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Beyond Meat Reports Second Quarter 2022 Financial Results

Beyond Meat Reports Second Quarter 2022 Financial Results

Beyond Meat, Inc. (NASDAQ: BYND), a leader in plant-based meat, today reported financial results for its second quarter ended July 2, 2022.

Second Quarter 2022 Financial Highlights1

  • Net revenues were $147.0 million, a decrease of 1.6% year-over-year.
  • Gross profit was a loss of $6.2 million, or gross margin of -4.2% of net revenues. Gross profit was negatively impacted by approximately $14.5 million, or -10.0 percentage points of gross margin, associated with sales to the liquidation channel and increased inventory reserves, and a further $7.7 million, or -6.7 percentage points of gross margin, related to Beyond Meat® Jerky.
  • Net loss was $97.1 million, or $1.53 per common share. Net loss as a percentage of net revenues was -66.1%.
  • Adjusted EBITDA was a loss of $68.8 million, or -46.8% of net revenues.

Beyond Meat President and CEO Ethan Brown commented, “In Q2 2022, we recorded our second largest quarter ever in terms of net revenues even as consumers traded down among proteins in the context of inflationary pressures, and we made solid sequential progress on reducing operating and manufacturing conversion costs. Across the balance of the year, we are tightly focused on intensifying OpEx and manufacturing cost reductions, executing against a series of planned market activities for our global strategic partners, and strengthening our retail business through core support and the introduction of one of our best innovations to date. Through these and other measures, we are confident we will emerge from the current economic climate leaner and stronger, and well positioned for our next chapter of growth.”

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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.

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Brown continued, “We recognize progress is taking longer than we expected, notwithstanding the increasing urgency and importance of our opportunity. Our transition to mass market consumption will occur as we actualize our vision: providing consumers with plant-based meats that are indistinguishable from, understood as healthier than, and at price parity with their animal protein equivalents. With the recent, dramatic, decline in consumer buying power, the importance of delivering on our price parity targets is magnified. We take note of this powerful reminder, and continue to advance as well as broaden cost reduction activities in service to realizing price parity.”

Second Quarter 2022

Net revenues decreased 1.6% to $147.0 million in the second quarter of 2022, compared to $149.4 million in the year-ago period. The decrease in net revenues was driven by a decrease in net revenue per pound of approximately 14.2%, partially offset by a 14.6% increase in total pounds sold. The decrease in net revenue per pound was primarily attributable to changes in price, including the impact of sales to liquidation channels and list price reductions in the EU implemented in the first quarter of 2022, changes in foreign exchange rates, and increased trade discounts. U.S. retail channel net revenues increased 2.2% compared to the year-ago period primarily driven by sales of Beyond Meat Jerky, which was introduced in the first quarter of 2022, to the Planet Partnership, LLC, our joint venture with PepsiCo, Inc., partially offset by decreases of other products. U.S. foodservice channel net revenues decreased 2.4% primarily due to discontinued distribution at a certain customer, which was included in the year-ago period, partially offset by increased sales of other products. International retail channel net revenues decreased 17.0% mainly due to list price reductions in the EU, unfavorable foreign exchange rate impact, and increased trade discounts partially offset by increased pounds sold. International foodservice channel net revenues increased 7.0% primarily due to an increase in pounds sold, partially offset by changes in sales mix, unfavorable foreign exchange rate impact, and increased trade discounts.

Net revenues by channel (unaudited):

The following tables present our net revenues by channel for the periods presented:

 Three Months Ended Change
(in thousands)July 2, 
2022
 July 3, 
2021
 Amount %
U.S.:       
Retail$78,861 $77,195 $1,666  2.2%
Foodservice 23,389  23,961  (572) (2.4)%
U.S. net revenues 102,250  101,156  1,094  1.1%
International:       
Retail 23,692  28,544  (4,852) (17.0)%
Foodservice 21,098  19,726  1,372  7.0%
International net revenues 44,790  48,270  (3,480) (7.2)%
Net revenues$147,040 $149,426 $(2,386) (1.6)%
 Six Months Ended Change
(in thousands)July 2, 
2022
 July 3, 
2021
 Amount %
U.S.:       
Retail$147,121 $141,021 $6,100  4.3%
Foodservice 38,882  40,703  (1,821) (4.5)%
U.S. net revenues 186,003  181,724  4,279  2.4%
International:       
Retail 39,829  45,743  (5,914) (12.9)%
Foodservice 30,663  30,123  540  1.8%
International net revenues 70,492  75,866  (5,374) (7.1)%
Net revenues$256,495 $257,590 $(1,095) (0.4)%

Pounds sold by channel (unaudited):

The following table presents consolidated pounds sold by channel for the periods presented:

 Three Months Ended Change Six Months Ended Change
(in thousands)July 2,
2022
 July 3,
2021
 Amount % July 2,
2022
 July 3,
2021
 Amount %
U.S.:               
Retail16,057 13,834 2,223  16.1% 28,510 24,962 3,548  14.2%
Foodservice3,965 4,002 (37) (0.9)% 6,717 6,884 (167) (2.4)%
International:               
Retail5,061 4,775 286  6.0% 8,591 7,734 857  11.1%
Foodservice5,042 3,666 1,376  37.5% 7,623 5,669 1,954  34.5%
Total pounds sold30,125 26,277 3,848  14.6% 51,441 45,249 6,192  13.7%

