Summary

• Beyond Meat, Inc. is a leading plant-based meat company offering innovative, sensory-advanced plant-based meats, providing both nutritional and environmental benefits to consumers.
• Beyond was founded in 2009 by Ethan Brown and is currently headquartered in El Segundo, California, U.S.
• The company operates under one reporting segment. However, the segment includes retail and food services revenues from the US and international regions.
• The company's net revenues for the year ended 31 December 2022 were $419 million, a 9.85% decrease from the previous year's $465 million, resulting in a $46 million decrease.
• The 52-week price range of Beyond is 5.58 to 22.87, and the trailing PE ratio is 600.19, the gross margin is -9.63%, the operating margin is -92.44%, the net margin is -93.60% and the return on equity is 19.42% due to equity deficit as of 30 September 2023.

Brief Company Overview

Beyond Meat Inc. (NASDAQ: BYND) is a leading plant-based meat company offering innovative, sensory-advanced plant-based meats with nutritional and environmental benefits. The company offers a variety of products including Beyond Burger, Beyond Beef, Beyond Meatballs, Beyond Meat Jerky, Beyond Steak, Beyond Sausage, Beyond Breakfast Sausage Patties, Beyond Ground Pork, Beyond Chicken Tenders, Beyond Chicken Nuggets, and Beyond Popcorn Chicken. Beyond was founded in 2009 by Ethan Brown and is currently headquartered in El Segundo, California, U.S. In 2020, Beyond Meat expanded its global presence by opening offices in the Netherlands and China, and launching products in over 80 countries.

Beyond operates under one operating segment and sells the product under three platforms such as beef, pork and poultry. The primary customers of the company are vegetarians and vegans, who do not eat any animal products for ethical or health reasons.

As of December 31, 2022, Beyond had 787 full-time employees and 89 contract workers. The current CEO of Beyond Meat is Ethan Brown, who is also the founder and president of the company.¹ As of September 30, 2023, the company had 64,460,196 shares outstanding and the company paid no dividends as yet. The company has 320 institutional shareholders, and Parkwood LLC is the largest shareholder with 8.37% shareholding. The 52-week price range of Beyond is 5.58 to 22.87, and the trailing PE ratio is 600.19. The loss per share of the company is 1.09 for the quarter that ended on 30 September 2023; the gross margin is -9.63%, the operating margin is -92.44%, the net margin is -93.60% and the return on equity is 19.42% due to equity deficit as of 30 September 2023.

Recent Developments

• On October 12, 2023, Madison Square Garden Sports Corp. (NYSE: MSGS) and Madison Square Garden Entertainment Corp. (NYSE: MSGE) entered a new partnership with Beyond Meat, Inc. regarding the GO BEYOND® GRILL, which will exclusively feature and serve Beyond Smashable Burger and Beyond Sausage in the Madison Square Garden.²
• On August 02, 2023, Beyond Meat, Inc. launched the Beyond Stack Burger™ and announced the expansion of its burger portfolio with the debut of the company’s newest product innovation.³
• On July 11, 2023, Beyond Meat, Inc., following a successful initial rollout of Beyond Steak®, expanded distribution to include Whole Foods Market, Publix, Wegmans, Meijer and Stater Bros. Markets.⁴
• On October 24, 2022, Beyond Meat, Inc. launched Beyond Steak™, a new innovation designed to deliver the juicy, tender and delicious bite of seared steak tips with the added nutritional and environmental benefits of plant-based meat.⁵
• On January 10, 2022, Pizza Hut® and Beyond Meat, Inc. launched the plant-based Beyond Italian Sausage™ Crumbles as a permanent offering at Pizza Hut Canada locations nationwide.⁶

Recent Financing Activities

• On September 30, 2023, for the nine months ended, stock options were exercised by the employees and Beyond utilized the $0.17 million net proceeds in paying the employee benefits and lease obligations.⁷
• On March 05, 2021, Beyond issued Senior debts and collected proceeds amounting to $1,150 million to meet the operational expenditures and support growth by investment in Fixed Assets and Joint Ventures.⁸

