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 October 1, 2022.
Third Quarter 2022 Financial
Highlights1
- Net revenues were $82.5 million, a
decrease of 22.5% year-over-year.
- Gross profit was a loss of $14.8
million, or gross margin of -18.0% of net revenues. Gross profit
was negatively impacted by approximately $7.2 million, or -8.8
percentage points of gross margin, of underutilization fees and
one-time termination costs associated with certain co-manufacturing
agreements. Approximately $5.9 million in underutilization and
one-time termination costs were associated with Beyond Meat Jerky
which negatively impacted gross profit by $5.8 million, or -7.0
percentage points of gross margin, during the period.
- Net loss was $101.7 million, or $1.60
per common share. Net loss as a percentage of net revenues was
-123.2%.
- Adjusted EBITDA was a loss of $73.8
million, or -89.5% of net revenues.
Beyond Meat President and CEO Ethan Brown
commented, “As we shared last month, Beyond Meat is executing a
full force pivot to a sustainable growth model, emphasizing the
achievement of cash flow positive operations within the second half
of 2023. This transition is designed to fortify our business in the
near-term as record inflation continues to pose a challenge for our
brand and category, positioning Beyond Meat to endure and advance
toward our long-term objective of being a major protein provider
within the $1.4 trillion meat industry.”
__________________________
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.
Brown continued, “Though this quarter’s results are
disappointing, with a sharp decline in revenues and associated
knock-on effects across the income statement including gross margin
driven by a challenging macro environment, we are implementing
aggressive measures with urgency to positively impact our near-term
operations. Our path forward comprises 3 key actions: significant
reduction of our operating expenses; intensified focus on cash flow
accretive inventory management activities; and sales and marketing
programs that are tightly focused on opportunities and segments
that strike the right balance between near-term growth and our most
valuable long-term opportunities. We are focusing on the key
drivers of our business and are committed to sharing our progress
toward delivering them over the coming quarters.”
Third Quarter 2022
Net revenues decreased 22.5% to $82.5 million in
the third quarter of 2022, compared to $106.4 million in the
year-ago period. The decrease in net revenues was driven by a 12.8%
decrease in total pounds sold and an approximately 11.2% decrease
in net revenue per pound. All markets and channels were negatively
impacted by a combination of weaker than expected demand in the
category and certain customer and distributor changes such as
reductions in targeted inventory levels, among other factors. The
decrease in net revenue per pound was primarily attributable to
strategic but limited price reductions in the U.S. and broader list
price reductions in the EU implemented in the first quarter of
2022, increased trade discounts and unfavorable changes in foreign
exchange rates. U.S. retail channel net revenues decreased 11.8%
compared to the year-ago period primarily driven by an 11.8%
decrease in pounds sold with net revenue per pound staying flat.
U.S. foodservice channel net revenues increased 5.6% compared to
the year-ago period primarily driven by a 32.2% increase in pounds
sold, partially offset by lower net revenue per pound. The decrease
in net revenue per pound was primarily due to changes in sales mix
and, to a lesser extent, higher trade discounts. International
retail channel net revenues decreased 52.3% compared to the
year-ago period primarily driven by a 37.0% decrease in pounds sold
and a 24.4% decrease in net revenue per pound. The decrease in net
revenue per pound was primarily due to list price reductions in the
EU implemented in the first quarter of 2022, unfavorable foreign
exchange rate impact, changes in sales mix and increased trade
discounts. International foodservice channel net revenues decreased
42.2% compared to the year-ago period primarily due to a 25.5%
decrease in net revenue per pound and a 22.4% decrease in pounds
sold. The decrease in net revenue per pound was primarily due to
changes in sales mix and unfavorable foreign exchange rate
impact.
