Beyond Meat, Inc. (NASDAQ: BYND) (“Beyond Meat” or “the Company”),
a leader in plant-based meat, today reported financial results for
its third quarter ended September 30, 2023.
Third Quarter 2023 Financial
Highlights1
- Net revenues were $75.3 million, a
decrease of 8.7% year-over-year.
- Gross profit was a loss of $7.3
million, or gross margin of -9.6%, compared to a loss of $14.8
million, or gross margin of -18.0%, in the year-ago period.
- Gross profit and gross margin were
positively impacted by lower manufacturing costs, excluding
depreciation, lower materials costs, lower depreciation and lower
inventory reserves per pound, partially offset by lower net
revenues 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 $4.4 million, or
5.9 percentage points of gross margin, relative to depreciation
expense utilizing the Company’s previous estimated useful
lives.
- Net loss was $70.5 million, or $1.09
per common share, compared to net loss of $101.7 million, or $1.60
per common share, in the year-ago period.
- Adjusted EBITDA was a loss of $57.5
million, or -76.3% of net revenues, compared to an Adjusted EBITDA
loss of $73.8 million, or -89.5% 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, “Though we
are encouraged by pockets of growth, particularly in the EU where
we saw double digit gains in net revenues on a year-over-year
basis, we are disappointed by our overall results as we continue to
experience worsening sector-specific and broader consumer
headwinds. As we shared last week, we are conducting a review of
our global operations for purposes of further and significantly
reducing our operating expense base as we seek to accelerate our
transition to a sustainable and, ultimately, profitable business.
And while we expect current headwinds to persist in the coming
quarters, we have confidence in the long-term trajectory of our
business, its central relevance to the intensifying health, climate
and natural resource challenges facing our global community, and
our ability to emerge as a stronger, leaner organization as a
result of the decisive measures we are undertaking to fit the
current macroeconomic reality and business environment.”
Third Quarter 2023
Net revenues decreased 8.7% to $75.3 million in the third
quarter of 2023, compared to $82.5 million in the year-ago period.
The decrease in net revenues was driven by an 11.6% decrease in net
revenue per pound, partially offset by a 3.5% increase in volume of
products sold. The decrease in net revenue per pound was primarily
driven by increased trade discounts, especially in the U.S. retail
channel, and changes in product sales mix, partially offset by
favorable changes in foreign currency exchange rates. The increase
in volume of products sold was primarily driven by sales to
international retail and foodservice channels, partially offset by
a decrease in volume of products sold in U.S. retail and
foodservice channels due to weak category demand.
U.S. retail channel net revenues decreased 33.9% to $30.5
million in the third quarter of 2023, compared to $46.2 million in
the year-ago period, primarily due to an 18.8% decrease in volume
of products sold, primarily reflecting weak category demand, and an
18.6% decrease in net revenue per pound, primarily resulting from
higher trade discounts, changes in pricing and changes in product
sales mix.
U.S. foodservice channel net revenues decreased 21.6% to $12.5
million in the third quarter of 2023, compared to $16.0 million in
the year-ago period, primarily due to a 37.7% decrease in volume of
products sold, primarily reflecting the cycling of sales to a large
Quick Service Restaurant (“QSR”) customer for a limited time
offering in the year-ago period which did not repeat in the third
quarter of 2023, partially offset by a 26.0% increase in net
revenue per pound, primarily driven by changes in product sales
mix.
International retail channel net revenues increased 38.8% to
$14.2 million in the third quarter of 2023, compared to $10.2
million in the year-ago period, primarily due to a 42.8% increase
in volume of products sold, primarily reflecting strong sales from
new product introductions and the lapping of a weak year-ago
comparison, partially offset by a 2.8% decrease in net revenue per
pound. The decrease in net revenue per pound was primarily due to
higher trade discounts and changes in product sales mix, partially
offset by favorable changes in foreign currency exchange rates.