Financial Performance Highlights

Q3 2023 Highlights

In Q3 for the period ended 30 September 2023, net revenues decreased 8.7% to $75.3 million from $82.5 million in Q3 of 2022, primarily due to a decrease in net revenue per pound of 11.6%. This was partially offset by a 3.5% increase in product volume. The decrease was primarily due to increased trade discounts and changes in product sales mix, while the increase was primarily driven by international retail and food service channels. In Q3, the company's gross loss was $7.3 million, with a -9.6% margin, compared to a year-ago loss of $14.8 million. This was largely due to lower manufacturing costs, materials costs, depreciation, and inventory reserves per pound, partially offset by lower net revenues per pound. Additionally, a change in the accounting estimate for large manufacturing equipment in Q1 2023 reduced COGS depreciation expense by approximately $4.4 million. Earnings Per Share (EPS) for the third quarter as of 30 September 2023, was -1.09, an increase of 32% compared with the prior year's third quarter EPS, which amounted to -1.60, resulting in an improvement in profitability from investment. The company paid no dividends as yet.

Annual Performance Highlights

Net revenues for the year ended on 31 December 2022 were $419 million, declined by 9.85% compared with the prior year's revenue ended on 31 December 2021, which amounted to $465 million, resulting in a decline in the net revenue by $46 million. In 2022, net revenues were negatively impacted by soft demand in the plant-based category, macroeconomic issues like inflation, rising interest rates, recession concerns, and increased competition, while the COVID-19 pandemic's long-term effects and consumer behavior further impacted the business.

Gross Profit for the year ended on 31 December 2022 was -$24 million,  declined by 120% compared with the prior year's gross profit ended on 31 December 2021, which amounted to $117 million, resulting in a decline in the gross profit by $141 million. The Gross Margin for the year ended on 31 December 2022 was -5.67%, which declined by 30.91% compared with the prior year's gross margin that ended on 31 December 2021, which amounted to 25.24%, resulting in a decline in profitability. Despite a 0.4% increase in total pounds sold, gross profit and gross margin decreased primarily as a result of increased cost per pound of approximately $1.10 and decreased net revenue per pound of approximately $0.56 in the year ended December 31, 2022, compared to the prior year. Beyond Meat Jerky negatively impacted gross profit by approximately $19.3 million in the year ended December 31, 2022.

Net Loss for the year ended on 31 December 2022 was -$366 million,  increased by 101% compared with the prior year's net loss ended on 31 December 2021, which amounted to $182 million, resulting in an increase in the net loss by $184 million. The Net Margin for the year ended on 31 December 2022 was -87.40%, which declined by 48.21% compared with the prior year's net margin that ended on 31 December 2021, which amounted to -39.19%, resulting in a significant decline in profitability. Earnings Per Share (EPS) for the year ended on 31 December 2022 was -$5.75, a decline of 100% compared with the prior year's EPS ended on 31 December 2021, which amounted to -$2.88 resulting in a decline in the EPS by $2.87. The company paid no dividends as yet. The net cash used in operating activities was $320 million and the net cash used was $301 million in 2022 and 2021, respectively. The net cash used in investing activities was $87 million and the net cash used was $147 million in 2022 and 2021, respectively. The net cash received from financing activities was $573 million in 2021 and the net cash used was $407 million in 2022.

The company operates under one reporting segment. However, the segment includes retail and food services revenues from the US and international regions. U.S. retail sales net revenues decreased by 3.5% in 2022, with total pounds sold increasing by 0.5%. Lower pricing, increased liquidation channels, and higher trade discounts contributed to the decrease. Sales of Beyond Burger and Beyond Dinner Sausage offset the decrease, contributing $33.5 million. U.S. foodservice sales decreased $7.2 million in 2022, 9.4%, due to a 7.5% decrease in net revenue per pound and a 2.0% decrease in total pounds sold. This was primarily due to reduced sales of Beyond Burger and Beyond Breakfast Sausage, partially offset by increased sales of chicken products. International retail sales saw a 25.3% decrease in net revenues in 2022, with a 21.5% decrease in net revenue per pound and a 4.9% decrease in pounds sold. This was mainly due to EU price reductions, foreign exchange rates, increased trade discounts, and sales mix changes. In 2022, international food service channel sales experienced a 14.8% decrease in net revenues, with a 21.5% decrease in net revenue per pound. This was mainly due to changes in sales mix, foreign exchange rates, and increased trade discounts. Sales of Beyond Burger, Beyond Beef Crumble, and Beyond Beef decreased, partially offset by chicken sales.

