Beyond Meat, Inc. (NASDAQ: BYND) (“Beyond Meat” or “the Company”),
a leader in plant-based meat, today reported financial results for
its second quarter ended July 1, 2023.
Second Quarter 2023 Financial
Highlights1
- Net revenues were $102.1 million, a
decrease of 30.5% year-over-year.
- Gross profit was $2.3 million, or
gross margin of 2.2% of net revenues, compared to a loss of $6.2
million, or gross margin of -4.2% of net revenues, in the year-ago
period.
- Gross profit and gross margin were
positively impacted by lower materials costs, lower inventory
reserves and lower logistics costs per pound, partially offset by
higher manufacturing costs excluding depreciation, which included
the impact from flow-through of higher cost inventory produced in
the fourth quarter of 2022, and lower net revenue per pound.
- Gross profit and gross margin
included the impact from a change in the Company’s accounting
estimate associated with the estimated useful lives of its large
manufacturing equipment made in the first quarter of 2023, which
reduced COGS depreciation expense by approximately $5.1 million, or
5.0 percentage points of gross margin, relative to depreciation
expense utilizing the Company’s previous estimated useful
lives.
- Net loss was $53.5 million, or $0.83
per common share, compared to net loss of $97.1 million, or $1.53
per common share, in the year-ago period.
- Adjusted EBITDA was a loss of $40.8
million, or -40.0% of net revenues, compared to an Adjusted EBITDA
loss of $68.8 million, or -46.8% of net revenues, in the year-ago
period.
1 This release includes references to non-GAAP financial
measures. Refer to “Non-GAAP Financial Measures” later in this
release for the definitions of the non-GAAP financial measures
presented and a reconciliation of these measures to their closest
comparable GAAP measures.
Beyond Meat President and CEO Ethan Brown commented, “The second
quarter brought mixed results amidst otherwise strong progress
toward our goal of sustainable long-term growth. Ongoing category
headwinds compressed net revenues, which in turn impacted product
sales mix and gross margin, overshadowing significant strides in
operational efficiency, including meaningful year-over-year
reductions in operating expenses, COGS per pound, and overall cash
consumption. While we are reducing our full-year 2023 net revenues
outlook, we nevertheless expect a modest return to year-over-year
top-line growth in the third and fourth quarters of 2023, and,
relative to the first half of 2023, a meaningful reduction in cash
consumption and an increase in gross margin. As we look to the
future, we remain steadfast in our belief that plant-based meat,
and Beyond Meat specifically, will play an important part of the
global response to a climate crisis that appears to be rapidly
intensifying, while also delivering health benefits to the
individual consumer.”
Second Quarter 2023
Net revenues decreased 30.5% to $102.1 million in the second
quarter of 2023, compared to $147.0 million in the year-ago period.
The decrease in net revenues was driven by a 23.9% decrease in
volume of products sold and an 8.6% decrease in net revenue per
pound. The decrease in volume primarily reflected weak category
demand, especially in the Company’s U.S. retail and U.S.
foodservice channels, and the cycling of a particularly strong
second quarter in 2022. The decrease in net revenue per pound was
primarily driven by changes in product sales mix and increased
trade discounts, partially offset by pricing changes.
U.S. retail channel net revenues decreased 38.5% compared to the
year-ago period, due to a 34.3% decrease in volume of products
sold, primarily reflecting weak category demand and the cycling of
significant sell-in of Beyond Meat Jerky in the year-ago period,
and a 6.3% decrease in net revenue per pound, resulting from higher
trade discounts and changes in product sales mix, partially offset
by increased pricing for certain items resulting from reduced sales
to liquidation channels in the quarter. U.S. foodservice channel
net revenues decreased 45.4% compared to the year-ago period, due
to a 44.2% decrease in volume of products sold, primarily
reflecting weak overall demand and comparison against a
particularly strong second quarter in that channel in 2022, and a
2.2% decrease in net revenue per pound, primarily due to increased
trade discounts, partially offset by changes in product sales mix.
International retail channel net revenues decreased 15.6% compared
to the year-ago period, due to a 17.9% decrease in volume of
products sold, primarily reflecting weak category demand, partially
offset by a 2.8% increase in net revenue per pound. The increase in
net revenue per pound was primarily due to changes in product sales
mix and favorable changes in foreign exchange rates, partially
offset by higher trade discounts and pricing changes. International
foodservice channel net revenues decreased 0.9% compared to the
year-ago period, primarily due to a 16.7% decrease in net revenue
per pound, partially offset by a 19.0% increase in volume of
products sold, primarily reflecting strong sales to large QSR
customers in the EU. The decrease in net revenue per pound was
primarily due to changes in product sales mix and higher trade
discounts, partially offset by favorable changes in foreign
exchange rates.
