Beyond Meat, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 30, 2024; comparison period ended April 1, 2023. Unaudited consolidated results.
Business context
Beyond Meat sells plant-based meat products across retail and foodservice channels. As of March 2024, its products were available at approximately 130,000 outlets in more than 65 countries. The company is narrowing its commercial focus and prioritizing gross-margin improvement, expense reduction and cash generation; it is discontinuing Beyond Meat Jerky.
Key financial metrics
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Net revenue | $75.6 million | $92.2 million |
| Gross profit / margin | $3.7 million / 4.9% | $6.2 million / 6.7% |
| Operating loss | $53.5 million | $57.7 million |
| Net loss | $54.4 million; $0.84 per share | $59.0 million; $0.92 per share |
| Adjusted EBITDA (non-GAAP) | $(32.9) million; (43.5)% of revenue | $(45.8) million; (49.6)% of revenue |
| Cash used in operating activities | $31.8 million | $42.2 million |
| Capital expenditures | $1.2 million | $5.3 million |
At March 30, cash and cash equivalents were $157.9 million, with an additional $15.6 million in restricted cash. Current assets were $336.5 million and current liabilities $78.8 million. Inventory was $122.5 million, down from $130.3 million at year-end 2023. The company had $1.15 billion principal amount of 0% convertible senior notes due 2027, carried at $1.14 billion net of issuance costs. Stockholders’ deficit was $561.4 million.
Changes versus the prior comparable period
- Revenue declined 18.0%, primarily from a 16.1% reduction in product volume and a 2.3% decline in net revenue per pound. Revenue fell across all four reported channels: U.S. retail and foodservice each declined 16.0% and 16.2%; international retail declined 12.0%; international foodservice declined 28.7%.
- Gross margin fell 180 basis points to 4.9%. Lower volumes, higher manufacturing and materials costs, and lower revenue per pound outweighed lower inventory provisions and logistics costs.
- Operating expenses declined to $57.1 million from $63.9 million, reflecting lower R&D and SG&A costs. Net loss improved, but included a $7.5 million accrual for a consumer class-action settlement.
- Operating cash use improved by $10.4 million year over year. Cash, cash equivalents and restricted cash totaled $173.5 million at quarter-end, compared with $273.6 million a year earlier.
Outlook, risks and unusual items
- Management expects 2024 operating expenses to decline from 2023 levels and believes existing cash and anticipated operating cash flows can fund foreseeable requirements for at least 12 months. It also anticipates seeking additional capital in 2024; financing may dilute shareholders or add restrictions, and may not be available on acceptable terms.
- Management said cash-flow-positive operations achieved in Q3 2023 were not sustained in Q4 2023 or Q1 2024. Achieving sustained positive cash flow depends on demand, gross-margin recovery, cost reductions and working-capital management. No specific revenue or earnings guidance is provided in the filing.
- Beyond IV products began shipping to customers in Q1. Management cites continued category weakness, consumer trade-down and inflation, competition, product mix, capacity underutilization, input costs and execution of cost-reduction initiatives as risks to results.
- On May 6, 2024, after quarter-end, the company agreed in a binding settlement term sheet to contribute $7.5 million to resolve certain consumer protein-claim class actions, subject to court approval. The full amount was accrued in Q1; management anticipates $250,000 in payments during 2024 and $7.25 million in 2025.
- A former co-manufacturer claims at least approximately $73 million in confidential arbitration; the company asserts counterclaims. A Quebec co-manufacturer claim seeks approximately CAD 129.8 million. The company says it cannot estimate potential losses beyond recorded accruals for various litigation matters.
- Other exposures include a 12-year campus lease and approximately $79.4 million of base rent for undelivered phases, $25.2 million of pea-protein purchase commitments through 2025, and $10.3 million of capital-expenditure purchase-order commitments due within 12 months. In France, restrictions on plant-based product naming remain under litigation; the CJEU ruling is expected in approximately seven to twelve months.
- The company’s $250 million shelf registration and ATM capacity remained unused as of March 30, 2024. A hypothetical 10% change in pea-protein cost would affect cost of goods sold by approximately $0.7 million; a 5% or 10% adverse foreign-exchange move on intercompany balances was estimated to produce a $5.2 million or $10.5 million loss, respectively.
Investor verification priorities
- Whether revenue volume stabilizes and Beyond IV, pricing changes and channel initiatives improve demand without further weakening net revenue per pound.
- Whether gross margin recovers and cost reductions translate into sustained positive operating cash flow, rather than relying on one-time working-capital effects.
- Cash runway, capital-raising plans and potential dilution, alongside the $1.15 billion notes due in 2027 and lease and purchase commitments.
- Approval and payment timing of the $7.5 million settlement, and outcomes or exposure from the co-manufacturer arbitration, Quebec claim and other litigation.
- Progress in reducing inventory and optimizing manufacturing capacity, and developments in France and other markets concerning product naming rules.