International foodservice channel net revenues increased 78.7%
to $18.1 million in the third quarter of 2023, compared to $10.1
million in the year-ago period, primarily due to a 90.9% increase
in volume of products sold, primarily reflecting strong sales to a
large QSR customer in the EU, partially offset by a 6.3% decrease
in net revenue per pound. The decrease in net revenue per pound was
primarily due to higher trade discounts and changes in pricing,
partially offset by favorable changes in foreign currency 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) |
September 30, 2023 |
|
October 1, 2022 |
|
Amount |
|
% |
U.S.: |
|
|
|
|
|
|
|
Retail |
$ |
30,518 |
|
$ |
46,177 |
|
$ |
(15,659 |
) |
|
(33.9 |
)% |
Foodservice |
|
12,535 |
|
|
15,994 |
|
|
(3,459 |
) |
|
(21.6 |
)% |
U.S. net revenues |
|
43,053 |
|
|
62,171 |
|
|
(19,118 |
) |
|
(30.8 |
)% |
International: |
|
|
|
|
|
|
|
Retail |
|
14,153 |
|
|
10,195 |
|
|
3,958 |
|
|
38.8 |
% |
Foodservice |
|
18,106 |
|
|
10,134 |
|
|
7,972 |
|
|
78.7 |
% |
International net revenues |
|
32,259 |
|
|
20,329 |
|
|
11,930 |
|
|
58.7 |
% |
Net revenues |
$ |
75,312 |
|
$ |
82,500 |
|
$ |
(7,188 |
) |
|
(8.7 |
)% |
|
Nine Months Ended |
|
Change |
(in
thousands) |
September 30, 2023 |
|
October 1, 2022 |
|
Amount |
|
% |
U.S.: |
|
|
|
|
|
|
|
Retail |
$ |
123,167 |
|
$ |
193,298 |
|
$ |
(70,131 |
) |
|
(36.3 |
)% |
Foodservice |
|
39,974 |
|
|
54,876 |
|
|
(14,902 |
) |
|
(27.2 |
)% |
U.S. net revenues |
|
163,141 |
|
|
248,174 |
|
|
(85,033 |
) |
|
(34.3 |
)% |
International: |
|
|
|
|
|
|
|
Retail |
|
48,437 |
|
|
50,024 |
|
|
(1,587 |
) |
|
(3.2 |
)% |
Foodservice |
|
58,119 |
|
|
40,797 |
|
|
17,322 |
|
|
42.5 |
% |
International net revenues |
|
106,556 |
|
|
90,821 |
|
|
15,735 |
|
|
17.3 |
% |
Net revenues |
$ |
269,697 |
|
$ |
338,995 |
|
$ |
(69,298 |
) |
|
(20.4 |
)% |
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 |
|
Nine Months Ended |
|
Change |
(in
thousands) |
September 30,2023 |
|
October 1,2022 |
|
Amount |
|
% |
|
September 30,2023 |
|
October 1,2022 |
|
Amount |
|
% |
U.S.: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail |
7,199 |
|
8,861 |
|
(1,662 |
) |
|
(18.8 |
)% |
|
26,064 |
|
37,371 |
|
(11,307 |
) |
|
(30.3 |
)% |
Foodservice |
2,104 |
|
3,378 |
|
(1,274 |
) |
|
(37.7 |
)% |
|
6,866 |
|
10,095 |
|
(3,229 |
) |
|
(32.0 |
)% |
International: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail |
3,375 |
|
2,364 |
|
1,011 |
|
|
42.8 |
% |
|
10,868 |
|
10,955 |
|
(87 |
) |
|
(0.8 |
)% |
Foodservice |
5,317 |
|
2,785 |
|
2,532 |
|
|
90.9 |
% |
|
16,864 |
|
10,408 |
|
6,456 |
|
|
62.0 |
% |
Volume of products sold |
17,995 |
|
17,388 |
|
607 |
|
|
3.5 |
% |
|
60,662 |
|
68,829 |
|
(8,167 |
) |
|
(11.9 |
)% |
Gross profit in the third quarter of 2023 was a loss of $7.3
million, or gross margin of -9.6%, compared to a loss of $14.8
million, or gross margin of -18.0%, in the year-ago period.
