APRN - Earnings call transcript Q2 2021 | Blue Apron Holdings, Inc.

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Operator

Good morning and welcome to the Blue Apron Holdings’ Second Quarter 2021 Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode.

As a reminder, this call is being recorded today, Tuesday, August 3, 2021, for replay purposes. A slide presentation has been created to accompany today’s remarks and can be accessed on the Blue Apron Investor Relations website. [Operator Instructions] On this morning's call, we have Linda Findley Kozlowski, President and Chief Executive Officer of Blue Apron; and Randy Greben, Chief Financial Officer.

over statement. company, call the will the Harbor Safe handing to we the review Before that company forward-looking statements under XXXX. expectations, purpose Various the the the plans, its call of Reform and future Private about Securities prospects Act Harbor constitute Safe statements Litigation the makes for provisions during of today’s earnings morning may results a those those of with risk the from in result SEC factors, described those filings. including this by Actual indicated materially release the company’s the company’s and and differ as forward-looking issued other statements

In addition, any represent as the be only update company views representing and company’s statements. any date. upon subsequent today, should any forward-looking disclaims relied of statements as to specifically of as The its views obligation not these

referring be to with will company non-GAAP in which not the call, accounting this generally-accepted are accordance prepared principles. measures, During

to You to GAAP to non-GAAP filings, directly the release where measures, and the most has earnings financial reconciliation SEC the and defined of these these to review are it encouraged measures measures. refer comparable

In is With of included to release, Events at Presentations. this under earnings during would in I over company’s our measures Blue call which non-GAAP addition, investors.blueapron.com referred CEO. turn Kozlowski, certain on relations website the Apron's are the and investor located Linda reconciliations like call to that, available to forward-looking Findley

Linda Findley Kozlowski

Thank Good joining for Betsy. you, today. morning, everyone, you and us thank

highlight as Order quarter growth the This Apron again of variety, each of attracting key our metrics, has of consecutive consistent Adding effectiveness results including us choice has in growth particular sustained product quarter high-value retaining to and on record allowed demonstrated the ways customers offer our our and bring week. in Blue second kitchens focus Average once by through more our Value. Our customer value flexibility, third to innovation. initiatives, ongoing resulted into

the which Randy quarter of agreement relating also further. charge will non-cash guidance, May, addition, $X the amendment with was adjusting benefit to associated without in-line financing with of exceeded loss recovered our Net in supplier XXXX. our Net exceeded the revenue EBITDA guidance. credits a for in In recall second approximately even customer adjusted after a discuss expectations, million

have Turning highlights. growth and vaccinated sustained now as customer being reflected value, our progress is strategy levels we to some more the with people in of The seen continued quarter heightened second even travel are record from been strong and quarterly customer recently the Value in-line and Order increasing. is reaching QX, Average Orders per level. levels to with we’ve delivering, increased a both were year-over-year QX

was we consecutive Customer $XXX quarters quarter, that As in fifth XXXX. milestone only a per Average for the result, the above which Revenue have achieved since

and the sequential that year-over-year Given QX experience typically a in decline the demand we we most due saw seasonality pandemic, basis. the total and QX customers QX between from and spike benefitted the XXXX return to quarterly of on

However, within this was at decline our levels expectations.

to it’s in kits, and accelerated in carry order more to analyze return solid second With heightened interest as internal more time. tracked a cooking we to Throughout The some had home, consumer understand while geographic and places region rates these impacts for trend business Our quarter are even results data a the well country environment. more customer we indicates reflect open, restrictions encouraging, on we behavior the restrictions. that meal that pandemic normalized stringent to geographic pandemic, a at continue our of ease. more as points. awareness the by on The previously have as data same expect the

This our a ingredients, implement to continue cook, targeted initiatives delicious easy that from segment and unique peer help Apron is to consumer places on of recipes. to derive the high-quality, differentiate our consumer group. value we value Blue goal set lot grow among Our and

up is by illustrated as Customer, the which $XX to or second XX% quarter goal this achieving XXXX. compared are of Average per approximately We to $XXX, our Revenue

create achieve is of more goal on Our strategy to two choices new products variety. with consistent introduction offer we founded and our the connections years more customers. deeper significantly ago, this now to Compared to

has in August XX Our XX grown options weekly compared to menu to XXXX.