Business Overview

Beyond Meat is a leading plant-based meat company offering innovative, sensory-advanced plant-based meats, providing both nutritional and environmental benefits to consumers. As of December 2022, Beyond Meat Branded products were available at approximately 190,000 retail and food service outlets in more than 80 countries worldwide, across mainstream grocery, mass merchandiser, club store, convenience store, and natural retailer channels, and various food-away-from-home channels, including restaurants, foodservice outlets, and schools. The business of the company is conducted through wholly owned subsidiaries, a variety of joint ventures, and other entities. The company operates under one reportable segment which is plant-based meat.

Segmental (Plant-based Meat) Analysis

This segment produces meat directly from plants, an innovation that enables consumers to experience the taste, texture, and other sensory attributes of popular animal-based meat products while enjoying the nutritional and environmental benefits of eating the plant-based meat products with a brand promise of “Eat What You Love”. The company sells a range of plant-based meat products across three main meat platforms beef, pork, and poultry. The primary products under the beef platform include the Beyond Burger, Beyond Beef, Beyond Meatballs, Beyond Beef Crumbles, Beyond Meat Jerky, and Beyond Steak which are sold across the U.S. and international retail and foodservice channels. The primary products under the pork platform include Beyond Sausage, Beyond Breakfast Sausage Patties, Beyond Breakfast Sausage Links, Beyond Sausage Crumbles, and Beyond Ground Pork. The primary products under the poultry platform include Beyond Chicken Tenders, Beyond Chicken Nuggets, and Beyond Popcorn Chicken. The customers of the plant-based meat segment are vegetarians and vegans, who do not eat any animal products for ethical or health reasons. Beyond Meat offers them a satisfying and nutritious way to enjoy the taste and texture of meat without compromising their values.

The company operates under one reporting segment. However, the segment includes retail and food services revenues from the US and international regions. U.S. retail sales net revenues decreased by 3.5% in 2022, with total pounds sold increasing by 0.5%. U.S. foodservice sales decreased $7.2 million in 2022, 9.4%, due to a 7.5% decrease in net revenue per pound and a 2.0% decrease in total pounds sold. International retail sales experienced a 25.3% decrease in net revenues in 2022, with a 21.5% decrease in net revenue per pound and a 4.9% decrease in pounds sold. In 2022, international food service channel sales experienced a 14.8% decrease in net revenues, with a 21.5% decrease in net revenue per pound. In 2022, the company purchased property, plant, and equipment amounting to $70.5 million primarily driven by continued investments in production equipment and facilities related to its capacity expansion initiatives and international expansion, and $13.3 million for investment in TPP (Joint Venture with Pepsico).

Other Information

Generally, Beyond experiences greater demand for certain products during the summer grilling season. In 2022 and 2021, U.S. retail channel net revenues during the second quarter were 16% and 21% higher than the first quarter, respectively. The company experiences additional seasonality effects, especially within its retail channel, with revenue contribution from this channel generally tending to be greater in the second and third quarters of the year, along with increased levels of purchasing by customers ahead of holidays, the impact of customer shelf reset activity and the timing of product restocking by retail customers.

Beyond is a leading company in the meat industry, competing with both traditional animal-protein companies and plant-based meat brands. It faces competition from brands like Alpha Foods, Boca Foods, Lightlife, Gardein, Hungry Planet, Impossible Foods, and more. Other large food operators include Nestle' S.A., Pure Farmland by Smithfield Foods, Raised & Rooted, Happy Little Plants, Sysco's Simply Plant-Based Meatless Burger, Tattooed Chef, The Not Company, and Vegetarian Butcher. Additionally, several U.S. and international companies are developing lab-grown or "clean meat," an animal-protein product derived from animal cells, which could appeal to consumers.

Beyond Meat distributes its products through various channels, including retail stores, food service outlets, and e-commerce platforms. It sells its products in refrigerated or frozen sections and has partnered with major retailers like Walmart, Kroger, Whole Foods, Target, Costco, and CVS. It also offers its products in restaurants, cafeterias, hotels, schools, hospitals, and catering services. It has collaborated with leading food service operators like McDonald's, KFC, Subway, Dunkin', Starbucks, Pizza Hut, and Taco Bell. Beyond Meat also offers subscription plans and bundles for its online customers.