Compared to the year-ago period, gross profit and gross margin were
positively impacted by lower manufacturing costs, excluding
depreciation, lower materials costs, lower depreciation and lower
inventory reserves per pound, partially offset by lower net
revenues 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 $4.4 million, or
5.9 percentage points of gross margin, relative to depreciation
expense utilizing the Company’s previous estimated useful
lives.
Operating expenses were $62.4 million in the third quarter of
2023 compared to $74.9 million in the year-ago period. The decrease
in operating expenses was primarily due to reduced restructuring
expenses, reduced non-production headcount expenses, primarily as a
result of the reduction-in-force implemented in October 2022, lower
product donation expenses and decreased scale-up expenses,
partially offset by the write-off of an uncollectible note
receivable and higher consulting fees.
Loss from operations in the third quarter of 2023 was $69.6
million compared to $89.7 million in the year-ago period. The
decrease in loss from operations was primarily due to the
year-over-year improvement in gross profit and reduction in
operating expenses.
Total other expense, net, was $0.7 million in the third quarter
of 2023 compared to $3.2 million in the year-ago period. The
decrease in total other expense, net, was primarily due to lower
realized and unrealized foreign currency transaction losses and
higher interest income.
Net loss was $70.5 million in the third quarter of 2023 compared
to $101.7 million in the year-ago period. Net loss per common share
was $1.09 in the third quarter of 2023 compared to $1.60 in the
year-ago period. The reduction in net loss was primarily driven by
the reduction in loss from operations, the decrease in total other
expense, net, and an $8.6 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 $57.5 million, or -76.3% of net
revenues in the third quarter of 2023 compared to an Adjusted
EBITDA loss of $73.8 million, or -89.5% 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 $232.8 million and total outstanding debt was
$1.1 billion as of September 30, 2023. Net cash used in operating
activities was $79.3 million in the nine months ended September 30,
2023, compared to $270.3 million in the year-ago period. Capital
expenditures totaled $8.6 million in the nine months ended
September 30, 2023, compared to $60.0 million in the year-ago
period. Net cash used in investing activities was $9.3 million in
the nine months ended September 30, 2023, compared to $70.7 million
in the year-ago period. Net cash used in investing activities in
the nine months ended September 30, 2023 included $3.3 million in
investment in TPP that was previously committed, partially offset
by $2.5 million in proceeds from sales of certain fixed assets.
2023 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, 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 now expected to be approximately
breakeven.
- The Company continues to expect operating expenses to be
approximately $245 million or less, before one-time separation
costs and potential savings associated with the Company’s recent
reduction in force.
- Capital expenditures are now expected to be in the range of $10
million to $15 million.
- On November 2, 2023, the Company announced a reduction-in-force
affecting 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.