a a lifestyle. As to their to they orders customer from from, them variety result, select to Blue meet every recipes, choose time that allow more have today, Apron including customizable order their personalize

we of Order As as we’ve as discussed, XXXX. customer this customers, per Customer retention increases repeat this Revenue XX.X% increases, and in and Customer To for Average improvement compared well the Revenue second leads end, Value quarter to saw Average a engagement. per Average to

are In QX, initiatives XX% new we QX. total Average increased product products drove in increases are the As which improvement generating highlighted, AOV, in I in in these directly correlated to to Value. our XX% Order a

will is culinary upgrade in improvement customization. engagement, is basis offering increase QX to Two a customers. in this new QX, on in offering. in premium option AOV to It orders of in which repeat the The Order and proteins, our again next highest and customers. AOV XX% QX, The Four-Serving that drive in week an offer recipes. premium approximately each and advanced flavors, driver contributed of even of drive XXXX select in or dollar the We retention expect average, add, features techniques, unique to our We ingredient before products on On Value the to improvement This specialty roadmap. and QX. has key are XX% customer swap, and continue AOV repeat continues help the other Average Premium of currently drive introduction year-over-year product

ones higher option. order these recipes rate, In not addition to have compared at to per tried this paying more who a to who churn box, have similar lower customers a at frequency and tried tend

a to simple dessert week. anticipate a also is introduced to of the lunch. meal we’ve items in that Craft interest product that the will elevating will Four-Serving introduced in Apron to last it more two our QX more ways Since to menu responsible offering needs it the least had we for mid-May. Add-ons, ratings customers’ Two-Serving Four-Serving offering, for only to add side new received we second menu our to recipes. Blue Add-ons used occasions, a popular our increased off were for and start. though recipes, have expanding different or of year, and I’d which that Two two so be to In especially menu high we’ve grow, like This meal and our and Burger team their it tried this and customers premium each for believe as time. personalization the in we Burger taking a AOV, include continue created, the with our available success of appetizer, we to delight offering expand menus weeks also over of a to an since improvement be Add-ons first this has drive to variety continue Burger. add we the to the way products XX add We are is customers menu to table, ways experience. their allows different feedback look as it can are X% menu box We X% a AOV also at are customers the highlight continue active quarter. has culinary ways is and/or option our shipping helping menus, Building on to dish, weekday look launched a as on to menu started mid-June, Craft and far. was the like Craft know to strong was quarter, offering to kitchen. eight Almost in our the homes promote new on We once and response it even under in for Signature our and customers whole. in and recently XX% be customizable. available love, and been Both are QX is part, this to our proven in meet we

We the box to have week, Four-Serving enjoy recipes, allows serving the the Two customers same introduced leftovers. which in to of the both on the also for to Two-Serving different option or recipes double and needs during select size amount

expect We help frequency initiatives drive forward. will both order these of going

Blue Lastly, Apron we Wine. also working to grow are

expanding a Blue wine customers team, subscription, ways allow in Apron expand to our more into only that our continuing continue As the will give program. wine us in-house their meal we Blue to U.S. bring offers to of the kit to company custom offering this leadership our homes. monthly are enhance Apron the Under and wine

with XXX-ml now bottles of offering are bottles customers we companies can their market, addition our e-commerce XXX-ml to Average a to These our innovations monthly of products as are just some Order objective helping the subscription. to offer of is a on Similar variety box. which successful higher provide basis. add currently a introduced we’ve the to our drive part consistent online We across product industries, wide to are existing in they on Value select many

partnership We partnerships have brands more Pass announced the Shifting metrics. pipeline new Chef, cooking easy-to-replicate the weeks Mochi, coming collaboration White as along to to culinary the to retention ago, Inspired and Kass. our as get Sam marketing these by and Love Healthier affordable recipes for XXXX Two former are + most by help of roadmap lean our available to we efforts, Netflix limited-time. family includes boxes. and boxes believe driver planned drive we key value. product well-respected with a with serving, and continue in-house a These customer into and boxes will of our House $X of together. per improvement each create for engagement, the Nutrition experts, for whole were now recognized show, additions our customer be box a designed America part yet, in further Senior will three Advisor down developed and at Waffles Policy nutrition episodes These with our

nutritious are highlight home-cooked, PHA of partner We excited to the meals. very with benefits to

starting special Sam with partnership months. on Chef also menu August recipes available will the into that continue be He our coming developed Our Kass X. will

