1,581 ) (7,683 ) (6,384 ) Other income (expense), net —
— — (14,984 ) Income
(loss) before income taxes (23,684 ) (39,118 ) (122,061 ) (210,128
) Benefit (provision) for income taxes (22 ) (2 )
(88 ) (15 ) Net income (loss) $ (23,706 ) $ (39,120 )
$ (122,149 ) $ (210,143 ) Net income (loss) per share –
basic $ (0.12 ) $ (0.20 ) $ (0.63 ) $ (1.64 ) Net income (loss) per
share – diluted $ (0.12 ) $ (0.20 ) $ (0.63 ) $ (1.64 ) Weighted
average shares outstanding – basic 193,955,364 191,029,134
192,678,914 128,057,330 Weighted average shares outstanding –
diluted 193,955,364 191,029,134 192,678,914 128,057,330
BLUE APRON HOLDINGS, INC. Condensed Consolidated
Statement of Cash Flows (In thousands)
(Unaudited) Year Ended December
31, 2018 2017 CASH FLOWS FROM OPERATING
ACTIVITIES: Net income (loss) $ (122,149 ) $ (210,143 )
Adjustments to reconcile net income (loss) to net cash from (used
in) operating activities: Depreciation and amortization of property
and equipment 34,517 26,838 Loss (gain) on disposal of property and
equipment 1,624 (25 ) Loss on impairment — 9,456 Changes in
reserves and allowances (1,247 ) 1,870 Share-based compensation
16,320 11,270 Non-cash interest expense 1,595 2,719 Loss (gain) on
convertible notes — 14,984 Changes in operating assets and
liabilities (7,560 ) (9,411 ) Net cash from (used in)
operating activities (76,900 ) (152,442 )
CASH
FLOWS FROM INVESTING ACTIVITIES: Cash paid for acquisition (250
) (1,177 ) Decrease (increase) in restricted cash 679 1,595
Purchases of property and equipment (15,022 ) (124,242 ) Proceeds
from sale of property and equipment 983 137
Net cash from (used in) investing activities (13,610
) (123,687 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from debt issuances — 144,349 Repayments of debt
(41,422 ) — Payments of debt issuance costs (908 ) — Proceeds from
exercise of stock options 215 1,010 Principal payments on capital
lease obligations (274 ) (194 ) Net proceeds from public offering —
283,500 Payments of public offering costs —
(5,490 ) Net cash from (used in) financing activities
(42,389 ) 423,175 NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (132,899 ) 147,046 CASH AND CASH EQUIVALENTS —
Beginning of period 228,514 81,468 CASH
AND CASH EQUIVALENTS — End of period $ 95,615 $ 228,514
BLUE APRON HOLDINGS, INC.
Reconciliation of Non-GAAP Financial Measures (In
thousands) (Unaudited) Three Months Ended
Year Ended December 31, September
30, December 31, December 31,
December 31, 2018 2018 2017 2018
2017 Reconciliation of net income (loss) to
adjusted EBITDA Net income (loss) $ (23,706 ) $ (33,942
) $ (39,120 ) $ (122,149 ) $ (210,143 ) Share-based compensation
2,765 4,569 2,518 16,320 11,270 Depreciation and amortization 8,829
8,599 8,501 34,517 26,838 Other operating expense 2,170 — 6,779
2,170 12,713 Interest (income) expense, net 2,115 1,943 1,581 7,683
6,384 Other (income) expense, net — — — — 14,984 Provision
(benefit) for income taxes 22 19
2 88 15 Adjusted EBITDA $ (7,805
) $ (18,812 ) $ (19,739 ) $ (61,371 ) $ (137,939 )
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version on businesswire.com: https://www.businesswire.com/news/home/20190130005811/en/
Blue ApronInvestors:Felise Glantz
Kissellfelise.kissell@blueapron.comorMedia:Nisha
Devarajannisha.devarajan@blueapron.com
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