Total distribution points by channel
(unaudited):
The following table presents the approximate number of
distribution outlets by channel for the periods presented:
|
Q2 2022 |
|
Q3 2022 |
|
Q4 2022 |
|
Q1 2023 |
|
Q2 2023 |
|
Q3 2023 |
U.S.: |
|
|
|
|
|
|
|
|
|
|
|
Retail(1)(2) |
78,000 |
|
78,000 |
|
78,000 |
|
78,000 |
|
79,000 |
|
79,000 |
Foodservice |
41,000 |
|
42,000 |
|
43,000 |
|
42,000 |
|
41,000 |
|
42,000 |
International: |
|
|
|
|
|
|
|
|
|
|
|
Retail |
33,000 |
|
35,000 |
|
35,000 |
|
36,000 |
|
36,000 |
|
36,000 |
Foodservice |
31,000 |
|
33,000 |
|
34,000 |
|
35,000 |
|
34,000 |
|
26,000 |
Total distribution
points(2) |
183,000 |
|
188,000 |
|
190,000 |
|
191,000 |
|
190,000 |
|
183,000 |
___________
(1) |
Each of the
periods presented 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 Q3 2023. |
(2) |
The number of retail and foodservice outlets where Beyond Meat
branded products are available was derived from rolling 52-week
data as of September 2023. Such data does not reflect the Company’s
assumption of distribution for Beyond Meat Jerky in the fourth
quarter of 2023, which is expected to limit the Company’s
distribution reach for Beyond Meat Jerky and substantially reduce
the Company’s total number of U.S. retail distribution
outlets. |
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 =
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. 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 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, prolonged, weakening 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; a
continued decrease in demand, and the underlying factors negatively
impacting demand, in the plant-based meat category; risks and
uncertainties related to certain cost-reduction initiatives, cost
structure improvements, workforce reductions and executive
leadership changes, and the timing and success of reducing
operating expenses and achieving certain financial goals and cash
flow positive objectives; the timing and success of narrowing our
commercial focus to certain growth opportunities; accelerating
activities that prioritize gross margin expansion and cash
generation; changes to our pricing architecture within certain
channels; and accelerated, cash-accretive inventory reduction
initiatives; our ability to successfully execute our global
operations review, including the potential exit of select product
lines; further optimization of our manufacturing capacity and real
estate footprint; and a review and potential restructuring of our
operations in China; 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 inability to
properly manage and ultimately sell our inventory in a timely
manner, which could require us to sell our products through
liquidation channels at lower prices, write-down or write-off
obsolete inventory, or increase inventory reserves; any future
impairment charges, including due to any future changes in
estimates, judgments or assumptions, failure to achieve forecasted
operating results, weakness in the economic environment, changes in
market conditions and/or declines in our market capitalization; the
sufficiency of our cash and cash equivalents to meet our liquidity
needs, including estimates of our expenses, future revenues,
capital expenditures, capital requirements and our needs for
additional financing; 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; 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 further downsizing and exiting
certain operations, including product lines, domestically and/or
abroad; the impact of uncertainty as a result of doing business in
China and Europe, including as a result of our review and potential
restructuring of our operations in China; the volatility of or
inability to access the capital markets, including due to
macroeconomic factors, geopolitical tensions or the outbreak of
hostilities or war - for example, the war in Ukraine and the
escalating conflict in Israel, Gaza and surrounding areas; changes
in the retail landscape, including our ability to maintain and
expand our distribution footprint, the timing, success 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, success 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 QSR 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
optimize our manufacturing and production capacity, and real estate
footprint, including consolidating manufacturing facilities and
production lines, exiting co-manufacturing arrangements and
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,
termination fees and other costs to exit certain supply chain
arrangements and product lines and/or the write-down or write-off
of certain equipment; 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, the timing
and success of changes to our pricing architecture within certain
channels, and the mix of products sold; our ability to successfully
enter new geographic markets, manage our international business 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; our ability to
protect our brand against misinformation about our products and the
plant-based meat category, real or perceived quality or health
issues with our products, marketing campaigns aimed at generating
negative publicity regarding our products and the plant-based meat
category, including regarding the nutritional value of our
products, and other issues that could adversely affect our brand
and reputation; 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; 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
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; risks related to our debt, including our ability to
repay our indebtedness, 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; our
ability to meet our obligations under our El Segundo Campus and
Innovation Center (“Campus Headquarters”) lease, the timing of
occupancy and completion of the build-out of our space, cost
overruns, delays, the impact of workforce reductions or other
cost-reduction initiatives on our space demands, and the timing and
success of subleasing excess space at our Campus Headquarters; 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 and the impact of any non-compliance on
our operations, brand reputation, and ability to fulfill customer
orders in full and on time; 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; 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.