Gross profit was a loss of $6.2 million, or gross margin of -4.2% of net revenues, in the second quarter of 2022, compared to gross profit of $47.4 million, or gross margin of 31.7% of net revenues, in the year-ago period. The Company’s second quarter results included increased sales of certain inventory to the liquidation channel, as well as higher inventory reserves, which, combined, the Company estimates reduced gross profit and gross margin by approximately $14.5 million and 10.0 percentage points, respectively (excluding any impact from Beyond Meat Jerky). The Company estimates that Beyond Meat Jerky, which was introduced in the first quarter of 2022, further reduced gross profit and gross margin by approximately $7.7 million and 6.7 percentage points, respectively. In addition to the aforementioned factors, gross margin in the second quarter of 2022 compared to the year-ago period was negatively impacted by increased manufacturing costs per pound including depreciation, higher materials costs, and increased logistics costs.

Loss from operations in the second quarter of 2022 was $89.7 million compared to $18.6 million in the year-ago period. In addition to the decrease in gross profit, the expanded loss from operations was primarily attributable to growth in non-production headcount expenses compared to the year-ago period, increased general and administrative expenses driven by ongoing consulting agreements, greater investment in marketing activities, higher expenses associated with production trial activities, and increased investments in innovation.

Net loss was $97.1 million in the second quarter of 2022 compared to $19.7 million in the year-ago period. Net loss per common share was $1.53 in the second quarter of 2022 compared to net loss per common share of $0.31 in the year-ago period. In addition to the expanded loss from operations, net loss in the second quarter of 2022 included $5.4 million in unrealized foreign currency losses primarily due to unfavorable changes in foreign exchange rates of the Euro and Chinese Yuan compared to the year-ago period.

Adjusted EBITDA was a loss of $68.8 million, or -46.8% of net revenues in the second quarter of 2022 compared to an Adjusted EBITDA loss of $2.2 million, or -1.5% of net revenues, in the year-ago period.

Balance Sheet and Cash Flow Highlights

The Company’s cash and cash equivalents balance was $454.7 million and total outstanding debt was $1.1 billion as of July 2, 2022. Net cash used in operating activities was $235.7 million for the six months ended July 2, 2022, compared to $120.4 million for the year-ago period. In the six months ended July 2, 2022, net cash used in operating activities included $43.7 million in prepaid lease costs related to the Company’s new innovation center and headquarters facility currently under construction, compared to $26.6 million in the year-ago period. Capital expenditures totaled $42.0 million for the six months ended July 2, 2022, compared to $51.4 million for the year-ago period. Capital expenditures primarily reflect the Company’s continued investments in production equipment and facilities related to capacity expansion and commercialization initiatives domestically and abroad.

2022 Outlook

The Company’s operating environment continues to be affected by near-term uncertainty related to macroeconomic issues, including inflation and rising interest rates, increasing concerns about the likelihood of a recession, COVID-19 and its potential impact on consumer behavior and demand levels, challenges related to labor availability and supply chain disruptions, partially attributable to recent geopolitical tensions. Management’s outlook considers the potential impact from these factors assuming present day conditions, but the Company acknowledges its operating results may differ materially from the expectations set forth below if its assumptions related to the aforementioned variables, among others, do not materialize. Relative to its previous expectations, the Company believes many of these factors have shifted adversely, and based on management’s best assessment of the environment today, the Company is providing the following outlook for the full year 2022:

  • Net revenues are expected to be in the range of $470 million to $520 million, an increase of 1% to 12% compared to 2021. This compares to the Company’s previous expectation of net revenues in the range of $560 million to $620 million, representing an increase of 21% to 33% compared to 2021.
  • The Company is announcing a reduction-in-force affecting approximately 4% of its global workforce. The reduction-in-force is expected to result in total annualized savings of approximately $8 million, excluding one-time separation costs of approximately $1 million, which the Company expects to incur in the third quarter of 2022.

Total distribution points by channel (unaudited):

The following table presents the approximate number of distribution outlets by channel for the periods presented:

 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022
U.S.:           
Retail(1)32,000 34,000 34,000 34,000 35,000 78,000
Foodservice39,000 34,000 36,000 38,000 39,000 41,000
International:           
Retail24,000 29,000 32,000 30,000 31,000 33,000
Foodservice23,000 22,000 26,000 28,000 30,000 31,000
Total distribution points118,000 119,000 128,000 130,000 135,000 183,000

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(1) Q2 2022 includes distribution points associated with Beyond Meat Jerky. Excluding Beyond Meat Jerky, total U.S. retail distribution outlets was approximately 35,000.

Conference Call and Webcast

The Company will host a conference call and webcast to discuss these results with additional comments and details today at 5:00 p.m. Eastern, 2:00 p.m. Pacific. Investors interested in participating in the live call can dial 412-902-4255. The conference call webcast will be available live over the Internet through the “Investors” section of the Company’s website at www.beyondmeat.com and later archived.

Source: Beyond Meat

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