Net revenues by channel
(unaudited):
The following tables present our net revenues by
channel for the periods presented:
|
Three Months Ended |
|
Change |
(in thousands) |
October 1,2022 |
|
October 2,2021 |
|
Amount |
|
% |
U.S.: |
|
|
|
|
|
|
|
Retail |
$ |
46,177 |
|
$ |
52,361 |
|
$ |
(6,184 |
) |
|
(11.8 |
)% |
Foodservice |
|
15,994 |
|
|
15,139 |
|
|
855 |
|
|
5.6 |
% |
U.S. net revenues |
|
62,171 |
|
|
67,500 |
|
|
(5,329 |
) |
|
(7.9 |
)% |
International: |
|
|
|
|
|
|
|
Retail |
|
10,195 |
|
|
21,391 |
|
|
(11,196 |
) |
|
(52.3 |
)% |
Foodservice |
|
10,134 |
|
|
17,541 |
|
|
(7,407 |
) |
|
(42.2 |
)% |
International net revenues |
|
20,329 |
|
|
38,932 |
|
|
(18,603 |
) |
|
(47.8 |
)% |
Net revenues |
$ |
82,500 |
|
$ |
106,432 |
|
$ |
(23,932 |
) |
|
(22.5 |
)% |
|
Nine Months Ended |
|
Change |
(in thousands) |
October 1,2022 |
|
October 2,2021 |
|
Amount |
|
% |
U.S.: |
|
|
|
|
|
|
|
Retail |
$ |
193,298 |
|
$ |
193,382 |
|
$ |
(84 |
) |
|
— |
% |
Foodservice |
|
54,876 |
|
|
55,842 |
|
|
(966 |
) |
|
(1.7 |
)% |
U.S. net revenues |
|
248,174 |
|
|
249,224 |
|
|
(1,050 |
) |
|
(0.4 |
)% |
International: |
|
|
|
|
|
|
|
Retail |
|
50,024 |
|
|
67,134 |
|
|
(17,110 |
) |
|
(25.5 |
)% |
Foodservice |
|
40,797 |
|
|
47,664 |
|
|
(6,867 |
) |
|
(14.4 |
)% |
International net revenues |
|
90,821 |
|
|
114,798 |
|
|
(23,977 |
) |
|
(20.9 |
)% |
Net revenues |
$ |
338,995 |
|
$ |
364,022 |
|
$ |
(25,027 |
) |
|
(6.9 |
)% |
Pounds sold by channel
(unaudited):
The following table presents consolidated pounds
sold by channel for the periods presented:
|
Three Months Ended |
|
Change |
|
Nine Months Ended |
|
Change |
(in thousands) |
October 1,2022 |
|
October 2,2021 |
|
Amount |
|
% |
|
October 1,2022 |
|
October 2,2021 |
|
Amount |
|
% |
U.S.: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail |
8,861 |
|
10,041 |
|
(1,180 |
) |
|
(11.8 |
)% |
|
37,371 |
|
35,003 |
|
2,368 |
|
|
6.8 |
% |
Foodservice |
3,378 |
|
2,556 |
|
822 |
|
|
32.2 |
% |
|
10,095 |
|
9,440 |
|
655 |
|
|
6.9 |
% |
International: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail |
2,364 |
|
3,751 |
|
(1,387 |
) |
|
(37.0 |
)% |
|
10,955 |
|
11,485 |
|
(530 |
) |
|
(4.6 |
)% |
Foodservice |
2,785 |
|
3,588 |
|
(803 |
) |
|
(22.4 |
)% |
|
10,408 |
|
9,257 |
|
1,151 |
|
|
12.4 |
% |
Total pounds sold |
17,388 |
|
19,936 |
|
(2,548 |
) |
|
(12.8 |
)% |
|
68,829 |
|
65,185 |
|
3,644 |
|
|
5.6 |
% |
Gross profit was a loss of $14.8 million, or gross
margin of -18.0% of net revenues, in the third quarter of 2022,
compared to gross profit of $23.0 million, or gross margin of 21.6%
of net revenues, in the year-ago period. Gross margin decreased
primarily as a result of increased costs per pound and decreased
net revenue per pound in the third quarter of 2022 compared to the
year-ago period. The increase in cost per pound was primarily
driven by higher manufacturing cost per pound including
depreciation, as well as increased materials and logistics costs
per pound. The Company’s third quarter results were negatively
impacted by approximately $7.2 million, or -8.8 percentage points
of gross margin, of underutilization fees and one-time termination
costs associated with certain co-manufacturing agreements,
including approximately $5.9 million associated with Beyond Meat
Jerky which, in total, negatively impacted gross profit by $5.8
million, or -7.0 percentage points of gross margin, during the
period.
Loss from operations in the third quarter of 2022
was $89.7 million compared to $54.0 million in the year-ago period.
The increase in loss from operations was primarily driven by lower
gross profit partially offset by a reduction in operating expenses
compared to the year-ago period. The reduction in operating
expenses was primarily attributable to lower selling expenses,
reduced general and administrative expenses, and lower
non-production headcount expenses, partially offset by increased
product donations and restructuring costs.