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 |
|
Nine Months Ended |
|
September 30, 2023 |
|
October 1, 2022 |
|
September 30, 2023 |
|
October 1, 2022 |
Net revenues |
$ |
75,312 |
|
|
$ |
82,500 |
|
|
$ |
269,697 |
|
|
$ |
338,995 |
|
Cost of goods sold |
|
82,566 |
|
|
|
97,340 |
|
|
|
268,493 |
|
|
|
359,807 |
|
Gross (loss) profit |
|
(7,254 |
) |
|
|
(14,840 |
) |
|
|
1,204 |
|
|
|
(20,812 |
) |
Research and development
expenses |
|
9,118 |
|
|
|
13,413 |
|
|
|
30,323 |
|
|
|
49,293 |
|
Selling, general and
administrative expenses |
|
53,252 |
|
|
|
54,495 |
|
|
|
152,607 |
|
|
|
192,624 |
|
Restructuring expenses |
|
(4 |
) |
|
|
6,993 |
|
|
|
(631 |
) |
|
|
14,321 |
|
Total operating expenses |
|
62,366 |
|
|
|
74,901 |
|
|
|
182,299 |
|
|
|
256,238 |
|
Loss from operations |
|
(69,620 |
) |
|
|
(89,741 |
) |
|
|
(181,095 |
) |
|
|
(277,050 |
) |
Other (expense) income,
net: |
|
|
|
|
|
|
|
Interest expense |
|
(989 |
) |
|
|
(1,040 |
) |
|
|
(2,967 |
) |
|
|
(3,173 |
) |
Other, net |
|
243 |
|
|
|
(2,151 |
) |
|
|
4,897 |
|
|
|
(8,177 |
) |
Total other (expense) income,
net |
|
(746 |
) |
|
|
(3,191 |
) |
|
|
1,930 |
|
|
|
(11,350 |
) |
Loss before taxes |
|
(70,366 |
) |
|
|
(92,932 |
) |
|
|
(179,165 |
) |
|
|
(288,400 |
) |
Income tax expense |
|
— |
|
|
|
— |
|
|
|
5 |
|
|
|
21 |
|
Equity in losses of
unconsolidated joint venture |
|
126 |
|
|
|
8,746 |
|
|
|
3,864 |
|
|
|
10,849 |
|
Net loss |
$ |
(70,492 |
) |
|
$ |
(101,678 |
) |
|
$ |
(183,034 |
) |
|
$ |
(299,270 |
) |
Net loss per share available
to common stockholders—basic and diluted |
$ |
(1.09 |
) |
|
$ |
(1.60 |
) |
|
$ |
(2.85 |
) |
|
$ |
(4.71 |
) |
Weighted average common shares
outstanding—basic and diluted |
|
64,398,448 |
|
|
|
63,694,592 |
|
|
|
64,210,809 |
|
|
|
63,579,763 |
|
BEYOND MEAT, INC. AND SUBSIDIARIES |
Condensed Consolidated Balance Sheets |
(In thousands, except share and per share
data) |
(unaudited) |
|
September 30, 2023 |
|
December 31, 2022 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
217,545 |
|
|
$ |
309,922 |
|
Restricted cash, current |
|
2,689 |
|
|
|
— |
|
Accounts receivable, net |
|
35,763 |
|
|
|
34,198 |
|
Inventory |
|
194,570 |
|
|
|
235,696 |
|
Prepaid expenses and other current assets |
|
20,938 |
|
|
|
20,700 |
|
Assets held for sale |
|
118 |
|
|
|
5,943 |
|
Total current assets |
$ |
471,623 |
|
|
$ |
606,459 |
|
Restricted cash,
non-current |
|
12,600 |
|
|
|
12,627 |
|
Property, plant, and
equipment, net |
|
245,373 |
|
|
|
257,002 |
|
Operating lease right-of-use
assets |
|
132,671 |
|
|
|
87,595 |
|
Prepaid lease costs,
non-current |
|
60,680 |
|
|
|
85,472 |
|
Other non-current assets,
net |
|
4,550 |
|
|
|
10,744 |
|
Investment in unconsolidated
joint venture |
|
1,711 |
|
|
|
2,325 |
|
Total assets |
$ |
929,208 |
|
|
$ |
1,062,224 |
|
Liabilities and stockholders’
deficit: |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
61,861 |
|
|
$ |
55,300 |
|
Current portion of operating lease liabilities |
|
3,083 |
|
|
|
3,812 |
|
