Beyond Meat(R) Reports Second Quarter 2020 Financial Results
2020-08-04 04:20:07 PM ET (GlobeNewswire)
Net Revenues Increase to a Record $113.3 Million, up 69% Year-Over-Year
Retail Channel Net Revenues up 192% Year-Over-Year Driven by Higher Household Penetration and Increased Average Spending per Household
Beyond Meat, Inc. (NASDAQ:BYND) ("Beyond Meat" or "the Company"), a leader in plant-based meat, today reported financial results for its second quarter ended June 27, 2020.
Second Quarter 2020 Financial Highlights
-- Net revenues were $113.3 million, an increase of 69% year over year.
-- Gross profit was $33.7 million, or gross margin of 29.7% of net revenues; Adjusted gross profit was $39.6 million, or Adjusted gross margin of 34.9% of net revenues, reflecting exclusion of expenses attributable to COVID-19.
-- Net loss was $10.2 million, or $0.16 per common share; Adjusted net loss was $1.2 million, or $0.02 per diluted common share, reflecting exclusion of expenses attributable to COVID-19 and early debt extinguishment.
-- Adjusted EBITDA was $11.7 million, or 10.3% of net revenues.
Beyond Meat President and CEO Ethan Brown commented, "I am proud of our record net revenues and growth during a very challenging period. As the toll of the COVID-19 pandemic took hold across the foodservice industry, we repurposed assets and repacked and rerouted products to meet increased consumer activity in the retail aisles. Throughout the quarter, our brand experienced an enviable combination of consumer trends - increasing household penetration; increasing buying levels per household; and strong repeat purchase rates of nearly 50%, well above the success threshold for consumer packaged goods. Further, we forged ahead with our long-term growth strategy. We invested in expanded operations and sales in the EU and Asia, in innovation, and in targeted pricing measures during this period of high beef prices. Most notable in this regard was the retail introduction of our Cookout Classic(TM) value pack, which significantly reduced the price of our burgers from nearly 2 times tha t of conventional beef patties to an approximate 20% premium, on a per pound basis. Though the Cookout Classic(TM) only reached stores in the last 2 weeks of the second quarter, it accounted for 16 points of the year-over-year volume growth in our U.S. retail business. We look forward to continuing to serve our consumers and customers alike as we all hope for a resolution to the COVID-19 pandemic."
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This release includes references to non-GAAP financial measures. Refer to "Non-GAAP Financial Measures" later in this release for the definitions of the non-GAAP financial measures presented and a reconciliation of these measures to their closest comparable GAAP measures.
According to SPINS/IRI panel data for the 52-week period ended June 28, 2020.
Second Quarter 2020
Net revenues increased 69% to $113.3 million in the second quarter of 2020, compared to $67.3 million in the year-ago period. Growth in net revenues was primarily due to an increase in volume sold, partially offset by lower net price per pound driven by the Company's strategic investments in promotional activity intended to encourage greater consumer trial. Growth in volume sold was driven mainly by increased retail channel sales, resulting from distribution gains both domestically and abroad, higher sales velocities at existing retail customers, and contribution from new product introductions. During the quarter, increased retail channel sales were partially offset by a reduction in foodservice channel sales as a result of the ongoing COVID-19 pandemic.
Net revenues by channel (unaudited):
Three Months Ended Change
(in thousands) June 27, June 29, Amount %
2020 2019
U.S.:
Retail $ 90,040 $ 30,531 $ 59,509 194.9 %
Foodservice 6,486 16,504 (10,018 ) (60.7 ) %
U.S. net revenues 96,526 47,035 49,491 105.2 %
International:
Retail 9,572 3,589 5,983 166.7 %
Foodservice 7,240 16,627 (9,387 ) (56.5 ) %
International net revenues 16,812 20,216 (3,404 ) (16.8 ) %
Net revenues $ 113,338 $ 67,251 $ 46,087 68.5 %
Six Months Ended Change
(in thousands) June 27, June 29, Amount %
2020 2019
U.S.:
Retail $ 139,963 $ 49,992 $ 89,971 180.0 %
Foodservice 29,117 25,338 3,779 14.9 %
U.S. net revenues 169,080 75,330 93,750 124.5 %
International:
Retail 15,524 3,707 11,817 318.8 %
Foodservice 25,808 28,420 (2,612 ) (9.2 ) %
International net revenues 41,332 32,127 9,205 28.7 %
Net revenues $ 210,412 $ 107,457 $ 102,955 95.8 %
Gross profit was $33.7 million, or gross margin of 29.7% of net revenues, in the second quarter of 2020, compared to $22.7 million, or gross margin of 33.8% of net revenues, in the year-ago period. Adjusted gross profit, which excludes $5.9 million of costs associated with product repacking activities due to COVID-19, was $39.6 million, or Adjusted gross margin of 34.9% of net revenues, in the second quarter of 2020, compared to Adjusted gross profit of $22.7 million, or Adjusted gross margin of 33.8% of net revenues, in the year-ago period. The increase in Adjusted gross profit and Adjusted gross margin was primarily due to direct materials and packaging input cost savings, direct labor efficiencies, and an increase in the volume of products sold in the second quarter of 2020 compared to the year-ago period. The $5.9 million in costs associated with product repacking activities in the second quarter of 2020 were driven by the Company's efforts to repurpose certain foodservi ce inventory into retail products as a result of the sudden shift in consumer demand related to COVID-19. Following these repacking activities, the Company has rebalanced its mix of finished goods inventory between retail and foodservice products and does not anticipate a need for further repacking activity.