Net loss was $101.7 million in the third quarter of
2022 compared to $54.8 million in the year-ago period. Net loss per
common share was $1.60 in the third quarter of 2022 compared to net
loss per common share of $0.87 in the year-ago period. In addition
to the expanded loss from operations, net loss in the third quarter
of 2022 included $8.7 million of equity in losses associated with
the Company’s unconsolidated joint venture with PepsiCo, Inc., the
Planet Partnership, LLC (“TPP”), and $3.6 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 $73.8 million, or
-89.5% of net revenues in the third quarter of 2022 compared to an
Adjusted EBITDA loss of $36.8 million, or -34.5% of net revenues,
in the year-ago period.
Balance Sheet and Cash Flow
Highlights
The Company’s cash and cash equivalents balance was
$390.2 million and total outstanding debt was $1.1 billion as of
October 1, 2022. Net cash used in operating activities was $270.3
million for the nine months ended October 1, 2022, compared to
$191.0 million for the year-ago period. Capital expenditures
totaled $60.0 million for the nine months ended October 1, 2022,
compared to $104.3 million for the year-ago period. Net cash used
in investing activities also included $10.0 million of payments for
investment in the Company’s joint venture, TPP, in the nine months
ended October 1, 2022. There were no such payments in the year-ago
period.
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, and increased
competition. 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. Based
on management's best assessment of the environment today, the
Company is providing the following outlook:
- 2022 net revenues are expected to be
in the range of approximately $400 million to $425 million,
representing a decrease of approximately 14% to 9% compared to
2021.
- On October 14, 2022, the Company
announced a reduction-in-force affecting approximately 19% of its
global workforce. As a result, the Company estimates that it will
incur one-time cash charges of approximately $4 million in
connection with the reduction-in-force, primarily consisting of
notice period and severance payments, employee benefits, and
related costs. The majority of these charges will be incurred in
the fourth quarter 2022, and the Company expects the
reduction-in-force to be substantially complete by the end of 2022,
subject to local law and consultation requirements, which may
extend the process beyond the end of 2022 in certain countries. The
charges that we expect to incur are subject to assumptions,
including local law requirements, and actual charges may differ
from the estimate disclosed above.
- In aggregate, over the next twelve
months, the reduction-in-force, combined with the elimination of
certain open positions and recent changes to the executive
leadership team, as described in a Form 8-K filed with the
Securities and Exchange Commission (“SEC”) on October 14, 2022, is
expected to result in approximately $27 million in cash operating
expense savings, and an additional approximately $12 million in
non-cash savings related to previously granted, unvested
stock-based compensation which would have vested over the next
twelve months. In addition, as a result of these actions, the
Company expects to recognize approximately $3 million of one-time
non-cash savings related to the reversal of previously expensed,
unvested stock-based compensation in the third and fourth quarters
of 2022.
- The Company is targeting cash flow
positive operations within the second half of 2023.
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 |
|
Q3 2022 |
U.S.: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail(1) |
32,000 |
|
34,000 |
|
34,000 |
|
34,000 |
|
35,000 |
|
78,000 |
|
78,000 |
Foodservice |
39,000 |
|
34,000 |
|
36,000 |
|
38,000 |
|
39,000 |
|
41,000 |
|
42,000 |
International: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail |
24,000 |
|
29,000 |
|
32,000 |
|
30,000 |
|
31,000 |
|
33,000 |
|
35,000 |
Foodservice |
23,000 |
|
22,000 |
|
26,000 |
|
28,000 |
|
30,000 |
|
31,000 |
|
33,000 |
Total distribution points |
118,000 |
|
119,000 |
|
128,000 |
|
130,000 |
|
135,000 |
|
183,000 |
|
188,000 |
___________(1) Q2 and Q3 2022 includes distribution
points associated with Beyond Meat Jerky. Excluding Beyond Meat
Jerky, total U.S. retail distribution outlets was approximately
34,000 in Q3 2022.
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.
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 commitment, 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 September 2022, Beyond Meat
branded products were available at approximately 188,000 retail and
foodservice outlets in over 85 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 full year 2022 revenue outlook,
cost-reduction initiatives, expected charges and savings related to
its workforce reduction and executive leadership changes, and the
timing and success of achieving its cash flow positive targets. The
charges associated with the reduction-in-force and executive
leadership changes 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 workforce reduction, executive leadership
changes and other potential cost-reduction initiatives, and the
workforce reduction, executive leadership changes and
cost-reduction initiatives may have an adverse impact on the
Company’s performance. Additionally, the Company’s ability to meet
its cash flow positive targets is subject to a number of
assumptions and uncertainties, including, without limitation, the
Company’s ability to reduce costs and achieve positive gross
margins; the Company’s ability to meet certain revenue and
operating expense targets, which may be subject to factors beyond
the Company’s control; and the Company’s ability to monetize
inventory and manage working capital.