Accrued expenses and other current liabilities |
|
13,914 |
|
|
|
16,729 |
|
Total current liabilities |
$ |
78,858 |
|
|
$ |
75,841 |
|
Long-term liabilities: |
|
|
|
Convertible senior notes, net |
$ |
1,136,558 |
|
|
$ |
1,133,608 |
|
Operating lease liabilities, net of current portion |
|
76,382 |
|
|
|
55,854 |
|
Finance lease obligations and other long-term liabilities |
|
316 |
|
|
|
469 |
|
Total long-term liabilities |
$ |
1,213,256 |
|
|
$ |
1,189,931 |
|
Commitments and
Contingencies |
|
|
|
Stockholders’ deficit: |
|
|
|
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; 64,460,196 and
63,773,982 shares issued and outstanding at September 30, 2023
and December 31, 2022, respectively |
|
6 |
|
|
|
6 |
|
Additional paid-in
capital |
|
567,927 |
|
|
|
544,357 |
|
Accumulated deficit |
|
(926,143 |
) |
|
|
(743,109 |
) |
Accumulated other
comprehensive loss |
|
(4,696 |
) |
|
|
(4,802 |
) |
Total stockholders’ deficit |
$ |
(362,906 |
) |
|
$ |
(203,548 |
) |
Total liabilities and stockholders’ deficit |
$ |
929,208 |
|
|
$ |
1,062,224 |
|
|
|
|
|
BEYOND MEAT, INC. AND SUBSIDIARIES |
Condensed Consolidated Statements of Cash
Flows |
(In thousands) |
(unaudited) |
|
Nine Months Ended |
|
September 30, 2023 |
|
October 1, 2022 |
Cash flows from
operating activities: |
|
|
|
Net loss |
$ |
(183,034 |
) |
|
$ |
(299,270 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
Depreciation and amortization |
|
17,707 |
|
|
|
23,255 |
|
Non-cash lease expense |
|
5,997 |
|
|
|
3,389 |
|
Share-based compensation expense |
|
23,791 |
|
|
|
28,848 |
|
Loss on sale of fixed assets |
|
3,876 |
|
|
|
946 |
|
Amortization of debt issuance costs |
|
2,951 |
|
|
|
2,951 |
|
Equity in losses of unconsolidated joint venture |
|
3,864 |
|
|
|
10,849 |
|
Write-down of note receivable |
|
3,795 |
|
|
|
— |
|
Unrealized losses on foreign currency transactions |
|
2,740 |
|
|
|
11,160 |
|
Net change in operating assets and
liabilities: |
|
|
|
Accounts receivable |
|
(1,806 |
) |
|
|
7,703 |
|
Inventories |
|
40,470 |
|
|
|
(12,411 |
) |
Prepaid expenses and other assets |
|
1,282 |
|
|
|
7,802 |
|
Accounts payable |
|
8,335 |
|
|
|
(2,922 |
) |
Accrued expenses and other current liabilities |
|
(2,752 |
) |
|
|
(3,429 |
) |
Prepaid lease costs, non-current |
|
(3,254 |
) |
|
|
(49,063 |
) |
Operating lease liabilities |
|
(3,244 |
) |
|
|
(3,177 |
) |
Long-term liabilities |
|
— |
|
|
|
3,022 |
|
Net cash used in operating activities |
$ |
(79,282 |
) |
|
$ |
(270,347 |
) |
Cash flows from
investing activities: |
|
|
|
Purchases of property, plant and equipment |
$ |
(8,567 |
) |
|
$ |
(59,952 |
) |
Proceeds from sale of fixed assets |
|
2,477 |
|
|
|
— |
|
Payments for investment in joint venture |
|
(3,250 |
) |
|
|
(10,000 |
) |
Payments of security deposits |
|
— |
|
|
|
(752 |
) |
Net cash used in investing activities |
$ |
(9,340 |
) |
|
$ |
(70,704 |
) |
Cash flows from
financing activities: |
|
|
|
Principal payments under finance lease obligations |
$ |
(168 |
) |
|
$ |
(152 |
) |
Proceeds from exercise of stock options |