Net revenues by channel (unaudited):
The following tables present the Company’s net revenues by
channel for the periods presented:
|
|
Three Months Ended |
|
Change |
|
(in
thousands) |
|
July 1,2023 |
|
July 2,2022 |
|
Amount |
|
% |
|
U.S.: |
|
|
|
|
|
|
|
|
|
Retail |
|
$ |
48,490 |
|
$ |
78,861 |
|
$ |
(30,371 |
) |
|
(38.5 |
)% |
Foodservice |
|
|
12,764 |
|
|
23,389 |
|
|
(10,625 |
) |
|
(45.4 |
)% |
U.S. net revenues |
|
|
61,254 |
|
|
102,250 |
|
|
(40,996 |
) |
|
(40.1 |
)% |
International: |
|
|
|
|
|
|
|
|
|
Retail |
|
|
19,995 |
|
|
23,692 |
|
|
(3,697 |
) |
|
(15.6 |
)% |
Foodservice |
|
|
20,900 |
|
|
21,098 |
|
|
(198 |
) |
|
(0.9 |
)% |
International net
revenues |
|
|
40,895 |
|
|
44,790 |
|
|
(3,895 |
) |
|
(8.7 |
)% |
Net revenues |
|
$ |
102,149 |
|
$ |
147,040 |
|
$ |
(44,891 |
) |
|
(30.5 |
)% |
|
|
Six Months Ended |
|
Change |
(in
thousands) |
|
July 1,2023 |
|
July 2,2022 |
|
Amount |
|
% |
U.S.: |
|
|
|
|
|
|
|
|
Retail |
|
$ |
92,649 |
|
$ |
147,121 |
|
$ |
(54,472 |
) |
|
(37.0 |
)% |
Foodservice |
|
|
27,439 |
|
|
38,882 |
|
|
(11,443 |
) |
|
(29.4 |
)% |
U.S. net revenues |
|
|
120,088 |
|
|
186,003 |
|
|
(65,915 |
) |
|
(35.4 |
)% |
International: |
|
|
|
|
|
|
|
|
Retail |
|
|
34,284 |
|
|
39,829 |
|
|
(5,545 |
) |
|
(13.9 |
)% |
Foodservice |
|
|
40,013 |
|
|
30,663 |
|
|
9,350 |
|
|
30.5 |
% |
International net
revenues |
|
|
74,297 |
|
|
70,492 |
|
|
3,805 |
|
|
5.4 |
% |
Net revenues |
|
$ |
194,385 |
|
$ |
256,495 |
|
$ |
(62,110 |
) |
|
(24.2 |
)% |
Volume of products sold by channel
(unaudited):
The following table presents consolidated volume of the
Company’s products sold in pounds for the periods presented:
|
|
Three Months Ended |
|
Change |
|
Six Months Ended |
|
Change |
(in
thousands) |
|
July 1,2023 |
|
July 2,2022 |
|
Amount |
|
% |
|
July 1,2023 |
|
July 2,2022 |
|
Amount |
|
% |
U.S.: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail |
|
10,550 |
|
16,057 |
|
(5,507 |
) |
|
(34.3 |
)% |
|
18,865 |
|
28,510 |
|
(9,645 |
) |
|
(33.8 |
)% |
Foodservice |
|
2,211 |
|
3,965 |
|
(1,754 |
) |
|
(44.2 |
)% |
|
4,762 |
|
6,717 |
|
(1,955 |
) |
|
(29.1 |
)% |
International: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail |
|
4,156 |
|
5,061 |
|
(905 |
) |
|
(17.9 |
)% |
|
7,493 |
|
8,591 |
|
(1,098 |
) |
|
(12.8 |
)% |
Foodservice |
|
5,998 |
|
5,042 |
|
956 |
|
|
19.0 |
% |
|
11,547 |
|
7,623 |
|
3,924 |
|
|
51.5 |
% |
Volume of products
sold |
|
22,915 |
|
30,125 |
|
(7,210 |
) |
|
(23.9 |
)% |
|
42,667 |
|
51,441 |
|
(8,774 |
) |
|
(17.1 |
)% |
Gross profit was $2.3 million, or gross margin of 2.2% of net
revenues, in the second quarter of 2023, compared to a loss of $6.2
million, or gross margin of -4.2% of net revenues, in the year-ago
period. Gross profit and gross margin were positively impacted by
lower materials costs, lower inventory reserves and lower logistics
costs per pound, partially offset by higher manufacturing costs
excluding depreciation, and lower net revenue per pound.
Manufacturing costs included the impacts from flow-through of
higher cost inventory produced in the fourth quarter of 2022 when
production volume was curtailed in response to weak demand, and
underutilization fees. Gross profit and gross margin included the
impact from a change in the Company’s accounting estimate
associated with the estimated useful lives of its large
manufacturing equipment made in the first quarter of 2023, which
reduced COGS depreciation expense by approximately $5.1 million, or
5.0 percentage points of gross margin, relative to depreciation
expense utilizing the Company’s previous estimated useful
lives.
Loss from operations in the second quarter of 2023 was $53.8
million compared to $89.7 million in the year-ago period. The
decrease in loss from operations was primarily driven by higher
gross profit, reduced non-production headcount expenses primarily
as a result of the reduction in force implemented in October 2022,
lower legal and consulting fees, decreased production trial
expenses, and lower outbound freight costs included in the
Company’s selling expenses.
Total other income, net, was $0.8 million in the second quarter
of 2023 compared to total other expense, net, of $6.0 million in
the year-ago period. The increase in total other income, net, was
primarily due to lower realized and unrealized foreign currency
transaction losses and higher net interest income.
Net loss was $53.5 million in the second quarter of 2023
compared to $97.1 million in the year-ago period. Net loss per
common share was $0.83 in the second quarter of 2023 compared to
$1.53 in the year-ago period. The reduction in net loss was
primarily driven by the reduction in loss from operations, the
increase in total other income, net, and a $0.9 million decrease in
losses related to the Company’s joint venture with PepsiCo, Inc.,
the Planet Partnership, LLC (“TPP”).
Adjusted EBITDA was a loss of $40.8 million, or -40.0% of net
revenues in the second quarter of 2023 compared to an Adjusted
EBITDA loss of $68.8 million, or -46.8% of net revenues, in the
year-ago period.
Balance Sheet and Cash Flow Highlights
The Company’s cash and cash equivalents balance, including
restricted cash, was $225.9 million and total outstanding debt was
$1.1 billion as of July 1, 2023. Net cash used in operating
activities was $88.3 million in the six months ended July 1, 2023,
compared to $235.7 million in the year-ago period. Capital
expenditures totaled $7.1 million in the six months ended July 1,
2023, compared to $42.0 million in the year-ago period. Net cash
used in investing activities was $8.1 million in the six months
ended July 1, 2023, compared to $42.0 million in the year-ago
period. Net cash used in investing activities in the six months
ended July 1, 2023 included $3.3 million in investment in TPP that
was previously committed, partially offset by $2.3 million in
proceeds from sales of fixed assets.
