Business context and reporting period
Beyond Meat, Inc. filed this Form 10-K for the fiscal year ended December 31, 2022. The company sells plant-based meat products across beef, pork and poultry platforms through retail and foodservice channels; it reported one operating and reportable segment. Products were available at approximately 190,000 retail and foodservice outlets in more than 80 countries at year-end. This is an annual report, not a standalone fourth-quarter filing.
Financial performance and liquidity
| Metric | FY 2022 | FY 2021 |
|---|---|---|
| Net revenue | $418.9 million | $464.7 million |
| Gross profit (loss) / margin | $(23.7) million / (5.7)% | $117.3 million / 25.2% |
| Operating loss | $(342.8) million | $(174.9) million |
| Net loss | $(366.1) million | $(182.1) million |
| Net loss per share, basic and diluted | $(5.75) | $(2.88) |
| Adjusted EBITDA (non-GAAP) | $(278.0) million | $(112.8) million |
| Cash used in operating activities | $(320.2) million | $(301.4) million |
| Cash used in investing activities | $(87.5) million | $(147.5) million |
At December 31, 2022, cash and cash equivalents were $309.9 million, with a further $12.6 million restricted as collateral. Current assets were $606.5 million and current liabilities $75.8 million. Inventory was $235.7 million, down from $241.9 million. Convertible notes had $1.15 billion principal outstanding, carried at $1.134 billion net of issuance costs; they bear 0% regular interest and mature in 2027. The balance sheet showed a $203.5 million stockholders’ deficit. Management said existing cash and anticipated operating cash flows were expected to fund foreseeable needs for at least the next 12 months, while noting that this depends on execution and assumptions.
Changes versus the prior year
- Revenue fell 9.8%, while total pounds sold increased 0.4%; the decrease reflected lower revenue per pound, discounts, price reductions, foreign exchange and weaker demand.
- International revenue fell 20.7%; U.S. revenue fell 4.9%. International retail declined 25.3%, the largest channel decrease.
- Cost of goods sold rose 27.4% to $442.7 million, exceeding revenue. Higher manufacturing and logistics costs, inventory reserves and write-offs, and the launch of Beyond Meat Jerky contributed to the deterioration. The company recorded $22.6 million of excess and obsolete inventory write-offs and $9.1 million in underutilization fees and co-manufacturing termination costs.
- SG&A increased 14.3% to $239.5 million, including increased marketing, payroll and severance costs. Research and development expenses declined 7.0% to $62.3 million.
- Cash and cash equivalents declined from $733.3 million to $309.9 million. The company used $70.5 million for property, plant and equipment and contributed $13.3 million to its PepsiCo joint venture in 2022.
- Net loss included $18.9 million in the company’s share of joint-venture losses, versus $3.0 million in 2021. Beyond Meat Jerky contributed $33.5 million of U.S. retail revenue but negatively affected gross profit by approximately $19.3 million.
Outlook, management commentary and risks
Beginning in Q4 2022, management pivoted toward margin recovery and lower operating expenses, inventory reduction and cash generation, and concentration on near-term retail and foodservice opportunities alongside selected strategic partners. Management expected 2023 operating expenses to decline from 2022 levels, but provided no specific revenue, margin or cash-flow guidance in the supplied filing text. It cautioned that achieving cash-flow-positive targets depends on cost reductions, positive gross margins, revenue and expense targets, inventory monetization and working-capital management.
The company announced 2022 workforce reductions affecting approximately 4% and 19% of its global workforce in separate actions. It expected approximately $8 million in annualized savings from the first action, excluding about $1 million of separation costs; the second action resulted in approximately $4 million of one-time cash charges. Management warned savings may not be fully realized. The company also began restructuring certain Jerky-related contracts and operations, with work expected to continue through most of 2023.
Key risks include sustained category softness and competition; premium pricing and inflation-driven consumer trade-down; promotional discounting and pressure on margins; capacity underutilization and further inventory write-downs; reliance on pea-protein suppliers and co-manufacturers; customer and distributor concentration; execution of cost reductions; and substantial cash burn and debt obligations. The Beyond Burger accounted for approximately 50% of 2022 gross revenue. One distributor represented approximately 12% of gross revenue.
Legal matters include putative consumer class actions alleging misleading protein and ingredient claims; the company said potential losses were not estimable. A French trade association lawsuit and French restrictions on meat-related product names could affect marketing in France; court proceedings were ongoing. Don Lee Farms litigation was settled in October 2022 without a material financial impact. Deloitte issued unqualified opinions on the financial statements and internal controls over financial reporting; management also concluded controls were effective at year-end.
Most important facts for investors to verify
- Whether demand, revenue per pound and sales trends stabilize, particularly in international retail and the refrigerated plant-based category.
- Whether gross margins recover and 2023 operating-expense reductions translate into lower cash burn, including after Jerky restructuring and inventory actions.
- Cash runway and funding needs under weaker-than-expected sales; assess the $1.15 billion notes due 2027, lease commitments and other purchase and co-manufacturer commitments.
- Inventory quality and reserve assumptions: the auditor identified the excess and obsolete inventory provision as a critical audit matter; year-end inventory was $235.7 million and the provision was $17.8 million.
- Outcomes and potential costs of consumer class actions and French labeling disputes, as well as progress on the Campus Headquarters build-out and related commitments.