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 the COVID-19 pandemic, including the
ultimate duration, magnitude and effects of the pandemic and, in
particular, the impact to the foodservice channel, operations and
supply chains, growth trends, our international expansion plans,
market share, new and existing customers and expense trends, 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, in
particular, the COVID-19 pandemic, 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 effects of the COVID-19
pandemic, including on our business, financial condition, cash
flows and results of operations, including on our supply chain, the
demand for our products, our product and channel mix, labor needs
at the Company as well as in the supply chain and at customers, the
timing and level of retail purchasing, the timing and level of
foodservice purchasing, our manufacturing and co-manufacturing
facilities and operations, our inventory levels, our ability to
expand and produce in new geographic markets or the timing of such
expansion efforts, the pace and success of new product
introductions, the timing of new foodservice launches, and on
overall economic conditions and consumer confidence and spending
levels; the impact of uncertainty in our domestic and international
supply chain, including labor shortages and disruption and shipping
delays and disruption; a resurgence of COVID-19 and the impact of
variants of the virus that causes COVID-19 which could slow, halt
or reverse the reopening process, or result in the reinstatement of
social distancing measures, business closures, restrictions on
operations, quarantines, lockdowns and travel bans; the impact of
inflation and rising interest rates across the economy, including
higher food, grocery, raw materials, transportation, energy, labor
and fuel costs; reduced consumer confidence and changes in consumer
spending, including spending to purchase our products, and negative
trends in consumer purchasing patterns due to consumers’ disposable
income, credit availability and debt levels, as well as due to
recessionary and inflationary pressures; factors negatively
impacting demand in the plant-based meat category; the effects of
increased competition from our market competitors and new market
entrants; the impact of uncertainty as a result of doing business
in China and Europe; government or employer mandates requiring
certain behaviors from employees due to COVID-19, including
COVID-19 vaccine mandates, which could result in employee attrition
at the Company, suppliers and customers as well as difficulty
securing future labor and supply needs; the impact of adverse and
uncertain economic and political conditions in the U.S. and
international markets, including due to an economic recession,
downturn or periods of rising or high inflation; the volatility of
capital markets and other macroeconomic factors, including due to
geopolitical tensions or the outbreak of hostilities or war;
foreign exchange rate fluctuations; risks and uncertainties related
to certain cost-reduction initiatives, workforce reductions,
executive leadership changes, and the timing and success of
achieving certain financial goals or cash flow positive targets;
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; our ability to identify and execute cost-down initiatives
intended to achieve price parity with animal protein; the success
of operations conducted by joint ventures, such as the Planet
Partnership, LLC with PepsiCo, Inc., 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; changes in the retail
landscape, including 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; 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, 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 such as reductions in targeted inventory
levels, and supply chain and labor disruptions; 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 or contagious diseases or fear of such outbreaks, such as