2023 Outlook
The Company's operating environment continues to be affected by
uncertainty related to macroeconomic issues, including softer
demand in the plant-based meat category, high inflation, rising
interest rates, and ongoing concerns about the likelihood of a
recession, among other things, all of which have had and could
continue to have unforeseen impacts on the Company’s actual
realized results. Based on management's best assessment of the
environment today, the Company is providing the following updated
outlook for the full year 2023:
- Net revenues are expected to be in the range of approximately
$360 million to $380 million, representing a decrease of
approximately 14% to 9% compared to 2022.
- Gross margin, including the positive impact of the Company’s
change in accounting estimates for the useful lives of its large
manufacturing equipment implemented in the first quarter of 2023,
is expected to be in the mid to high single-digit range.
- Operating expenses are expected to be $245 million or
less.
- Capital expenditures are expected to be in the range of $20
million to $25 million.
- With respect to the Company’s previously stated target of
achieving cash flow positive operations within the second half of
2023, in light of greater than expected consumer and category
headwinds and their anticipated impact on net revenues, the Company
now believes this is unlikely to be met in the stated timeframe.
Nevertheless, management remains firmly focused on achieving cash
flow positive operations, including increased cost containment, and
expects meaningfully reduced cash consumption for the balance of
the year.
Total distribution points by channel
(unaudited):
The following table presents the approximate number of
distribution outlets by channel for the periods presented:
|
|
Q1 2022 |
|
Q2 2022 |
|
Q3 2022 |
|
Q4 2022 |
|
Q1 2023 |
|
Q2 2023 |
U.S.: |
|
|
|
|
|
|
|
|
|
|
|
|
Retail(1) |
|
35,000 |
|
78,000 |
|
78,000 |
|
78,000 |
|
78,000 |
|
79,000 |
Foodservice |
|
39,000 |
|
41,000 |
|
42,000 |
|
43,000 |
|
42,000 |
|
41,000 |
International: |
|
|
|
|
|
|
|
|
|
|
|
|
Retail |
|
31,000 |
|
33,000 |
|
35,000 |
|
35,000 |
|
36,000 |
|
36,000 |
Foodservice |
|
30,000 |
|
31,000 |
|
33,000 |
|
34,000 |
|
35,000 |
|
34,000 |
Total distribution points |
|
135,000 |
|
183,000 |
|
188,000 |
|
190,000 |
|
191,000 |
|
190,000 |
___________(1) Each of Q2 2022, Q3 2022, Q4 2022, Q1 2023 and Q2
2023 includes distribution points unique to Beyond Meat Jerky.
Excluding distribution points unique to Beyond Meat Jerky, total
U.S. retail distribution outlets were approximately 33,000 in Q2
2023.
Conference Call and Webcast
The Company will host a conference call to
discuss these results at 5:00 p.m. Eastern, 2:00 p.m. Pacific.
Investors interested in participating in the live call can dial
412-902-4255 which will be answered by an operator or by clicking
the Call me™ weblink and entering the Call me™ Passcode =
2545165. There will also be a simultaneous, live webcast available
on the Investors section of the Company’s website at
www.beyondmeat.com. The webcast will also be archived.
About Beyond Meat
Beyond Meat, Inc. (NASDAQ: BYND) is a leading plant-based meat
company offering a portfolio of revolutionary plant-based meats
made from simple ingredients without GMOs, no added hormones or
antibiotics, and 0 mg of cholesterol per serving. Founded in 2009,
Beyond Meat products are designed to have the same taste and
texture as animal-based meat while being better for people and the
planet. Beyond Meat’s brand promise, Eat What You Love®, represents
a strong belief that there is a better way to feed our future and
that the positive choices we all make, no matter how small, can
have a great impact on our personal health and the health of our
planet. By shifting from animal-based meat to plant-based protein,
we can positively impact four growing global issues: human health,
climate change, constraints on natural resources and animal
welfare. As of June 2023, Beyond Meat branded products were
available at approximately 190,000 retail and foodservice outlets
in more than 75 countries worldwide. Visit www.BeyondMeat.com and
follow @BeyondMeat, #BeyondBurger and #GoBeyond on Facebook,
Instagram, Twitter and TikTok.
Forward-Looking Statements
Certain statements in this release constitute “forward-looking
statements" within the meaning of the federal securities laws,
including statements related to the Company’s expectations with
respect to its full year 2023 outlook, including among others,
anticipated decreases in the Company’s cash consumption and
increases in gross margin for the remainder of the year. The
Company may be unable to realize the contemplated benefits in
connection with the cost-reduction initiatives and restructuring of
certain operating activities, which may have an adverse impact on
the Company’s performance, results of operations and financial
condition. Additionally, the Company’s ability to make progress
toward its goal of achieving cash flow positive operations is
dependent on a number of assumptions and uncertainties, including,
without limitation, demand in the category and for the Company’s
products; the Company’s ability to reduce costs and achieve
positive gross margins; the Company’s ability to grow revenues and
meet operating expense reduction targets, which may be subject to
factors beyond the Company’s control; and the Company’s ability to
monetize inventory and manage working capital.