Loss from operations in the second quarter of 2020 was $8.2 million compared to income from operations of $2.2 million in the year-ago period. The decrease in income from operations was primarily driven by increased headcount to support the Company's long-term growth, higher share-based compensation expense, increases in the Company's marketing initiatives, continued investments in innovation, product donation costs related to the Company's COVID-19 relief campaign, investments in international expansion initiatives, and higher restructuring expenses, partially offset by the increase in gross profit during the quarter.
Net loss was $10.2 million in the second quarter of 2020 compared to net loss of $9.4 million in the year-ago period. Net loss per diluted common share was $0.16 in the second quarter of 2020 compared to net loss per diluted common share of $0.24 in the year-ago-period. During the second quarter of 2020, net loss included $5.9 million of costs associated with the product repacking activities attributable to COVID-19, $1.6 million in product donation costs related to the Company's COVID-19 relief campaign, and $1.5 million of early debt extinguishment costs associated with the Company's refinanced credit arrangements. Excluding these costs, Adjusted net loss was $1.2 million in the second quarter of 2020, or $0.02 per diluted common share, compared to Adjusted net income of $2.3 million, or $0.05 per diluted common share, in the year-ago period.
Adjusted EBITDA was $11.7 million, or 10.3% of net revenues, in the second quarter of 2020 compared to Adjusted EBITDA of $6.9 million, or 10.2% of net revenues, in the year-ago period.
Chief Financial Officer and Treasurer, Mark Nelson commented, "With our robust sales momentum and strong, underlying operating results during the second quarter, we feel confident about Beyond Meat's potential to seize upon the growth opportunities ahead of us. Although COVID-19 has added complexity to managing our business, we are proud of the way our team has adapted and continues to execute against our long-term strategic plan, closely managing near-term risk while continuing to invest in Beyond Meat's longer-term future."
Balance Sheet and Cash Flow Highlights
The Company's cash and cash equivalents balance was $222.3 million as of June 27, 2020 and total outstanding debt was $50.0 million. Net cash used in operating activities was $44.3 million for the six months ended June 27, 2020, compared to $22.4 million for the prior year period. Capital expenditures totaled $26.0 million for the six months ended June 27, 2020 compared to $7.5 million for the prior year period. The increase in capital expenditures was primarily driven by the Company's continued investments in production equipment and facilities related to capacity expansion initiatives. On April 22, 2020, the Company announced that it had entered into a new $150 million five-year secured revolving credit facility, which also includes an accordion feature for up to an additional $200 million, replacing its prior credit facilities. Long-term borrowings on the Company's new revolving credit facility were $50.0 million as of June 27, 2020, as compared to short and long-term borro wings under the Company's prior credit facilities of $30.6 million as of December 31, 2019.
Update on COVID-19 and 2020 Outlook
Due to the COVID-19 pandemic, as previously communicated, the Company experienced a meaningful slowdown in its foodservice business as various regions around the world implemented stay-at-home orders, resulting in the closure or limited operations of many of its foodservice customers. At the same time, the Company experienced an increase in demand by its retail customers as consumers shifted towards more at-home consumption, which more than offset the decline in sales to foodservice customers. While many of the Company's foodservice customers have reopened, most are operating under various local restrictions and continue to navigate a highly uncertain environment. Given the uncertainty regarding the ultimate duration, magnitude and effects of the COVID-19 pandemic, management remains unable to predict the continuing impact of COVID-19 on its business for the balance of the year with reasonable certainty. As such, the Company's 2020 outlook, previously provided on February 27, 2020, remains suspended until further notice.
Conference Call and Webcast
The Company will host a conference call and webcast to discuss these results with additional comments and details today at 4:30 p.m. Eastern, 1:30 p.m. Pacific. The conference call webcast will be available live over the Internet through the "Investors" section of the Company's website at www.beyondmeat.com. Investors interested in participating in the live call can dial 866-221-1171 from the U.S. or 270-215-9602 from international locations. A telephone replay will be available approximately two hours after the call concludes through Wednesday, August 19, 2020, by dialing 855-859-2056 from the U.S., or 404-537-3406 from international locations, and entering confirmation code 4658234.
