Beyond Meat: Q2 Sees Revenue Down, Margins Up
Beyond Meat made progress in its mission to reach profitable growth as price increases in Q2 helped bolster gross margins and offset declining volume.
The El Segundo, Calif.-based company posted net revenues of $93.2 million, representing a -8.8% year-over-year decrease. Despite this decline, gross profit was $13.7 million, a marked improvement over $2.3 million in the year-ago period.
Beyond exceeded its Q2 revenue objective, providing “very clear proof point that our operations are making progress toward getting leaner and more efficient,” said CEO and president Ethan Brown in prepared remarks.
That progress was reflected in improving gross margins – 14.7%, its best quarterly gross margin since Q3 2021 – and an adjusted EBITDA loss of -$23 million compared to -$40.8 million in the period last year.
Volume of products sold decreased 14% but was offset by a 6.1% increase in net revenue per pound driven primarily by lower trade discounts and price increases across certain products in retail and foodservice.
It was also the lowest quarterly cost-of-goods sold per pound since Q2 2021.
“This suggests that we are starting to see the financial benefits from some of the pricing, network consolidation and other cost reduction initiatives we have been pursuing,” said CFO and treasurer Lubi Kutua.
The company continues to pursue rationalization of its U.S. warehousing network and is starting to see the realization of year-over-year savings in transportation and warehousing expenses, Kutua added.
Yet, the rosy spin on yesterday’s results does not fully gloss over the arduous climb Beyond Meat has been on in recent years including labor cuts and lawsuits that have hampered the company’s optimistic outlook.
It was Beyond’s ninth consecutive quarter of year-over-year revenue declines despite company leadership’s pledge to “aggressively manage cash use” and institute efficiency strategies that would lead to profitable operations.
In February, the plant-based meat maker launched its Beyond IV, a reformulated product line using avocado oil and emphasized the health benefits of less saturated fat. Last month, it introduced its Beyond Sun Sausage that features the American Heart Association Certified badge to further drive the company’s narrative of being a healthier protein alternative.
U.S. retail channel net revenue decreased 7.5% to $44.9 million in the second quarter. The International retail segment contracted from $17.6 million versus $20 million in the same period last year.
As he has in recent quarterly earnings calls, Brown continued to harp on institutional headwinds and “misinformation” coming from the conventional animal meat industry that have hampered the potential of the category.
Despite the mixed results, Q2 was “generally in-line with reduced expectations,” William Blair analysts wrote in a post-earnings report.
“Sales in the U.S. remained soft,” the analysts continued. “While demand is still sluggish, the company continues to work to rightsize the product and customer portfolio and implement actions to lower costs across the enterprise and preserve cash.”
The full-year 2024 outlook was updated in the earnings report to net revenues in the range of $320 million to $340 million with gross margin expected to be in the mid-teens.