Forward-looking statements are based on management's current
opinions, expectations, beliefs, plans, objectives, assumptions and
projections regarding financial performance, prospects, future
events and future results, including ongoing uncertainty related to
macroeconomic issues, including inflation and rising interest
rates, demand in the plant-based meat category, ongoing concerns
about the likelihood of a recession, increased competition, supply
chain disruptions and challenges related to labor availability,
among other matters, and involve known and unknown risks that are
difficult to predict. In some cases, you can identify
forward-looking statements by the use of words such as “may,”
“could,” “expect,” “intend,” “plan,” “seek,” “anticipate,”
“believe,” “estimate,” “project,” “predict,” “outlook,”
“potential,” “continue,” “likely,” “will,” “would” and variations
of these terms and similar expressions, or the negative of these
terms or similar expressions. These forward-looking statements are
only predictions, not historical fact, and involve certain risks
and uncertainties, as well as assumptions. Forward-looking
statements should not be read as a guarantee of future performance
or results, and will not necessarily be accurate indications of the
times at, or by which or whether, such performance or results will
be achieved. Actual results, levels of activity, performance,
achievements and events could differ materially from those stated,
anticipated or implied by such forward-looking statements. While
Beyond Meat believes that its assumptions are reasonable, it is
very difficult to predict the impact of known factors, and, of
course, it is impossible to anticipate all factors that could
affect actual results. There are many risks and uncertainties that
could cause actual results to differ materially from
forward-looking statements made herein including, but not limited
to, the impact of inflation and rising interest rates across the
economy, including higher food, grocery, raw materials,
transportation, energy, labor and fuel costs; decreased demand, and
the underlying factors negatively impacting demand, in the
plant-based meat category; the impact of adverse and uncertain
economic and political conditions in the U.S. and international
markets, including concerns about the likelihood of an economic
recession, downturn or periods of rising or high inflation; reduced
consumer confidence and changes in consumer spending, including
spending to purchase our products, and negative trends in consumer
purchasing patterns due to levels of consumers’ disposable income,
credit availability and debt levels, and economic conditions,
including due to recessionary and inflationary pressures; our
ability to accurately predict consumer taste preferences, trends
and demand and successfully innovate, introduce and commercialize
new products and improve existing products, including in new
geographic markets; the effects of competitive activity from our
market competitors and new market entrants; disruption to, and the
impact of uncertainty in, our domestic and international supply
chain, including labor shortages and disruption, shipping delays
and disruption, and the impact of cyber incidents at suppliers and
vendors; risks and uncertainties related to certain cost-reduction
initiatives, workforce reductions, executive leadership changes,
and the timing and success of achieving certain financial goals or
cash flow positive targets; our ability to streamline operations
and improve cost efficiencies, which could result in the
contraction of our business and the implementation of significant
cost cutting measures such as downsizing and exiting certain
operations, domestically and/or abroad; the impact of uncertainty
as a result of doing business in China and Europe; the volatility
of or inability to access the capital markets, including due to
macroeconomic factors, geopolitical tensions or the outbreak of
hostilities or war; changes in the retail landscape, including our
ability to maintain and expand our distribution footprint, the
timing and level of trade and promotion discounts, our ability to
maintain and grow market share and increase household penetration,
repeat purchases, buying rates (amount spent per buyer) and
purchase frequency, and our ability to maintain and increase sales
velocity of our products; changes in the foodservice landscape,
including the timing and level of marketing and other financial
incentives to assist in the promotion of our products, our ability
to maintain and grow market share and attract and retain new
foodservice customers or retain existing foodservice customers, and
our ability to introduce and sustain offering of our products on
menus; the timing and success of distribution expansion and new
product introductions in increasing revenues and market share; the
timing and success of strategic Quick Service Restaurant
partnership launches and limited time offerings resulting in
permanent menu items; foreign exchange rate fluctuations; our
ability to identify and execute cost-down initiatives intended to
achieve price parity with animal protein; the effectiveness of our
business systems and processes; our estimates of the size of our
market opportunities and ability to accurately forecast market
growth; our ability to effectively expand or optimize our
manufacturing and production capacity, including effectively
managing capacity for specific products with shifts in demand;
risks associated with underutilization of capacity which could give
rise to increased costs per unit, underutilization fees and
termination fees to exit certain supply chain arrangements and/or
the write-off of certain equipment; our inability to sell our
inventory in a timely manner requiring us to sell our products
through liquidation channels at lower prices, write-down or
write-off obsolete inventory, or increase inventory reserves; our
ability to accurately forecast our future results of operations and
financial goals or targets, including fluctuations in demand for
our products and in the plant-based meat category generally and
increased competition; our ability to accurately forecast demand
for our products and manage our inventory, including the impact of
customer orders ahead of holidays and shelf reset activities,
customer and distributor changes and buying patterns, such as
reductions in targeted inventory levels, and supply chain and labor
disruptions, including due to the impact of cyber incidents at
suppliers and vendors; our operational effectiveness and ability to
fulfill orders in full and on time; variations in product selling
prices and costs, and the mix of products sold; our ability to
successfully enter new geographic markets, manage our international
expansion and comply with any applicable laws and regulations,
including risks associated with doing business in foreign
countries, substantial investments in our manufacturing operations
in China and the Netherlands, and our ability to comply with the
U.S. Foreign Corrupt Practices Act or other anti-corruption laws;
the effects of global outbreaks of pandemics (such as the COVID-19
pandemic), epidemics or other public health crises, or fear of such
crises; the success of our marketing initiatives and the ability to
maintain and grow our brand awareness, maintain, protect and
enhance our brand, attract and retain new customers and maintain
and grow our market share, particularly while we are seeking to
reduce our operating expenses; our ability to attract, maintain and
effectively expand our relationships with key strategic foodservice
partners; our ability to attract and retain our suppliers,
distributors, co-manufacturers and customers; our ability to
procure sufficient high-quality raw materials at competitive prices
