Beyond Meat has reported financial results for its first quarter ended April 3, 2021. The results show substantial growth in a period where foodservice continues to be limited.
- Net revenues were $108.2 million, an increase of 11.4% year-over-year.
- Gross profit was $32.7 million, or gross margin of 30.2% of net revenues.
- Net loss was $27.3 million, or $0.43 per common share; Adjusted net loss was $26.2 million, or $0.42 per common share, reflecting exclusion of expenses attributable to early debt extinguishment.
- Adjusted EBITDA was a loss of $10.8 million, or -10.0% of net revenues.
Ethan Brown, Beyond Meat President and CEO commented on the results saying: “We were pleased to see sequential improvement in our revenue growth and gross margin performance despite continued COVID-19 pressure on our foodservice business. Throughout the first quarter, we remained highly focused on investing in and building out production infrastructure in the U.S., the EU, and China; new product development and commercialization for our strategic QSR customers and retail markets; and research and development in service to our core growth levers of taste, nutrition, and cost.”
Brown added, “As I look at the foundation we are putting in place, I have never been more optimistic about Beyond Meat’s future as a significant and enduring global protein company. More near-term, we are cautiously returning to the practice of issuing guidance, starting with net revenues, as we have recently begun to see a slow thaw occurring within foodservice both domestically and in certain international markets.”
First Quarter 2021
Net revenues increased 11.4% to $108.2 million in the first quarter of 2021, compared to $97.1 million in the year-ago period. Growth in net revenues was primarily due to increased retail channel sales, partially offset by a decline in foodservice channel sales due to the continued impact of COVID-19 on foodservice demand levels.
Growth in volume sold during the first quarter of 2021 was partially offset by lower net price per pound driven by the Company’s strategic investments in promotional activity, and product mix shifts as larger-pack items carrying a lower net price per unit volume accounted for a greater proportion of the Company’s retail net revenues compared to the year-ago period.
Gross profit was $32.7 million, or gross margin of 30.2% of net revenues, in the first quarter of 2021, compared to $37.7 million, or gross margin of 38.8% of net revenues, in the year-ago period. The decrease in gross profit and gross margin was primarily due to higher transportation and warehousing costs, lower net price realization due to increased trade discounts and changes in product sales mix, higher depreciation and amortization expense primarily attributable to incremental fixed assets associated with the Company’s production facilities in Pennsylvania, The Netherlands and China, and increased fixed overhead costs.
Loss from operations in the first quarter of 2021 was $24.6 million compared to income from operations of $1.8 million in the year-ago period. The reduction in income from operations was primarily driven by increased production trial activities, growth in overall headcount levels primarily to support increased innovation capabilities and international growth, higher freight costs included in the Company’s selling expenses, and higher share-based compensation expense compared to the year-ago period.
Net loss was $27.3 million in the first quarter of 2021 compared to net income of $1.8 million in the year-ago period. Net loss per common share was $0.43 in the first quarter of 2021 compared to net income per common share of $0.03 in the year-ago period. During the first quarter of 2021, net loss included $1.0 million in expenses attributable to the Company’s early extinguishment of its revolving credit facility. During the first quarter of 2020, net income included $1.2 million in expenses attributable to COVID-19, specifically related to product donations tied to the Company’s COVID-19 relief campaign. Excluding these costs, Adjusted net loss was $26.2 million in the first quarter of 2021, or $0.42 per common share, compared to Adjusted net income of $3.0 million, or $0.05 per common share, in the year-ago period.
Adjusted EBITDA was a loss of $10.8 million, or -10.0% of net revenues, in the first quarter of 2021 compared to Adjusted EBITDA of $13.9 million, or 14.3% of net revenues, in the year-ago period.
Balance Sheet and Cash Flow Highlights
The Company’s cash and cash equivalents balance was $1.1 billion as of April 3, 2021 and total outstanding debt was $1.1 billion. During the first quarter of 2021, the Company completed a convertible senior notes offering in the aggregate principal amount of $1.15 billion, including a $150.0 million over-allotment option. Net cash used in operating activities was $30.7 million for the three months ended April 3, 2021, compared to $17.2 million for the year-ago period. Capital expenditures totaled $23.4 million for the three months ended April 3, 2021 compared to $12.4 million for the year-ago period. The increase in capital expenditures was primarily due to the Company’s continued investments in production equipment and facilities related to capacity expansion initiatives, mainly in China and the EU.
Update on COVID-19 and 2021 Outlook
Due to the COVID-19 pandemic, the Company continues to experience significantly reduced demand in its foodservice channel as decreased foot traffic, streamlined menu offerings and restrictions on foodservice locations’ operating capacity have resulted in closures or meaningfully curtailed operations of many of the Company’s foodservice customers.
At the same time, the surge in demand from retail customers that characterized the early stages of the pandemic as consumers abruptly shifted towards more at-home consumption has moderated. Given that the ongoing evolution of consumer demand patterns across retail and foodservice channels has significantly increased the difficulty of forecasting the Company’s customer demand levels, management believes it cannot provide full-year guidance for 2021 with reasonable certainty.
However, in order to furnish some degree of visibility into the Company’s near-term expectations, management will provide, on an interim basis, limited quarterly guidance for net revenues for the closest upcoming reporting period. To this end, the Company is providing the following guidance for the second quarter of 2021:
Net revenues in the range of $135 million to $150 million, an increase of 19% to 32% compared to the second quarter of 2020.
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 415-226-5361. 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.
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