COVID-19; the success of our marketing initiatives and the ability
to maintain and grow brand awareness, maintain, protect and enhance
our brand, attract and retain new customers and grow our market
share; 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,
especially those impacted by the conflict in the Ukraine or
problems in the global supply chain exacerbated by COVID-19
lockdowns in China; 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 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;
significant disruption in, or breach in security of our information
technology systems and resultant interruptions in service and any
related impact on our reputation, including related to data
privacy; the ability of our transportation providers to ship and
deliver our products in a timely and cost effective manner;
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, senior management changes
and realignment of reporting structures; 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
effects of natural or man-made catastrophic or severe weather
events particularly involving our or any of our co-manufacturers’
manufacturing facilities or our suppliers’ facilities; the impact
of marketing campaigns aimed at generating negative publicity
regarding our products, brand and the plant-based industry
category; 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 administration costs related to compliance and
reporting obligations; 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 campus innovation and headquarters
lease, the timing of occupancy and completion of the build-out of
our space, cost overruns, delays and the impact of COVID-19,
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; the sufficiency of our cash and cash
equivalents to meet our liquidity needs and service our
indebtedness, and our ability to access capital markets upon
favorable terms, including due to rising interest rates and market
volatility; economic conditions and the impact on consumer
spending; the impact of increased scrutiny from 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, 2021 filed with the SEC on March 2, 2022,
the Company’s Quarterly Report on Form 10-Q for the fiscal quarter
ended July 2, 2022 filed with the SEC on August 11, 2022, and the
Company’s Quarterly Report on Form 10-Q for the fiscal quarter
ended October 1, 2022 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 net
loss, Adjusted net loss per diluted common share, 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:Fitzhugh Taylor and
Raphael Grossbeyondmeat@icrinc.com
BEYOND MEAT, INC. AND
SUBSIDIARIESCondensed Consolidated Statements of
Operations(In thousands, except share and per
share data)(unaudited)
|
Three Months Ended |
|
Nine Months Ended |
|
October 1,2022 |
|
October 2,2021 |
|
October 1,2022 |
|
October 2,2021 |
Net revenues |
$ |
82,500 |
|
|
$ |
106,432 |
|
|
$ |
338,995 |
|
|
$ |
364,022 |
|
Cost of goods sold |
|
97,340 |
|
|
|
83,456 |
|
|
|
359,807 |
|
|
|
260,986 |
|
Gross (loss) profit |
|
(14,840 |
) |
|
|
22,976 |
|
|
|
(20,812 |
) |
|
|
103,036 |
|
Research and development expenses |
|
13,413 |
|
|
|
14,862 |
|
|
|
49,293 |
|
|
|
44,610 |
|
Selling, general and
administrative expenses |
|
54,495 |
|
|
|
56,362 |
|
|
|
192,624 |
|
|
|
143,602 |
|
Restructuring expenses |
|
6,993 |
|
|
|
5,750 |
|
|
|
14,321 |
|
|
|
12,068 |
|
Total operating expenses |
|
74,901 |
|
|
|
76,974 |
|
|
|
256,238 |
|
|
|
200,280 |
|
Loss from operations |
|
(89,741 |
) |
|
|
(53,998 |
) |
|
|
(277,050 |
) |
|
|
(97,244 |
) |
Other (expense) income, net |
|
|
|
|
|
|
|
Interest expense |
|
(1,040 |
) |
|
|
(1,005 |
) |
|
|
(3,173 |
) |
|
|
(2,656 |
) |
Other, net |
|
(2,151 |
) |
|
|
759 |
|
|
|
(8,177 |
) |
|
|
(631 |
) |
Total other expense, net |
|
(3,191 |
) |
|
|
(246 |
) |
|
|
(11,350 |
) |
|
|
(3,287 |
) |
Loss before taxes |