to manufacture our products; the availability of pea and other
proteins that meet our standards; our ability to diversify the
protein sources used for our products; our ability to differentiate
and continuously create innovative products, respond to competitive
innovation and achieve speed-to-market; our ability to successfully
execute our strategic initiatives; the volatility associated with
ingredient, packaging, transportation and other input costs; real
or perceived quality or health issues with our products or other
issues that adversely affect our brand and reputation; our ability
to keep pace with technological changes impacting the development
of our products and implementation of our business needs;
significant disruption in, or breach in security of our or our
suppliers’ or vendors’ information technology systems, and
resultant interruptions in service and any related impact on our
reputation, including data privacy, and any potential impact on our
supply chain, including on customer demand, order fulfillment and
lost sales, and the resulting timing and/or amount of net revenues
recognized; the ability of our transportation providers to ship and
deliver our products in a timely and cost effective manner; senior
management and key personnel changes, the attraction, training and
retention of qualified employees and key personnel and our ability
to maintain our company culture; the effects of organizational
changes including reductions-in-force and realignment of reporting
structures; the success of operations conducted by joint ventures
where we share ownership and management of a company with one or
more parties who may not have the same goals, strategies or
priorities as we do and where we do not receive all of the
financial benefit; the timing, impact and success of restructuring
certain contracts and operating activities related to Beyond Meat
Jerky and our assumption of distribution responsibilities for
Beyond Meat Jerky; risks related to use of a professional employer
organization to administer human resources, payroll and employee
benefits functions for certain of our international employees, and
use of certain third party service providers for the performance of
several business operations including payroll and human capital
management services; the impact of potential workplace hazards; the
effects of natural or man-made catastrophic or severe weather
events, including events brought on by climate change, particularly
involving our or any of our co-manufacturers’ manufacturing
facilities, our suppliers’ facilities, or any other vital aspects
of our supply chain; the impact of marketing campaigns aimed at
generating negative publicity regarding our products, brand and the
plant-based meat category, including regarding the nutritional
value of our products; the effectiveness of our internal controls;
accounting estimates based on judgment and assumptions that may
differ from actual results; the requirements of being a public
company and effects of increased administrative costs related to
compliance and reporting obligations; the sufficiency of our cash
and cash equivalents to meet our liquidity needs, including risks
associated with adverse developments affecting the financial
services industry; our significant indebtedness and ability to
repay such indebtedness; risks related to our debt, including
limitations on our cash flow from operations and our ability to
satisfy our obligations under the convertible senior notes; our
ability to raise the funds necessary to repurchase the convertible
senior notes for cash, under certain circumstances, or to pay any
cash amounts due upon conversion; provisions in the indenture
governing the convertible senior notes delaying or preventing an
otherwise beneficial takeover of us; and any adverse impact on our
reported financial condition and results from the accounting
methods for the convertible senior notes; estimates of our
expenses, future revenues, capital expenditures, capital
requirements and our needs for additional financing; our ability to
meet our obligations under our El Segundo Campus and Innovation
Center lease, the timing of occupancy and completion of the
build-out of our space, cost overruns, delays, workforce reductions
or other cost-reduction initiatives on our space demands; our
ability to meet our obligations under leases for our corporate
offices, manufacturing facilities and warehouses, or risks related
to excess space capacity under our leases due to workforce
reductions or other cost-reduction initiatives; changes in laws and
government regulation affecting our business, including the U.S.
Food and Drug Administration and the U.S. Federal Trade Commission
governmental regulation, and state, local and foreign regulation;
new or pending legislation, or changes in laws, regulations or
policies of governmental agencies or regulators, both in the U.S.
and abroad, affecting plant-based meat, the labeling or naming of
our products, or our brand name or logo; the failure of
acquisitions and other investments to be efficiently integrated and
produce the results we anticipate; risks inherent in investment in
real estate; the financial condition of, and our relationships with
our suppliers, co-manufacturers, distributors, retailers, and
foodservice customers, and their future decisions regarding their
relationships with us; our ability and the ability of our suppliers
and co-manufacturers to comply with food safety, environmental or
other laws or regulations; seasonality, including increased levels
of purchasing by customers ahead of holidays, customer shelf reset
activity and the timing of product restocking by our retail
customers; economic conditions and the impact on consumer spending;
the impact of increased scrutiny from a variety of stakeholders,
institutional investors and governmental bodies on environmental,
social and governance (“ESG”) practices, including expanding
mandatory and voluntary reporting, diligence and disclosure on ESG
matters; the outcomes of legal or administrative proceedings, or
new legal or administrative proceedings filed against us; our, our
suppliers’ and our co-manufacturers’ ability to protect our
proprietary technology, intellectual property and trade secrets
adequately; the impact of tariffs and trade wars; the impact of
changes in tax laws; and the risks discussed under the heading
“Risk Factors” in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2022 filed with the SEC on March 1, 2023,
the Company’s Quarterly Report on Form 10-Q for the fiscal quarter
ended April 1, 2023 filed with the SEC on May 10, 2023, and the
Company’s Quarterly Report on Form 10-Q for the fiscal quarter
ended July 1, 2023 to be filed with the SEC, as well as other
factors described from time to time in the Company's filings with
the SEC. All forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their
entirety by the cautionary statements set forth above. Such
forward-looking statements are made only as of the date of this
release. Beyond Meat undertakes no obligation to publicly update or
revise any forward-looking statement because of new information,
future events, changes in assumptions or otherwise, except to the
extent required by applicable laws. If we do update one or more
forward-looking statements, no inference should be made that we
will make additional updates with respect to those or other
forward-looking statements.
Non-GAAP Financial Measures
The Company refers to certain financial measures that are not
recognized under U.S. generally accepted accounting principles
(GAAP) in this press release, including: Adjusted EBITDA and
Adjusted EBITDA as a % of net revenues. See “Non-GAAP Financial
Measures” below for additional information and reconciliations of
such non-GAAP financial measures.
