Beyond Meat has released financial results for the first quarter ending April 3, 2021. The results show significant growth in a period when food service continues to be limited.
HEADLINE RESULTS
- Net sales were $ 108.2 million, an 11.4% increase over the previous year.
- Gross profit was $ 32.7 million, or gross margin of 30.2% on net sales.
- The 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 the exclusion of charges related to prepayment of debt.
- Adjusted EBITDA was $ 10.8 million, or -10.0% of net sales.
Commenting on the results, Ethan Brown, President and CEO of Beyond Meat, said, “We were pleased to see our sales growth and gross margin improving sequentially, even though COVID-19 continued to put pressure on our foodservice business. During the first quarter, we continued to focus heavily on investing in and expanding manufacturing infrastructure in the US, EU and China. Developing and commercializing new products for our strategic QSR customers and retail markets; and research and development serving our key drivers of growth in terms of taste, nutrition and cost. “
Brown added, “When I look at the foundation we’re building, I’ve never been more optimistic about the future of Beyond Meat as a significant and enduring global protein company. In the short term, we are cautiously returning to the practice of issuing guidelines, starting with net revenue, as we recently saw slow thawing in food service both domestically and in certain international markets. “
First quarter of 2021
Net sales increased 11.4% to $ 108.2 million in the first quarter of 2021, compared to $ 97.1 million in the same period last year. The growth in net sales was mainly driven by higher retail channel sales, which was partially offset by a decrease in foodservice channel sales due to the ongoing impact of COVID-19 on foodservice demand.
Volume growth sold in the first quarter of 2021 was partially offset by lower net price per pound caused by the company’s strategic investments in promotional activities and shifts in the product mix as larger packs with a lower net price per volume unit had a higher proportion of the Company retail sales compared to the same period last year.
Gross profit was $ 32.7 million, or gross margin of 30.2% of net sales, for the first quarter of 2021, compared to $ 37.7 million, or a gross margin of 38.8% of net sales, for the same period last year. The decrease in gross profit and margin was primarily due to higher transportation and storage costs, lower net price realization due to increased trade discounts and changes in product sales mix, and higher depreciation mainly due to additional property, plant and equipment related to the company’s manufacturing facilities in Pennsylvania, the Netherlands and China as well as increased fixed costs.
Operating loss was $ 24.6 million for the first quarter of 2021, compared to operating income of $ 1.8 million for the same period last year. The decline in operating income was primarily due to increased activity in production trials, total workforce growth, mainly to support increased innovation and international growth, higher freight costs, which are included in the company’s selling expenses, and higher share-based compensation expenses compared to Previous year attributed to period a year ago.
Net loss was $ 27.3 million for the first quarter of 2021 compared to net income of $ 1.8 million for the same period last year. Net loss per common share was $ 0.43 for the first quarter of 2021, compared to net income per common share of $ 0.03 for the same period last year. For the first quarter of 2021, the net loss included charges of $ 1.0 million related to the company’s premature termination of the revolving credit facility. For the first quarter of 2020, net income included spending of $ 1.2 million related to COVID-19, specifically related to product donations related to the company’s COVID-19 relief campaign. Excluding these costs, adjusted net loss for the first quarter of 2021 was $ 26.2 million, or $ 0.42 per common share, compared to adjusted net income of $ 3.0 million, or $ 0.05 per common share, for the same period last year.
Adjusted EBITDA was a loss of $ 10.8 million, or -10.0% of net sales, for the first quarter of 2021, compared to an adjusted EBITDA of $ 13.9 million, or 14.3% of net sales, for the same period last year.
Balance sheet and cash flow highlights
The company’s cash and cash equivalents balance as of April 3, 2021 was $ 1.1 billion and its total outstanding debt was $ 1.1 billion. In the first quarter of 2021, the company completed an offering of convertible senior notes for a total face value of $ 1.15 billion, including an over-allotment option of $ 150.0 million. Cash flow from operating activities for the three months ended April 3, 2021 was $ 30.7 million compared to $ 17.2 million for the same period last year. Investments were $ 23.4 million for the three months ended April 3, 2021, compared to $ 12.4 million for the same period last year. The increase in investments was mainly due to the Company’s continued investment in manufacturing facilities and equipment related to capacity expansion initiatives, mainly in China and the EU.
Update to COVID-19 and 2021 Outlook
Due to the COVID-19 pandemic, the company continues to experience significantly lower demand in its food service channel, as lower pedestrian traffic, optimized menu offers and restrictions in the operating capacity of food service locations have led to closings or a significant reduction in the operation of many food service companies have customers.
At the same time, the surge in retail customer demand that marked the early stages of the pandemic, when consumers abruptly shifted to more at home consumption, has slowed. With consumer demand patterns continuing to evolve in the retail and hospitality sectors, it has become significantly more difficult for the company to forecast customer demand. However, management is of the opinion that there can be no forecast for the full year 2021 with sufficient certainty.
However, in order to gain some insight into the company’s near-term expectations, management will temporarily provide a limited quarterly forecast of net sales for the next upcoming reporting period. To this end, the company is providing the following guidelines for the second quarter of 2021:
Net sales were between $ 135 million and $ 150 million, an increase of 19 to 32 percent over Q2 2020.
Conference call and webcast
The company will host a conference call and webcast today at 5:00 p.m. East and 2:00 p.m. Pacific to discuss these findings with additional comments and details. Investors interested in participating in the live call can call 415-226-5361. The conference call webcast will be available live on the Internet through the Investors section of the company’s website at www.beyondmeat.com and will be archived later.
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