|
(92,932 |
) |
|
|
(54,244 |
) |
|
|
(288,400 |
) |
|
|
(100,531 |
) |
Income tax (benefit) expense |
|
— |
|
|
|
(23 |
) |
|
|
21 |
|
|
|
27 |
|
Equity in losses of
unconsolidated joint venture |
|
8,746 |
|
|
|
595 |
|
|
|
10,849 |
|
|
|
1,176 |
|
Net loss |
$ |
(101,678 |
) |
|
$ |
(54,816 |
) |
|
$ |
(299,270 |
) |
|
$ |
(101,734 |
) |
Net loss per share available
to common stockholders—basic and diluted |
$ |
(1.60 |
) |
|
$ |
(0.87 |
) |
|
$ |
(4.71 |
) |
|
$ |
(1.61 |
) |
Weighted average common shares
outstanding—basic and diluted |
|
63,694,592 |
|
|
|
63,280,122 |
|
|
|
63,579,763 |
|
|
|
63,111,703 |
|
BEYOND MEAT, INC. AND SUBSIDIARIES |
Condensed Consolidated Balance Sheets |
(In thousands, except share and per share
data) |
(unaudited) |
|
October 1,2022 |
|
December 31,2021 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
390,176 |
|
|
$ |
733,294 |
|
Accounts receivable, net |
|
34,949 |
|
|
|
43,806 |
|
Inventory |
|
246,987 |
|
|
|
241,870 |
|
Prepaid expenses and other current assets |
|
23,868 |
|
|
|
33,078 |
|
Total current assets |
$ |
695,980 |
|
|
$ |
1,052,048 |
|
Property, plant, and equipment, net |
|
262,595 |
|
|
|
226,489 |
|
Operating lease right-of-use assets |
|
88,335 |
|
|
|
26,815 |
|
Prepaid lease costs, non-current |
|
80,533 |
|
|
|
59,188 |
|
Other non-current assets, net |
|
6,670 |
|
|
|
6,836 |
|
Investment in unconsolidated joint venture |
|
7,174 |
|
|
|
8,023 |
|
Total assets |
$ |
1,141,287 |
|
|
$ |
1,379,399 |
|
Liabilities and Stockholders’
(Deficit) Equity: |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
68,676 |
|
|
$ |
69,040 |
|
Wages payable |
|
2,348 |
|
|
|
155 |
|
Accrued bonus |
|
148 |
|
|
|
128 |
|
Current portion of operating lease liabilities |
|
4,585 |
|
|
|
4,458 |
|
Accrued expenses and other current liabilities |
|
14,693 |
|
|
|
20,226 |
|
Short-term finance lease liabilities |
|
226 |
|
|
|
182 |
|
Total current liabilities |
$ |
90,676 |
|
|
$ |
94,189 |
|
Long-term liabilities: |
|
|
|
Convertible senior notes, net |
$ |
1,132,624 |
|
|
$ |
1,129,674 |
|
Operating lease liabilities, net of current portion |
|
56,484 |
|
|
|
22,599 |
|
Finance lease obligations and other long-term liabilities |
|
3,547 |
|
|
|
442 |
|
Total long-term liabilities |
$ |
1,192,655 |
|
|
$ |
1,152,715 |
|
Commitments and Contingencies |
|
|
|
Stockholders’ (deficit) equity: |
|
|
|
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; 63,735,625 and 63,400,899 shares issued and outstanding
at October 1, 2022 and December 31, 2021, respectively |
|
6 |
|
|
|
6 |
|
Additional paid-in capital |
|
539,399 |
|
|
|
510,014 |
|
Accumulated deficit |
|
(676,242 |
) |
|
|
(376,972 |
) |
Accumulated other comprehensive loss |
|
(5,207 |
) |
|
|
(553 |
) |
Total stockholders’ (deficit) equity |
$ |
(142,044 |
) |
|
$ |
132,495 |
|
Total liabilities and stockholders’ (deficit) equity |
$ |
1,141,287 |
|
|
$ |
1,379,399 |
|
|
|
|
|
BEYOND MEAT, INC. AND SUBSIDIARIES |
Condensed Consolidated Statements of Cash
Flows |
(In thousands) |
(unaudited) |
|
Nine Months Ended |
|
October 1, 2022 |
|
October 2, 2021 |
Cash flows from operating activities: |
|
|
|
Net loss |
$ |
(299,270 |
) |
|
$ |
(101,734 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
Depreciation and amortization |
|
23,255 |
|
|
|
14,910 |
|
Non-cash lease expense |
|
3,389 |
|
|
|
2,351 |
|
Share-based compensation expense |
|
28,848 |
|
|
|
21,624 |
|
Loss on sale of fixed assets |
|
946 |
|
|
|
199 |
|
Amortization of debt issuance costs |
|
2,951 |
|
|
|
2,338 |
|
Loss on extinguishment of debt |
|
— |
|
|
|
1,037 |
|
Equity in losses of unconsolidated joint venture |
|
10,849 |
|
|
|
1,176 |
|
Unrealized losses on foreign currency transactions |
|
11,160 |
|
|
|
— |
|
Net change in operating assets and
liabilities: |
|
|
|
Accounts receivable |
|
7,703 |
|
|
|
(13,495 |
) |
Inventories |
|
(12,411 |
) |
|
|
(73,557 |
) |