Availability of Information on Beyond Meat’s Website and
Social Media Channels
Investors and others should note that Beyond Meat routinely
announces material information to investors and the marketplace
using SEC filings, press releases, public conference calls,
webcasts and the Beyond Meat Investor Relations website. We also
intend to use certain social media channels as a means of
disclosing information about us and our products to consumers, our
customers, investors and the public (e.g., @BeyondMeat,
#BeyondBurger and #GoBeyond on Facebook, Instagram and Twitter, and
@BeyondMeatOfficial on TikTok). The information posted on social
media channels is not incorporated by reference in this press
release or in any other report or document we file with the SEC.
While not all of the information that the Company posts to the
Beyond Meat Investor Relations website or to social media accounts
is of a material nature, some information could be deemed to be
material. Accordingly, the Company encourages investors, the media
and others interested in Beyond Meat to review the information that
it shares at the “Investors” link located at the bottom of the
Company’s webpage at
https://investors.beyondmeat.com/investor-relations and to sign up
for and regularly follow the Company’s social media accounts. Users
may automatically receive email alerts and other information about
the Company when enrolling an email address by visiting “Request
Email Alerts” in the “Investors” section of Beyond Meat’s website
at https://investors.beyondmeat.com/investor-relations.
ContactsMedia:Shira
Zackaishira.zackai@beyondmeat.com
Investors:Raphael
Grossbeyondmeat@icrinc.com
BEYOND MEAT, INC. AND SUBSIDIARIES |
Condensed Consolidated Statements of
Operations |
(In thousands, except share and per share
data) |
(unaudited) |
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
July 1,2023 |
|
July 2,2022 |
|
July 1,2023 |
|
July 2,2022 |
Net revenues |
|
$ |
102,149 |
|
|
$ |
147,040 |
|
|
$ |
194,385 |
|
|
$ |
256,495 |
|
Cost of goods
sold |
|
|
99,876 |
|
|
|
153,202 |
|
|
|
185,927 |
|
|
|
262,467 |
|
Gross profit
(loss) |
|
|
2,273 |
|
|
|
(6,162 |
) |
|
|
8,458 |
|
|
|
(5,972 |
) |
|
|
|
|
|
|
|
|
|
Research and development
expenses |
|
|
8,773 |
|
|
|
16,202 |
|
|
|
21,205 |
|
|
|
35,880 |
|
Selling, general and administrative
expenses |
|
|
47,455 |
|
|
|
63,015 |
|
|
|
99,355 |
|
|
|
138,129 |
|
Restructuring
expenses |
|
|
(201 |
) |
|
|
4,302 |
|
|
|
(627 |
) |
|
|
7,328 |
|
Total operating
expenses |
|
|
56,027 |
|
|
|
83,519 |
|
|
|
119,933 |
|
|
|
181,337 |
|
Loss from
operations |
|
|
(53,754 |
) |
|
|
(89,681 |
) |
|
|
(111,475 |
) |
|
|
(187,309 |
) |
Other (expense) income,
net: |
|
|
|
|
|
|
|
|
Interest
expense |
|
|
(989 |
) |
|
|
(1,108 |
) |
|
|
(1,978 |
) |
|
|
(2,133 |
) |
Other,
net |
|
|
1,746 |
|
|
|
(4,902 |
) |
|
|
4,654 |
|
|
|
(6,026 |
) |
Total other income (expense),
net |
|
|
757 |
|
|
|
(6,010 |
) |
|
|
2,676 |
|
|
|
(8,159 |
) |
Loss before
taxes |
|
|
(52,997 |
) |
|
|
(95,691 |
) |
|
|
(108,799 |
) |
|
|
(195,468 |
) |
Income tax
expense |
|
|
5 |
|
|
|
11 |
|
|
|
5 |
|
|
|
21 |
|
Equity in losses of unconsolidated joint
venture |
|
|
503 |
|
|
|
1,432 |
|
|
|
3,738 |
|
|
|
2,103 |
|
Net
loss |
|
$ |
(53,505 |
) |
|
$ |
(97,134 |
) |
|
$ |
(112,542 |
) |
|
$ |
(197,592 |
) |
Net loss per share available to common stockholders—basic and
diluted |
|
$ |
(0.83 |
) |
|
$ |
(1.53 |
) |
|
$ |
(1.76 |
) |
|
$ |
(3.11 |
) |
Weighted average common shares outstanding—basic and
diluted |
|
|
64,246,048 |
|
|
|
63,573,658 |
|
|
|
64,119,258 |
|
|
|
63,519,444 |
|
BEYOND MEAT, INC. AND SUBSIDIARIES |
Condensed Consolidated Balance Sheets |
(In thousands, except share and per share
data) |
(unaudited) |
|
July 1,2023 |
|
December 31,2022 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash
equivalents |
$ |
210,781 |
|
|
$ |
309,922 |
|
Restricted cash,
current |
|
2,552 |
|
|
|
— |
|
Accounts receivable,
net |
|
50,821 |
|
|
|
34,198 |
|
Inventory |
|
207,138 |
|
|
|
235,696 |
|
Prepaid expenses and other current
assets |
|
26,051 |
|
|
|
20,700 |
|
Assets held for
sale |
|
98 |
|
|
|
5,943 |
|
Total current
assets |
$ |
497,441 |
|
|
$ |
606,459 |
|
Restricted cash,
non-current |
|
12,600 |
|
|
|
12,627 |
|
Property, plant, and
equipment, net |
|
250,335 |
|
|
|
257,002 |
|
Operating lease right-of-use
assets |
|
136,264 |
|
|
|
87,595 |
|
Prepaid lease costs,
non-current |
|
60,794 |
|
|
|
85,472 |
|
Other non-current assets,
net |
|
9,314 |
|
|
|
10,744 |
|
Investment in unconsolidated
joint venture |
|
1,837 |
|
|
|
2,325 |
|
Total assets |
$ |
968,585 |
|
|
$ |
1,062,224 |
|
Liabilities and stockholders’ (deficit) equity: |
|
|
|
Current liabilities: |
|
|
|
Accounts
payable |
$ |
39,508 |
|
|
$ |
55,300 |
|
Current portion of operating lease
liabilities |
|
3,127 |
|
|
|
3,812 |
|
