BYND - Beyond Meat® Reports Third Quarter 2023 Financial Results | Benzinga
EL SEGUNDO, Calif., Nov. 08, 2023 (GLOBE NEWSWIRE) -- 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 ...