Beyond Meat (BYND) Announces Preliminary Results for Q3
Beyond Meat, Inc. BYND provided a business update and discussed preliminary results yesterday for third-quarter 2023. It noted that certain sector-specific and consumer headwinds might have impacted its third-quarter results. The company also highlighted that it intends to improve its cost structure by pursuing significant cost reduction measures.
Inside the Headlines
For third-quarter 2023, Beyond Meat anticipates net revenues of about $75 million, suggesting a decline of 9% and 26.5% on a year-over-year and sequential basis, respectively. However, on its second-quarter earnings call, the company anticipated returning year-over-year top-line growth in the third quarter.
The lowered revenue guidance reflects the impacts of weak sales volumes in the U.S. foodservice and U.S. retail channels due to soft demand in the plant-based meat category and lower-than-expected promotional effectiveness. The unfavorable changes in product sales mix, indicating lower-than-expected sales of core products like Beyond Burger and Beyond Sausage, relative to its non-core products, are also likely to have impacted its top line.
Gross profit for the quarter is anticipated to be at a loss of about $7-$8 million. Beyond Meat expects to have generated a positive free cash flow of approximately $7.6 million in the third quarter. However, management noted that it does not expect to sustain positive free cash flow in the fourth quarter.
In the face of challenging market conditions, the company revised its financial outlook for 2023. For the year, BYND projects its net revenues in the band of $330-$340 million, suggesting a decline of 19-21% on a year-over-year basis. The revised net revenue guidance marks a decrease from the earlier mentioned decline of 9-14% to $360-$380 million. Gross profit is now projected to be approximately breakeven.
For the year, operating expenses are still expected to be $245 million or less. It currently projects capital expenditures to be in the range of $10-$15 million, lower than $20-$25 million estimated earlier.
Additionally, the company noted that it remains focused on improving its cost structure and operating performance by implementing five main actions. This involves the execution of a 19% reduction in its global non-production workforce, reviewing its pricing strategy to expand gross margin and effective management of inventory to lower working capital. It also includes focusing on channels and geographies that generate revenue growth and the utilization of portfolio and marketing to counter misinformation about its products in the U.S. retail market.
In 2024, BYND expects to achieve $9.5-$10.5 million in cash operating expense savings related to the workforce reduction and elimination of certain open positions. That said, it expects to incur one-time cash charges of about $2-$2.5 million associated with the workforce reduction.
Zacks Rank and Price Performance
Beyond Meat, with a market capitalization of $450.7 million, currently carries a Zacks Rank #2 (Buy). The company is poised to benefit from its solid product portfolio and focus on operational execution and cost-saving measures in the quarters ahead. However, low demand for its core products like Beyond Burger and Beyond Sausage remains a concern.
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In the past month, its shares have lost 13.4% compared with the industry’s decline of 5.8%.
Other Key Picks
Here, we have highlighted three other top-ranked stocks, namely Inter Parfums IPAR, Pilgrim's Pride PPC and Grocery Outlet Holding Corp. GO. While Inter Parfums and Pilgrim's Pride each sport a Zacks #1 Rank (Strong Buy), Grocery Outlet carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Inter Parfums manufactures, markets and distributes a range of fragrances and fragrance-related products. The Zacks Consensus Estimate for Inter Parfums’ current financial-year sales and earnings indicates 20.6% and 14.9% growth from their respective year-ago reported figures. IPAR has a trailing four-quarter earnings surprise of 45.9%, on average.
Pilgrim's Pride is a producer and distributor of chicken and pork products. PPC delivered an earnings surprise of 13.7% in the last reported quarter. The Zacks Consensus Estimate for its current quarter earnings suggests growth of 185.7 from the year-ago reported number.
Grocery Outlet is a retailer of consumables and fresh products. GO has a trailing four-quarter earnings surprise of 14.3%, on average. The Zacks Consensus Estimate for GO’s current financial-year sales and EPS indicates improvements of 11.2% and 4.9%, respectively, from the year-ago reported numbers.
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