Accrued expenses and other current
liabilities |
|
12,009 |
|
|
|
16,729 |
|
Total current
liabilities |
$ |
54,644 |
|
|
$ |
75,841 |
|
Long-term liabilities: |
|
|
|
Convertible senior notes,
net |
$ |
1,135,575 |
|
|
$ |
1,133,608 |
|
Operating lease liabilities, net of current
portion |
|
77,122 |
|
|
|
55,854 |
|
Finance lease obligations and other long-term
liabilities |
|
362 |
|
|
|
469 |
|
Total long-term
liabilities |
$ |
1,213,059 |
|
|
$ |
1,189,931 |
|
Commitments and
Contingencies |
|
|
|
Stockholders’ (deficit) equity: |
|
|
|
Preferred stock, par value $0.0001 per share—500,000 shares
authorized, none issued and
outstanding |
$ |
— |
|
|
$ |
— |
|
Common stock, par value $0.0001 per share—500,000,000 shares
authorized; 64,318,246 and 63,773,982 shares issued and outstanding
at July 1, 2023 and December 31, 2022,
respectively |
|
6 |
|
|
|
6 |
|
Additional paid-in
capital |
|
561,484 |
|
|
|
544,357 |
|
Accumulated
deficit |
|
(855,651 |
) |
|
|
(743,109 |
) |
Accumulated other
comprehensive
loss |
|
(4,957 |
) |
|
|
(4,802 |
) |
Total stockholders’
deficit |
$ |
(299,118 |
) |
|
$ |
(203,548 |
) |
Total liabilities and stockholders’ (deficit)
equity |
$ |
968,585 |
|
|
$ |
1,062,224 |
|
|
|
|
|
BEYOND MEAT, INC. AND SUBSIDIARIES |
Condensed Consolidated Statements of Cash
Flows |
(In thousands) |
(unaudited) |
|
|
Six Months Ended |
|
|
July 1,2023 |
|
July 2,2022 |
Cash flows from operating
activities: |
|
|
|
|
Net loss |
|
$ |
(112,542 |
) |
|
$ |
(197,592 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
Depreciation and
amortization |
|
|
11,928 |
|
|
|
14,820 |
|
Non-cash lease
expense |
|
|
3,613 |
|
|
|
2,091 |
|
Share-based compensation
expense |
|
|
17,313 |
|
|
|
19,598 |
|
Loss on sale of fixed
assets |
|
|
3,804 |
|
|
|
400 |
|
Amortization of debt issuance
costs |
|
|
1,967 |
|
|
|
1,967 |
|
Equity in losses of unconsolidated joint
venture |
|
|
3,738 |
|
|
|
2,103 |
|
Unrealized gain on foreign currency transactions |
|
|
213 |
|
|
|
7,076 |
|
Net change in operating assets and
liabilities: |
|
|
|
|
Accounts
receivable |
|
|
(16,462 |
) |
|
|
(30,158 |
) |
Inventories |
|
|
28,975 |
|
|
|
(17,036 |
) |
Prepaid expenses and other
assets |
|
|
(4,705 |
) |
|
|
(992 |
) |
Accounts
payable |
|
|
(14,177 |
) |
|
|
(206 |
) |
Accrued expenses and other current
liabilities |
|
|
(4,852 |
) |
|
|
7,949 |
|
Prepaid lease costs,
non-current |
|
|
(4,593 |
) |
|
|
(43,651 |
) |
Operating lease
liabilities |
|
|
(2,556 |
) |
|
|
(2,059 |
) |
Net cash used in operating
activities |
|
$ |
(88,336 |
) |
|
$ |
(235,690 |
) |
Cash flows from investing
activities: |
|
|
|
|
Purchases of property, plant and
equipment |
|
$ |
(7,139 |
) |
|
$ |
(41,965 |
) |
Proceeds from sale of fixed
assets |
|
|
2,316 |
|
|
|
— |
|
Payments for investment in joint
venture |
|
|
(3,250 |
) |
|
|
— |
|
Return of security
deposits |
|
|
— |
|
|
|
(23 |
) |
Net cash used in investing
activities |
|
$ |
(8,073 |
) |
|
$ |
(41,988 |
) |
Cash flows from financing
activities: |
|
|
|
|
Principal payments under finance lease
obligations |
|
$ |
(115 |
) |
|
$ |
(43 |
) |
Proceeds from exercise of stock
options |
|
|
152 |
|
|
|
1,309 |
|
Payments of minimum withholding taxes on net share settlement of
equity awards |
|
|
(337 |
) |
|
|
(769 |
) |
Net cash (used in) provided by financing
activities |
|
$ |
(300 |
) |
|
$ |
497 |
|
Net decrease in cash, cash
equivalents and restricted
cash |
|
$ |
(96,709 |
) |
|
$ |
(277,181 |
) |
Effect of exchange rate changes on
cash |
|
|
94 |
|
|
|
(1,439 |
) |
Cash, cash equivalents and restricted cash at the beginning of the
period |
|
|
322,548 |
|
|
|
733,294 |
|
Cash, cash equivalents and restricted cash at the end of the
period |
|
$ |
225,933 |
|
|
$ |
454,674 |
|
Supplemental disclosures
of cash flow information: |
|
|
|
|
Cash paid during the period for: |
|
|
|
|
Interest |
|
$ |
— |
|
|
$ |
153 |
|
Taxes |
|
$ |
9 |
|
|
$ |
21 |
|
Non-cash investing and financing activities: |
|
|
|
|
Non-cash additions to property, plant and
equipment |
|
$ |
1,769 |
|
|
$ |
12,430 |
|
Reclassification of pre-paid lease costs to operating lease
right-of-use
assets |
|
$ |
29,270 |
|
|
$ |
— |
|
Non-cash additions to financing
leases |
|
$ |
109 |
|
|
$ |
115 |
|
Operating lease right-of-use assets obtained in exchange for lease
liabilities |
|
$ |
36,400 |
|
|
$ |
748 |
|
Non-GAAP Financial Measures
Beyond Meat uses the non-GAAP financial measures
set forth below in assessing its operating performance and in its
financial communications. Management believes these non-GAAP
financial measures provide useful additional information to
investors about current trends in the Company's operations and are
useful for period-over-period comparisons of operations. In
addition, management uses these non-GAAP financial measures to
assess operating performance and for business planning purposes.