Prepaid expenses and other assets |
|
7,802 |
|
|
|
(13,249 |
) |
Accounts payable |
|
(2,922 |
) |
|
|
965 |
|
Accrued expenses and other current liabilities |
|
(3,429 |
) |
|
|
18,176 |
|
Prepaid lease costs, non-current |
|
(49,063 |
) |
|
|
(49,456 |
) |
Operating lease liabilities |
|
(3,177 |
) |
|
|
(2,332 |
) |
Long-term liabilities |
|
3,022 |
|
|
|
— |
|
Net cash used in operating activities |
$ |
(270,347 |
) |
|
$ |
(191,047 |
) |
|
|
|
|
Cash flows from investing activities: |
|
|
|
Purchases of property, plant and equipment |
$ |
(59,952 |
) |
|
$ |
(104,301 |
) |
Payment of security deposits |
|
(752 |
) |
|
|
(132 |
) |
Payments for investment in joint venture |
$ |
(10,000 |
) |
|
$ |
— |
|
Net cash used in investing activities |
$ |
(70,704 |
) |
|
$ |
(104,433 |
) |
|
|
|
|
Cash flows from financing activities: |
|
|
|
Proceeds from issuance of convertible senior notes |
$ |
— |
|
|
$ |
1,150,000 |
|
Purchase of capped calls related to convertible senior notes |
|
— |
|
|
|
(83,950 |
) |
Debt issuance costs |
|
— |
|
|
|
(23,605 |
) |
Repayment of revolving credit facility |
|
— |
|
|
|
(25,000 |
) |
Principal payments under finance lease obligations |
|
(152 |
) |
|
|
(130 |
) |
Proceeds from exercise of stock options |
|
1,610 |
|
|
|
7,554 |
|
Payments of minimum withholding taxes on net share settlement of
equity awards |
|
(1,073 |
) |
|
|
(2,749 |
) |
Net cash provided by financing activities |
$ |
385 |
|
|
$ |
1,022,120 |
|
Net (decrease) increase in cash and cash equivalents |
$ |
(340,666 |
) |
|
$ |
726,640 |
|
Effect of exchange rate changes on cash |
|
(2,452 |
) |
|
|
675 |
|
Cash and cash equivalents at
the beginning of the period |
|
733,294 |
|
|
|
159,127 |
|
Cash and cash equivalents at
the end of the period |
$ |
390,176 |
|
|
$ |
886,442 |
|
|
Supplemental disclosures
of cash flow information: |
|
|
|
Cash paid during the period for: |
|
|
|
Interest |
$ |
3 |
|
|
$ |
323 |
|
Taxes |
$ |
21 |
|
|
$ |
24 |
|
Non-cash investing and financing activities: |
|
|
|
Non-cash additions to property, plant and equipment |
$ |
9,639 |
|
|
$ |
2,653 |
|
Non-cash additions to financing leases |
$ |
280 |
|
|
$ |
580 |
|
Operating lease right-of-use assets obtained in exchange for lease
liabilities |
$ |
37,134 |
|
|
$ |
14,269 |
|
Reclassification of prepaid lease costs to operating lease
right-of-use assets |
$ |
27,718 |
|
|
$ |
— |
|
Reclassification of other current liability to additional paid-in
capital in connection with the share-settled obligation |
$ |
— |
|
|
$ |
2,535 |
|
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 a substitute 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 net loss and Adjusted net loss per
diluted common share
Adjusted net loss is defined as net loss adjusted
to exclude, when applicable, costs attributable to special items,
which are those items deemed not to be reflective of the Company’s
ongoing normal business activities.
Adjusted net loss per diluted common share is
defined as Adjusted net loss divided by the number of diluted
common shares outstanding.
We consider Adjusted net loss and Adjusted net loss
per diluted common share to be useful indicators of operating
performance because excluding special items allows for
period-over-period comparisons of our ongoing operations. Adjusted
net loss per diluted common share is a performance measure and
should not be used as a measure of liquidity.
Adjusted EBITDA and Adjusted EBITDA as a %
of net revenues
Adjusted EBITDA is defined as net loss adjusted to
exclude, when applicable, income tax (benefit) expense, interest
expense, depreciation and amortization expense, restructuring
expenses, share-based compensation expense, and Other, net,
including interest income, loss on extinguishment of debt and
foreign currency transaction gains and losses. Adjusted EBITDA as a
% of net revenues is defined as Adjusted EBITDA divided by net
revenues.