In food to our top-line in an by business XXXX, our on and for year. addition, and our to have initiative. meal weight. system. XX% kits are compostable, resilient the to our Through on to we foundation our we environmental Aprons to and new announced consistent generate business of packaging In achieve boxes reusable Love of Apron’s The Pass we Aprons sustainable support ethical, sustainable the EBITDA be part sustainability across next summary, make basis recently Blue progress we’re packaging for growth social expect By the goals. recycled end and of goals All annual build continue adjusted recyclable, starting and strong or dedicated positive All, the impacts managing an have XXX% content post-consumer to we packaging new

growth to of building marketing contributing and our metrics. our success proud launched in are efforts, to delivering. two key partnerships and the customer of our all initially strategies they initiatives, continue thrilled the revenue growth We years which see of We ago product we’re and results are

long-standing as quality meal and provide to As We our turned invites always, their appreciate service. who with commitment have that customer recently well a our as take those we homes to into Blue seriously us customers, Apron. experience world-class every

Looking what to we offer clear of kitchens those at invited growth their customer our us. Blue see metrics, the and into continue that from it's and key us order value the who Apron

derive I striving day retain to detail. over new it so value further customers, ones. can attract turn we our them, that Randy talk and each and in now from grow We’re about improve our every we more financials to to the will current

Randy Greben

morning good and everyone. Linda, you, Thank

second adjusted May. guidance, amendment EBITDA our Net associated highlighted of provided also $X.X XXXX adjusting million quarter, loss, related was revenue Net the was release, As million customer the of non-cash a this to voluntary of that of agreement for issued financing of in-line in onions. was one-time when million with guidance of of of morning’s we adjusted loss, the in the we our $X the quarter EBITDA. with charge included revenue, recall ahead all well recovery as a and approximately credits in recognition third net $XXX

as such Burger. offerings, critical by growth options Average of Value and their the new per additional expect our again menu of the deliver rollout a strategy our higher add and our and new balance Product products to successful the additional was driven Average continuation partnerships, over performance customers resulting KPI more as of our we to in expansive Add-ons quarter of to this and to innovation continues meal-kits, provide Customer. Revenue launch for component Craft products Second Order to year

to we stated, higher expansions previously with year. compared As plan these last support spend to marketing

first marketing of revenue, second investment Second as had XX.X% Marketing brought half levels the expect or quarter of of of spend on $XX.X total we quarter XXXX. million, of marketing demand in pandemic. was the continue above was or on to revenue, heightened $XX.X by spend million, net XXXX. XX.X% meeting revenue, compared XXXX XXXX and second net in we last QX low in to the year’s X.X% to net of approximately half the the investment focused

fifth Turning key our from quarter now which continue XXX,XXX customer XXX,XXX retention. of We to to engagement Revenue consecutive track pandemic. on at Revenue around was quarter Average second return we prior XXXX, and the only per was since was focus customer year’s metrics, normal reported, from levels a customer right a a reflecting $XXX to milestone height customer that second to to last the of in achieved the It’s our highest which benefit continues review the and in reflect per have Orders seasonality, X.X per customers down had Average the of Order our XXXX. than that quarters of $XX, in quarter, Value more notable $XXX. the Average customer for record

due increases to product cost are which goods and increases amortization, On excluding costs, choice, is in to The The to basis ingredients depreciation and costs. food produce, of freight of points cost and primarily enhanced in-bound increases offerings, food made increase in to XX.X%. as variety our providing the as premium attributable the sold, costs in XXX primarily in as percentage logistics outbound that year-over-year net well increased are and are side, customers. revenue, by we of a seasonal components investments

our was typically target, higher impact been we have well below costs, of publicized due XX.X% several also what pressure last impacted by over largely variable on which of the food the was margin to Our and logistics costs. months, inflationary

ways for look closely to to address rates. working these negotiate continue vendors issues, with We better to including our

to the the as margin back logistics year expect higher we normalize offset food of the levels will strategies costs. historical through and We variable towards half implement

streamline in implement productivity We the absorb we increased a with continue generated make without to improvements compromising to allowed year added progress in operations. utilization, launches, to us areas, Since initiatives have new we with which quality. several our complexity ago, almost to initiatives began efficiencies product on our improved including and has associated these asset ingredient