Management also believes these measures are widely used by
investors, securities analysts, rating agencies and other parties
in evaluating companies in our industry as a measure of our
operational performance. These non-GAAP financial measures should
not be considered in isolation or as substitutes for the comparable
GAAP measures. In addition, these non-GAAP financial measures may
not be computed in the same manner as similarly titled measures
used by other companies.
“Adjusted EBITDA” is defined as net loss adjusted to exclude,
when applicable, income tax expense, interest expense, depreciation
and amortization expense, restructuring expenses, share-based
compensation expense, and Other, net, including interest income,
and foreign currency transaction gains and losses.
“Adjusted EBITDA as a % of net revenues” is defined as Adjusted
EBITDA divided by net revenues.
There are a number of limitations related to the use of Adjusted
EBITDA and Adjusted EBITDA as a % of net revenues rather than their
most directly comparable GAAP measures. Some of these limitations
are:
- 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 increasing our
cash requirements;
- Adjusted EBITDA does not reflect interest expense, or the cash
required to service our debt, which reduces cash available to
us;
- Adjusted EBITDA does not reflect income tax payments that
reduce cash available to us;
- Adjusted EBITDA does not reflect restructuring expenses that
reduce cash available to us;
- Adjusted EBITDA does not reflect share-based compensation
expense and therefore does not include all of our compensation
costs;
- Adjusted EBITDA does not reflect Other, net, including interest
income and foreign currency transaction gains and losses, that may
increase or decrease cash available to us; and
- other companies, including companies in our industry, may
calculate Adjusted EBITDA differently, which reduces its usefulness
as a comparative measure.
The following table presents the reconciliation of Adjusted
EBITDA to its most comparable GAAP measure, net loss, as reported
(unaudited):
|
|
Three Months Ended |
|
Six Months Ended |
(in
thousands) |
|
July 1,2023 |
|
July 2,2022 |
|
July 1,2023 |
|
July 2,2022 |
Net loss, as
reported |
|
$ |
(53,505 |
) |
|
$ |
(97,134 |
) |
|
$ |
(112,542 |
) |
|
$ |
(197,592 |
) |
Income tax
expense |
|
|
5 |
|
|
|
11 |
|
|
|
5 |
|
|
|
21 |
|
Interest
expense |
|
|
989 |
|
|
|
1,108 |
|
|
|
1,978 |
|
|
|
2,133 |
|
Depreciation and amortization
expense |
|
|
5,879 |
|
|
|
7,729 |
|
|
|
11,928 |
|
|
|
14,820 |
|
Restructuring
expenses(1) |
|
|
(201 |
) |
|
|
4,302 |
|
|
|
(627 |
) |
|
|
7,328 |
|
Share-based compensation
expense |
|
|
7,748 |
|
|
|
10,306 |
|
|
|
17,313 |
|
|
|
19,598 |
|
Other,
net(2)(3) |
|
|
(1,746 |
) |
|
|
4,902 |
|
|
|
(4,654 |
) |
|
|
6,026 |
|
Adjusted
EBITDA |
|
$ |
(40,831 |
) |
|
$ |
(68,776 |
) |
|
$ |
(86,599 |
) |
|
$ |
(147,666 |
) |
|
|
|
|
|
|
|
|
|
Net loss as a % of net
revenues |
|
(52.4 |
)% |
|
(66.1 |
)% |
|
(57.9 |
)% |
|
(77.0 |
)% |
Adjusted EBITDA as a % of net
revenues |
|
(40.0 |
)% |
|
(46.8 |
)% |
|
(44.6 |
)% |
|
(57.6 |
)% |
____________
(1 |
) |
Primarily comprised of legal and
other expenses associated with the dispute with a co-manufacturer
with whom an exclusive supply agreement was terminated in May 2017.
On October 18, 2022, the parties to this dispute entered into a
confidential written settlement agreement and mutual release,
related to this matter. In the three and six months ended
July 1, 2023, we recorded a credit of $(0.2) million and
$(0.6) million, respectively, in restructuring expenses,
primarily driven by a reversal of certain accruals. |
(2 |
) |
Includes $(1.0) million and
$(0.7) million in net foreign currency transaction losses in the
three and six months ended July 1, 2023, respectively.
Includes $(5.5) million and $(6.6) million in net foreign currency
transaction losses in the three and six months ended July 2,
2022, respectively. |
(3 |
) |
Includes $2.9 million and $5.7
million in interest income in the three and six months ended
July 1, 2023, respectively. Includes $0.6 million and $0.7
million in interest income in the three and six months ended
July 2, 2022, respectively. |
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