Dive Brief:
- Beyond Meat CEO Ethan Brown told analysts the company is “turning a corner” as the publicly traded plant-based meat company lowered its operating losses during the quarter even as it sold fewer products.
- Revenues for the period ending April 1 were $92.2 million — 15.7% less than last year. It sold nearly 19.8 million pounds of product, a decrease of 7.3%. But the company’s net losses were much lower — $59 million in the last quarter, compared with $100.5 million a year ago. Brown reaffirmed Beyond Meat is on its way to meeting the goal to be cash flow positive by the end of 2023.
- As plant-based meat’s growth curve has largely flattened in the last 18 months and Beyond Meat saw its sales and revenues plunge, the company implemented a sustainable growth plan late last year.
Dive Insight:
The fact that an earnings report full of negative numbers is being praised says a lot about the state of plant-based meat today. While Beyond Meat isn’t experiencing growth right now, it is seeing the chasm between sales and losses narrow, and that’s one of Brown’s main objectives.
“Some of the kind of systemic shocks that our business went through are starting to subside, and we’re starting to, quarter-over-quarter, get back into a much stronger position with a business that is more appropriate for the current market,” Brown told investors Wednesday.
Beyond Meat has significantly reduced operating expenses, including job cuts in August and October last year.
The most recent quarter didn’t see anything as dramatic, but the company ended agreements with many of its contract manufacturers, dropping from eight to three, Brown said. They also reassessed manufacturing equipment and decided that much of it had a useful life of 10 years, instead of the five years it previously estimated. This decision, Brown said, lowered depreciation costs and will provide longer-term savings.
After its earnings report was released, Beyond Meat also announced an equity offering program for up to $200 million, which could help the company’s balance sheet.
In the last quarter, Beyond Meat’s operating expenses were down $34 million compared to a year ago, a reduction of 35%, Brown said. The company’s total cash use in the quarter was $48.6 million — more than $18 million less than it spent in the previous quarter and a 74% reduction from the year-ago period.
Brown said the company is targeting growth opportunities. In the U.S., it’s concentrating on retail — specifically refrigerated ground meat-like products, which have seen the largest declines. Beyond Meat is working on marketing to convince consumers about the taste and health benefits of the company’s products, as well as clear up misconceptions about ingredients and manufacturing, Brown said.
“Setting the record straight is a key part in getting consumers back to the category,” he said.
Internationally, Beyond Meat is working to build foodservice sales. This was the only category that grew sales in the last quarter compared to a year earlier, nearly doubling to $19.1 million. Brown said this is a sign of European consumer acceptance of plant-based meat. Beyond Meat’s options are on the menus of large QSR chains in several European nations.
More sales growth will be needed in the long run to help Beyond Meat reach its profitability goal, and Brown said he is confident that it will come to fruition.
The company will be launching a “next generation” burger in both foodservice and retail frozen in the U.S. this summer, which Brown said improves the sensory profile — especially the meat-like taste. He’s also hoping marketing campaigns and third-party research into health and wellness can boost sales.
As markets opened Thursday, investors reacted negatively to the news, sending Beyond’s share price down more than 12%. Analysts said the company appears to be on the right track for growth, but it will be a long journey to get there.
“Beyond Meat has the potential to deliver unique financial and societal benefits, given its vast addressable market, remarkable plant-based meat products, and potential brand building and scale,” according to a note from William Blair. “However, we feel current pressures on the category could persist and the company’s pivot to cash generation and sustainable growth could take some time.”