resulting obligation a key approximately California. quarter facility, and million the We on $XX.X to chain The our our are fair debt changes fair we address Along fees in Arlington, company’s recently or resulted is of savings we in XXXX, New costs, our costs administrative continue the closely expense. vendors reduce and of we obligation beneficial approximately income are The quarter addition, second the existing extinguishment our each reduce Jersey other operating higher May sheet Other extinguishment value find lines, quarter demand concluded XXXX, outstanding. $XXX,XXX we’ve and from the the represented managed adjustment. of quarterly fulfillment million made amendment transaction technology, agreement a long initially in as without This recorded In we fair those and approximately to debt, amended company’s expected from in to from at accounting plan to investments creating inventory, non-cash re-measured with recorded subleased the value then financing balance of debt to included second with Product, accepted execution resulting current company non-cash cost This debt $XXX,XXX. value mutually on-site and as generally professional and lenders, of at in instrument to to were and was $X.X warrants warrant the with business growth supply Texas in of value of initiatives. with accordance of working principles. a to opportunities in be date, issues our believe risks. in to recorded of an fair as support two loss the issue able remains in second capacity the XXXX. general centers one-time income

to we On the bottom million, million agreement, as an financing were $XX.X EBITDA adjusted our than and loss mentioned, line, $X.X charge loss for net when our related both reported of the guidance. one-time of adjusting a better which,

free Importantly, with year timing. levels, early pre-positioning investments driven balance year. operating in to that was flow from related quarter flow the this year, the expected the near substantially cash The improvement of use by the were business to as cash in to and capital cash in in the made improving first quarter addition breakeven both other utilization inventory of working normalization leveraging drive assets plan the to our the of and we through of

historically over period, in seasonal should an third coupled utilization in most the see consistent our occurring typical with used which cash revenue. cash be in the first is in with quarter. to to warmer expect out, used increase of this the back cash relatively half, in fulfilling cash-intensive in cash third in a the XXXX months, of operations from Zooming second related the quarter, seasonally the with summer half primarily We burn resulting seasonality lower business

reference, a our adjusted to included easy which been has net relations Blue from For release, in EBITDA loss reconciliation is Apron's posted investor earnings website. on table

of borrowings classified at and $X.X as to million. which in under $XX million includes This of of million Following the balance long-term the long-term debt. and $XX.X as offering $XX.X XX, net June our sheet, million was $XX.X classified approximately in portion cash of we equity cash and XXXX, financing of cash equivalents $XX.X mid-June, added debt which had cash million million total outstanding agreement, was our current

our evaluate sheet. further strengthen to to continue opportunities We balance

I customer its further while to The track key the variable With XXXX respect marketing improvements with the in the we And further in our to and any adjusted initiatives, to QX. continued in half EBITDA Our marketing believe year’s growth what this reflects PTG&A drive positive in topline, as not we remain our looking growth, return initiatives, to beginning our expect that customers towards XXXX. look revenue expectation assumptions as expect take operations valuable of execution to generate double-digit of compared single-digit that will experience the we and the annual improving investment progress second with strengthen our top-line high achieve annual containment operating fulfillment continue our ongoing should second narrow strategy, of supply confidence pre-pandemic This chain. net to financial forecasted and including our With over which the cost in continue expenses. year, certain will assumes we leverage, as we growth questions. relationships business outlook, returns full-year we or execute declines also XXXX, our and seasonality next to Linda growth last regarding our achieve historical the business, in In our guidance with we our significant low full-year readiness summary, and approximate improvements. margin unforeseen operational ahead, expectation increases sales and to half to trends. on expect efficiencies metrics, against will your after guidance to year. to company planned achieving EBITDA reflects growth disruptions adjusted now most well strategic further well positive our first

Operator

the question with first Instructions] go [Operator Maria Canaccord. from Please comes And Ripps ahead.

