Beyond Meat: “Tangible Progress” To Cash Flow Positive Future Despite Q1 Losses

Beyond Meat is showing “solid progression” in its goal to become cash flow positive despite a net loss for Q1 2023, CEO and co-founder Ethan Brown said Wednesday afternoon on the company’s quarterly earnings call.

The plant-based meat maker also announced a new $200 million “at the market” stock offering to help bolster its cash reserves as it pushes towards more revenue growth in the third and fourth quarters of 2023.

“As we look back on the second full quarter of our transition toward a sustainable growth operating model with an emphasis on achieving cash flow positive operations in the second half of this year, we are encouraged by early results even as we have many miles to travel,” Brown said in prepared comments. “Though we have much heavy lifting to do, we are seeing tangible progress.”

Though the company reported revenues of $92.2 million, a 15.7% drop from Q1 2022, the topline number reflected the cost-saving measures and efficiencies that have been implemented to stem the bleeding experienced in 2022. Beyond reported $59 million in net loss for this first quarter, nearly 40% less than the $100.4 million lost in the same quarter 2022.

Profits were up $6.2 million, reflecting a gross margin of 6.7% which is a far cry from Q4 2022 when profits were down $2.9 million with gross margins at -3.7% of revenues.

Brown emphasized that the company’s three-pronged strategy was working and that the brand was getting closer to price parity with conventional meat.

“We will continue to apply intense focus on margin restoration and cost reduction versus raising prices as we pursue our long standing price parity target with animal protein,” Brown said.

Browne reported that the company had crossed over into positive gross margins in Q1 in comparison to the -18% in Q3 2022. The company is achieving these margin gains even as it drops its average price per pound 6% on a sequential basis and 9% on a YoY basis, Brown said.

The company expects to see revenues inch up to roughly 15% sequentially as the fiscal year moves forward.

Despite all the optimism on Wednesday’s call, Beyond is still struggling domestically. U.S. retail sales were $44.1 million, a 35% decrease from the same period last year. Foodservice sales in Q1 were down 5.3% year-over-year.

Meanwhile, the company has seen a nearly 100% uptick in foodservice sales abroad as its partnership with McDonald’s on the McPlant burger has successfully become a permanent menu item in the UK, Ireland, Austria, Germany and the Netherlands.

In an effort to gain back market share within the U.S. plant-based community, Beyond Meat is launching a new messaging program called Better With Beyond that aims to reeducate consumers on the health benefits of switching to plant-based meats.

The new marketing program rolling out this summer is intended to clear up “confusion” on how the plant-based company makes its products and “highlights the great taste, health benefits of our products while celebrating our clean and sustainable process,” Browne said.

“Setting the record straight is a key part of bringing consumers back to the category,” he added.

Along with the marketing campaign, Beyond is optimistic that its partnership with the American Cancer Society to research a connection between plant-based meat and cancer prevention announced last fall will help consumers make informed decisions about healthy eating “rather than decisions driven by propaganda,” Brown said during the question-and-answer period.

Beyond’s leadership also hinted at a new burger innovation set to launch this summer in both retail frozen and foodservice that will improve taste and texture of the product to reach more consumers.

Although not addressed directly in the prepared statements, Beyond’s announcement of a new $200 million stock offering did not go unnoticed by investors. When asked about the new financing opportunity, Browne said that “it’s in no way a signal that we’re needing the cash immediately. So as a result, we’re just going to use it opportunistically.”

As of time of publication, Beyond Meat was trading at $10.80, about 13% lower than its previous close of $12.48.