|
171 |
|
|
|
1,610 |
|
Payments of minimum withholding taxes on net share settlement of
equity awards |
|
(391 |
) |
|
|
(1,073 |
) |
Net cash (used in) provided by financing activities |
$ |
(388 |
) |
|
$ |
385 |
|
Net decrease in cash, cash
equivalents and restricted cash |
$ |
(89,010 |
) |
|
$ |
(340,666 |
) |
Effect of exchange rate
changes on cash |
|
(704 |
) |
|
|
(2,452 |
) |
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 |
$ |
232,834 |
|
|
$ |
390,176 |
|
|
|
|
|
Supplemental
disclosures of cash flow information: |
|
|
|
Cash paid during the period for: |
|
|
|
Interest |
$ |
— |
|
|
$ |
3 |
|
Taxes |
$ |
9 |
|
|
$ |
21 |
|
Non-cash investing and financing activities: |
|
|
|
Non-cash additions to property, plant and equipment |
$ |
2,038 |
|
|
$ |
9,639 |
|
Non-cash additions to financing leases |
$ |
— |
|
|
$ |
280 |
|
Reclassification of pre-paid lease costs to operating lease
right-of-use assets |
$ |
28,046 |
|
|
$ |
27,718 |
|
Operating lease right-of-use assets obtained in exchange for lease
liabilities |
$ |
36,400 |
|
|
$ |
37,134 |
|
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 |
|
Nine Months Ended |
(in
thousands) |
September 30, 2023 |
|
October 1, 2022 |
|
September 30, 2023 |
|
October 1, 2022 |
Net loss, as reported |
$ |
(70,492 |
) |
|
$ |
(101,678 |
) |
|
$ |
(183,034 |
) |
|
$ |
(299,270 |
) |
Income tax expense |
|
— |
|
|
|
— |
|
|
|
5 |
|
|
|
21 |
|
Interest expense |
|
989 |
|
|
|
1,040 |
|
|
|
2,967 |
|
|
|
3,173 |
|
Depreciation and amortization expense |
|
5,779 |
|
|
|
8,435 |
|
|
|
17,707 |
|
|
|
23,255 |
|
Restructuring expenses(1) |
|
(4 |
) |
|
|
6,993 |
|
|
|
(631 |
) |
|
|
14,321 |
|
Share-based compensation expense |
|
6,478 |
|
|
|
9,250 |
|
|
|
23,791 |
|
|
|
28,848 |
|
Other, net(2)(3) |
|
(243 |
) |
|
|
2,151 |
|
|
|
(4,897 |
) |
|
|
8,177 |
|
Adjusted EBITDA |
$ |
(57,493 |
) |
|
$ |
(73,809 |
) |
|
$ |
(144,092 |
) |
|
$ |
(221,475 |
) |
|
|
|
|
|
|
|
|
Net loss as a % of net revenues |
|
(93.6 |
)% |
|
|
(123.2 |
)% |
|
|
(67.9 |
)% |
|
|
(88.3 |
)% |
Adjusted EBITDA as a % of net revenues |
|
(76.3 |
)% |
|
|
(89.5 |
)% |
|
|
(53.4 |
)% |
|
|
(65.3 |
)% |
____________
(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 nine months ended September 30, 2023, we
recorded a credit of $(4,000) and $(0.6) million,
respectively, in restructuring expenses, primarily driven by a
reversal of certain accruals. |
(2) |
Includes $(2.5) million and
$(3.3) million in net foreign currency transaction losses in the
three and nine months ended September 30, 2023, respectively.
Includes $(3.9) million and $(10.5) million in net foreign currency
transaction losses in the three and nine months ended
October 1, 2022, respectively. |
(3) |
Includes $2.8 million and $8.4
million in interest income in the three and nine months ended
September 30, 2023, respectively. Includes $1.5 million and
$2.2 million in interest income in the three and nine months ended
October 1, 2022, respectively. |
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