Limitations related to the use of non-GAAP
financial measures
There are a number of limitations related to the
use of Adjusted net loss, Adjusted net loss per diluted common
share, Adjusted EBITDA and Adjusted EBITDA as a % of net revenues
rather than their most directly comparable GAAP measures. Some of
these limitations are:
- Adjusted net loss and Adjusted net
loss per diluted common share exclude costs associated with
activities deemed to be non-recurring or not part of the Company’s
normal business activities, which are subjective determinations
made by management and may not actualize as expected;
- 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, loss on extinguishment of
debt 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 tables present the reconciliation of
Adjusted net loss and Adjusted net loss per diluted common share to
their most comparable GAAP measures, net loss and net loss per
share available to common stockholders—basic and diluted,
respectively, as reported (unaudited):
|
Three Months Ended |
|
Nine Months Ended |
(in thousands) |
October 1, 2022 |
|
October 2, 2021 |
|
October 1, 2022 |
|
October 2, 2021 |
Net loss, as reported |
$ |
(101,678 |
) |
|
$ |
(54,816 |
) |
|
$ |
(299,270 |
) |
|
$ |
(101,734 |
) |
Loss on extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,037 |
|
Adjusted net loss |
$ |
(101,678 |
) |
|
$ |
(54,816 |
) |
|
$ |
(299,270 |
) |
|
$ |
(100,697 |
) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
(in thousands, except share and per share
amounts) |
October 1, 2022 |
|
October 2, 2021 |
|
October 1, 2022 |
|
October 2, 2021 |
Numerator: |
|
|
|
|
|
|
|
Net loss, as reported |
$ |
(101,678 |
) |
|
$ |
(54,816 |
) |
|
$ |
(299,270 |
) |
|
$ |
(101,734 |
) |
Aggregate non-GAAP adjustments as listed above |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,037 |
|
Adjusted net loss used in computing Adjusted net loss per diluted
common share |
$ |
(101,678 |
) |
|
$ |
(54,816 |
) |
|
$ |
(299,270 |
) |
|
$ |
(100,697 |
) |
Denominator: |
|
|
|
|
|
|
|
Weighted average shares used in computing Adjusted net loss per
diluted common share |
|
63,694,592 |
|
|
|
63,280,122 |
|
|
|
63,579,763 |
|
|
|
63,111,703 |
|
Adjusted net loss per diluted common share |
$ |
(1.60 |
) |
|
$ |
(0.87 |
) |
|
$ |
(4.71 |
) |
|
$ |
(1.60 |
) |
|
Three Months Ended |
|
Nine Months Ended |
|
October 1, 2022 |
|
October 2, 2021 |
|
October 1, 2022 |
|
October 2, 2021 |
Net loss per share available to common stockholders—basic and
diluted, as reported |
$ |
(1.60 |
) |
|
$ |
(0.87 |
) |
|
$ |
(4.71 |
) |
|
$ |
(1.61 |
) |
Loss on extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.01 |
|
Adjusted net loss per diluted common share |
$ |
(1.60 |
) |
|
$ |
(0.87 |
) |
|
$ |
(4.71 |
) |
|
$ |
(1.60 |
) |
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) |
October 1, 2022 |
|
October 2, 2021 |
|
October 1, 2022 |
|
October 2, 2021 |
Net loss, as reported |
$ |
(101,678 |
) |
|
$ |
(54,816 |
) |
|
$ |
(299,270 |
) |
|
$ |
(101,734 |
) |
Income tax (benefit) expense |
|
— |
|
|
|
(23 |
) |
|
|
21 |
|
|
|
27 |
|
Interest expense |
|
1,040 |
|
|
|
1,005 |
|
|
|
3,173 |
|
|
|
2,656 |
|
Depreciation and amortization
expense |
|
8,435 |
|
|
|
5,703 |
|
|
|
23,255 |
|
|
|
14,910 |
|
Restructuring expenses(1) |
|
6,993 |
|
|
|
5,750 |
|
|
|
14,321 |
|
|
|
12,068 |
|
Share-based compensation expense |
|
9,250 |
|
|
|
6,385 |
|
|
|
28,848 |
|
|
|
21,624 |
|
Other, net(2) |
|
2,151 |
|
|
|
(759 |
) |
|
|
8,177 |
|
|
|
631 |
|
Adjusted EBITDA |
$ |
(73,809 |
) |
|
$ |
(36,755 |
) |
|
$ |
(221,475 |
) |
|
$ |
(49,818 |
) |
Net loss as a % of net revenues |
|
(123.2 |
)% |
|
|
(51.5 |
)% |
|
|
(88.3 |
)% |
|
|
(27.9 |
)% |
Adjusted EBITDA as a % of net
revenues |
|
(89.5 |
)% |
|
|
(34.5 |
)% |
|
|
(65.3 |
)% |
|
|
(13.7 |
)% |
____________
(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. Subsequent to the quarter
ended October 1, 2022, on October 18, 2022, the parties entered
into a confidential written settlement agreement and mutual release
in connection with this matter. |
(2) |
|
(a) Includes $3.9 million and $10.5 million in foreign currency
transaction losses in the three and nine months ended October 1,
2022, respectively, and $0.2 million and $0.4 million in foreign
currency transaction losses in the three and nine months ended
October 2, 2021, respectively. (b) Includes $1.0 million in loss on
extinguishment of debt associated with termination of the Company's
credit facility in the nine months ended October 2, 2021. |
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