Beyond Meat, Inc. (NASDAQ: BYND) (“Beyond Meat” or “the Company”)
provided a business update today.
Select Third Quarter 2023 Financial
Results
The Company is providing the following select
third quarter financial results.
- Net revenues are expected to be
approximately $75 million.
- Gross profit is expected to be a
loss of approximately $7 million to $8 million.
- The Company is expected to achieve
positive free cash flow, defined as cash flows from operating
activities less capital expenditures, of approximately $7.6 million
in the third quarter of 2023. While this milestone reflects ongoing
measures the Company is taking to reduce cash consumption,
management does not expect to sustain free cash flow positive
operations in the fourth quarter of 2023.
Beyond Meat President and CEO Ethan Brown
commented, “We anticipated a modest return to growth in the third
quarter of 2023 that did not occur, reflecting further
sector-specific and consumer headwinds. Even as we implement
measures to address those headwinds that are within our sphere of
influence, we intend to pursue a further, sizable reduction of
operating expenses to improve our cost structure.”
Brown added, “We intend to pursue five main
actions to improve our cost structure and overall operating
performance. One, we are executing an approximate 19% reduction in
our global non-production workforce, an immediate step in a broader
program to reduce expenses; two, we are reviewing our pricing
strategy to support gross margin expansion; three, we are
continuing to utilize inventory management to reduce working
capital; four, we are intensifying focus on channels and
geographies that are exhibiting revenue growth; and five, in U.S.
retail, we are using our portfolio and marketing to directly
counter misinformation about our products and category.”
Relative to its previous expectation of modest
year-over-year top-line growth in the third quarter of 2023, the
Company believes net revenues in the quarter were primarily
impacted by:
- Weaker than expected sales volumes
in U.S. retail and U.S. foodservice channels, primarily reflecting
ongoing and further demand softness in the plant-based meat
category;
- Lower than anticipated promotional
effectiveness, which was exacerbated by flat fee promotional
programs that did not deliver the anticipated volume lifts;
and
- Unfavorable changes in product
sales mix, primarily reflecting weaker than expected sales of the
Company’s core products, namely, Beyond Burger, Beyond Beef, and
Beyond Sausage, relative to certain non-core products, including
Beyond Steak, Beyond Chicken Tenders, Beyond Popcorn Chicken, and
Beyond Chicken Nuggets.
Preliminary results remain subject to the
completion of quarter-end accounting procedures and adjustments and
are subject to change.
Revision to 2023 Full Year
Outlook
As a result of the softer than anticipated third
quarter results and the Company’s updated expectations for the
balance of the year, the Company is revising the following key
elements of its 2023 full year outlook.
- Net revenues are now expected to be
in the range of $330 million to $340 million, representing a
decrease of approximately 21% to 19% compared to 2022.
- Gross profit for the full year is
now expected to be approximately breakeven.
- The Company continues to expect
operating expenses to be $245 million or less, before one-time
separation costs and non-cash savings related to previously
granted, unvested stock-based compensation associated with the
Company’s reduction in force.
- Capital expenditures are now
expected to be in the range of $10 million to $15 million.
Company is Initiating a Global
Operations Review; Executes Further Reduction in Force
To further reduce operating expenses, the
Company is initiating a review of its global operations, narrowing
its commercial focus to certain growth opportunities, and
accelerating activities that prioritize gross margin expansion and
cash generation. These efforts include the potential exit of select
product lines; changes to the Company’s pricing architecture within
certain channels; accelerated, cash-accretive inventory reduction
initiatives; further optimization of the Company’s manufacturing
capacity and real estate footprint; and a review and potential
restructuring of the Company’s operations in China.
In addition, the Company is further reducing its
current workforce by approximately 65 employees, representing
approximately 19% of the Company’s global non-production workforce
(or approximately 8% of the Company’s total global workforce). In
aggregate, in 2024, the reduction in force, combined with the
elimination of certain open positions, is expected to result in
approximately $9.5 million to $10.5 million in cash operating
expense savings, and an additional approximately $1.0 million to
$2.0 million in non-cash savings related to previously granted,
unvested stock-based compensation which would have vested in 2024.
The Company currently estimates that it will incur one-time cash
charges of approximately $2.0 million to $2.5 million in connection
with the reduction in force, primarily consisting of notice period
and severance payments, employee benefits, and related costs. The
Company expects that the majority of these charges will be incurred
in the fourth quarter of 2023, subject to local law and
consultation requirements, which may extend the process beyond the
end of 2023 in certain countries. The charges the Company expects
to incur are subject to assumptions, including local law
requirements, and actual charges may differ from the estimate
disclosed above.
Third Quarter Financial Results and
Earnings Conference Call on November 8, 2023
The Company will report full financial results
for the third quarter ended September 30, 2023 and provide
additional information about its outlook for the remainder of 2023
on Wednesday, November 8, 2023 after market close and hold a
conference call at 5:00 p.m. Eastern, 2:00 p.m. Pacific that same
day.
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 = 7573328.
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 third quarter results and 2023
full year outlook, global operations review and efforts to improve
its cost structure, cost-reduction initiatives, and expected
charges and savings related to its workforce reduction. The charges
associated with the reduction in force may be greater than
anticipated, completion of the reduction in force may take longer
than anticipated, the Company may be unable to realize the
contemplated benefits in connection with the global operations
review and efforts to improve its cost structure, workforce
reduction, and other potential cost-reduction initiatives, and the
global operations review, workforce reduction, cost-reduction
initiatives and cost structure improvement measures may have an
adverse impact on the Company’s performance.
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 the global operations review, cost structure improvement
measures, cost-reduction initiatives, and workforce reductions; 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 July 1, 2023 filed with the SEC on August 9, 2023, and the
Company’s Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 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.
ContactsMedia:Shira Zackai
shira.zackai@beyondmeat.com
Investors:Raphael Grossbeyondmeat@icrinc.com
Beyond Meat (NASDAQ:BYND)
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