Maria Ripps

for my and questions. morning, Good taking thanks

consumer but prepared to in a sort are relative And platforms in this I you Linda, relative remarks, how terms or you – your of with are you’ve frequency? seen platform your wanted of about up. to behavior with types expectations, engaging to bit of on you seeing little orders either in your changes terms maybe consumers and, are as, your of your things in touched any opening what ask just First,

Linda Findley Kozlowski

Sure.

of into little I we're we is, so continued for Maria. that the that touch So, business. we're products on elevated joining actually What continue much the a value-added lot engagement and morning, a can to bit call build this thanks seeing seeing with these

those the strength and using seeing elevated some and pieces, at them customization more order at enjoy So, to and people and looking levels those in and premium recipes occasions. of for add-ons special we're the continuing very

a bit on sort seeing their that kind return on to health and getting people a about, are of focusing very excited dynamic. We of focusing of health very, and

that our well. continue continues value call, our in it the to comes mentioned earnings to and we engage customers as when can extremely to previous menu wellness stronger people overall we business. so, get to their stronger And see And

As of we're high changes up, Delta changes ebb lot of a we're start customers you seeing seeing behavior. far other a we and but of in recipes, not sort seeing we're variants, in of very lot see as ordering are travel, fluctuation the flow, number happening seeing in premium still opening Again, to little a bit new and restrictions. huge and a order those particularly things the that, of around value as

are are that. definitely cook patterns meal do to to solution being and we kits interested to So, seeing at in as very home want continuing people where a

to the Craft far their seen, are talking their and those for some the As as evolution trying new elevating with special most and frankly, we've exciting, our about was techniques sort continuing I for looking things. family premium People into recipes. what of moments Burger is lean of and

that well. engagement really an represents engagement again seeing also because that's as been our the been not very numbers AOV long-term. encouraged with actually think us but value continued customers continued products, these for and only So, retention Overall, I exciting development we've of we're by a higher

Maria Ripps

Great, margins. is gross that's other And helpful. question around my

just So, increased which about, gross going premium ingredients, near-term? of mitigate sort like some more And on, high can impacting just components sold, a more how few for maybe the you are the you use transitory, sort the highlighted of goods example, these touch in of which foods be, Randy, you and think of here margins forward? talk maybe of to sort there of some talk for can parts cost more or should broadly of and about maybe cost expenses about, could moving sort sustainable, various we takes strategies of

Randy Greben

to Linda. and product issue first What will back that our the are start fronts. multiple elements is, and our product the of I'll we’re elevated as Absolutely products foremost I'd offering, to then over brand we around on hand continue and on through There good ingredients, make specifically it roadmap. addressing premium say Maria, persist

fantastic have Blue are our whom relationships Apron. direct XX% of We with to suppliers,

to our levels. suppliers. down partnership, where Again, traditional that's suppliers something that gross very that like the many make So, to expect this The we're which we looks ways will amount it's because ingredients with bring to the Linda, to that been provided is We're active we of can rates the the are to that more have customers. than we that be sure add? through more and normalize also a consistent one through We challenges logistics well to consistent logistics. our We multi-faceted like pressure. value feeling return our they're of continue with this work we something large balance on that seen that we'll maintain It's positioned in you do anything believe that dialogue us work to think approach, historically. margin. in levels providers has we well. to a area able you'd pass with specifically that year impact historical value companies that more the country. expect as to we've And positively seen is there providing And we've direct-to-consumer an the we with other our with

Linda Findley Kozlowski

products, would those new but and we're as I introduce very, that making we've add, products. maintaining that sure on strong we’re focused mentioned we Yeah, before, margins very the with this thing only

the we when pricing and account of premium some products. some of about So, take ingredients into we're premium the thinking

logistics, supply So, in sure that we making those drive ingredients to we're that to the the in, and offerings keeping to continue same continuing at addition sure quality in that had we to that we're bring trying attempt according and before, efficiencies of accordingly. the new to are pricing within also look those some drive efficiencies chain, we make

the that are value of always we're to making we business. those We going And customer, some providing sure and that about for we're of making can what's right sure to quite doing our continuing different also think test best how well. that's options the

Maria Ripps

both. That's very Thank it. Got helpful. you

Randy Greben

you, Maria. Thank

Operator

audience. time, we At is further remarks Instructions] back listening turn the floor my [Operator you any may our or Linda have. to closing this from It additional have pleasure that over questions to for no you

Linda Findley Kozlowski

we your very well. you On forward for to Apron, families, at we want look this quarter update to colleagues, today. third results wish an you much and you, report thank Thank providing and your friends of We everybody our time behalf everyone Blue your when fall.

Operator

for The conference concluded. attending now Thank today's presentation. has you

You may now disconnect.

Blue Apron (APRN) 3 Aug 212021 Q2 Earnings call transcript