Beyond Meat has reported its Q1 2024 financial earnings, communicating a continued decline in revenue, prompting a nearly 14% drop in the company’s stock. Net revenues fell 18% year-over-year to $75.6 million, marking the eighth consecutive quarter of year-over-year revenue declines for the company.
“We’re doing the things you need to do to get through a period that’s challenging and return to growth”
This development follows a significant surge in the company’s stock value in February after Beyond announced its 2023 Q4 earnings. Despite a nearly 8% decline in Q4 revenue compared to the previous year, Beyond Meat received favorable reviews from analysts during the recent earnings call. This positive feedback was due to the fact that, although US sales decreased, the company’s performance exceeded analyst expectations.
The decrease in revenue in Q1 was largely due to a 16.1% reduction in the volume of products sold and a slight 2.3% decrease in net revenue per pound, attributed to increased trade discounts and pricing changes. Notably, US retail channel net revenues saw a decline of 16.0%, influenced by a decrease in product volume and alterations in the sales mix. The international sectors also faced challenges, with a 12.0% reduction in the retail channel and a 28.7% decrease in the foodservice net revenues.
Impact on profit and operational costs
Amidst these downturns, the gross profit for the quarter was $3.7 million, representing a gross margin of 4.9%, which is a decline from the 6.7% margin in the previous year. This was impacted by higher manufacturing costs, including materials and depreciation, although partially offset by reduced inventory reserves and logistics costs.
On the operational front, Beyond Meat reduced its losses to $53.5 million, down from $57.7 million in the same quarter last year. This improvement was primarily due to a decrease in operating expenses, particularly in marketing and non-production headcount, although these gains were somewhat offset by a decrease in gross profit.
Progress and strategies for growth
President and CEO Ethan Brown explained the company’s forward-looking strategies, stating, “In Q1, we made solid progress against our 2024 priorities, including: hitting our first quarter revenue objective; reducing operating expenses and cash consumption year-over-year; bringing production in-house to reduce costs and improve quality; and commencing shipments of Beyond IV, the fourth generation of Beyond Burger and Beyond Beef.”
Brown remains optimistic about the company’s trajectory, noting the introduction of a new, healthier burger formulation in the US and the ongoing geographical expansion of its McPlant burger in Europe, developed in collaboration with McDonald’s. Brown furthers, “Together with measures we are exploring to bolster our balance sheet, we continue to work to position 2024 as a pivotal year as we strive to achieve sustainable and profitable operations.”
Future projections
For the remainder of 2024, Beyond Meat anticipates net revenues between $315 million and $345 million, with expectations for a stronger performance in the second half of the year. The company forecasts gross margins in the mid-to-high teens and projects capital expenditures between $15 million and $25 million.
The company’s operational landscape remains impacted by macroeconomic uncertainties, such as continued decreasing demand in the plant-based meat sector, persistent inflation, elevated interest rates, and looming recession fears. However, Beyond Meat is steadfast in its strategic initiatives to stabilize and grow its market position, remaining committed to achieving sustainable and profitable operations.
In a conference call with investors, as reported by Yahoo Finance, Brown noted, “We really do believe we are at the early stages of a pivotal and terrific year for Beyond Meat. We’re doing the things you need to do to get through a period that’s challenging and return to growth.”