Company History

Beyond Meat was established in 2009 by Ethan Brown with the explicit goal of addressing climate change.⁹ Brown first got in touch with Fu-hung Hsieh and Harold Huff, two professors at the University of Missouri, who had been working on their plant-based protein for years. Beyond Meat introduced its first product, Beyond Chicken Strips (formerly known as "Chicken-Free Strips"), at Whole Foods in 2012 after obtaining a license to use Hsieh and Huff's technology. In 2013, the company went national. Beyond Meat created its inaugural plant-based beef product, Beyond Beef Crumbles, in 2014 and has subsequently ventured into the realm of plant-based pork products. The 2013 Company of the Year award went to Beyond Meat by People for the Ethical Treatment of Animals (PETA).

GreatPoint Ventures, Kleiner Perkins, Obvious Corporation, Bill Gates, Biz Stone, the Humane Society, and Tyson Foods provided venture capital to the company between 2013 and 2016. Before the business's IPO, in April 2019, Tyson Foods sold its 6.5% holding in Beyond Meat and withdrew from the investment. In October 2016, the company had acquired a 5% stake. Beyond Meat had raised $72 million in venture capital by 2018. Athletes and celebrities including Leonardo DiCaprio, Jessica Chastain, Snoop Dogg, Liza Koshy, Chris Paul, Kyrie Irving, DeAndre Hopkins, and others have invested in Beyond Meat. Beyond Meat went public in May 2019 and began trading under the symbol BYND on the US Nasdaq exchange. It is the first publicly traded plant-based meat substitute firm. The business, which was valued at $3.8 billion on the day of its initial public offering (IPO), was the best-performing one made by a significant American corporation in over 20 years. Beyond Meat's market value was $9.44 billion as of June 2021. In November 2020, Beyond Meat revealed that, as a result of COVID-19's effect on food service sales, sales had increased by just 2% year over year, as opposed to an anticipated 40% growth. During the COVID-19 pandemic, Beyond Meat refocused on groceries, convenience stores, and other distribution channels. The stock price dropped to an all-time low by September 2022, which was 74% below the beginning of 2022 and 93% below the all-time peak reached in July 2019. The company announced in October 2022 that it was reducing its workforce by 19%, or about 200 employees, as a result of declining revenue. Further layoffs were announced by Beyond Meat in November 2023, following a quarter marked by a dismal 9% drop in sales and ongoing dropping sales.

Beyond Meat maintains a number of manufacturing plants across the US, including ones in Pennsylvania, Missouri, and Columbia, Washington.  The company's manufacturing space increased threefold after Beyond Meat launched its second production plant in Columbia, Missouri, in June 2018. Beyond Meat purchased a Devault, Pennsylvania, manufacturing facility in 2020. In the Netherlands, Beyond Meat maintains two locations in Europe: an owned facility in Enschede and a co-manufacturing site in Zoeterwoude that is owned and run by the Dutch business Zandbergen. The distribution network spanning Europe, the Middle East, and Africa is serviced by these two sites. Beyond Meat owns and runs a manufacturing facility in Jiaxing, Zhejiang, China. In 2021, full-scale production commenced at this, the company's first "end-to-end manufacturing facility" located outside of the United States. Beyond Meat and McDonald's announced in November 2020 that they would be working together to develop the McPlant option, which is a plant-based alternative to chicken and patties.¹⁰

In February 2021, testing of the McPlant began in Sweden and Denmark. Additionally, Beyond Meat announced the introduction of a plant-based minced pork substitute in China. Beyond Meat established an online store in 2020 to offer goods to customers directly. Taco Bell stated in January 2021 that it will be working with Beyond Meat to create a new plant-based protein snack, first as a test and later as a permanent option. The PLANeT Partnership, a joint venture between Beyond Meat and PepsiCo, was also announced in January 2021 to create and distribute plant-based food and beverages. Yum Brands and McDonald's joined forces with Beyond Meat in February 2021. These agreements will add new options to the menu, including the McPlant Burger and plant-based pizza toppings, chicken substitutes, and even taco fillings for Yum Brands' eateries Taco Bell, Pizza Hut, and KFC. McDonald's discontinued testing the McPlant burger in the USA in July 2022 due to dismal sales in 600 locations; nonetheless, the product is still available in numerous European nations. Beyond Meat declared in September 2021 that it would start selling its vegan chicken tenders in retailers, including Walmart. Pizza Hut® and Beyond Meat, Inc. introduced the plant-based Beyond Italian SausageTM Crumbles as a regular menu item at all Pizza Hut Canada locations across the country on January 10, 2022. Beyond Meat, Inc. debuted the Beyond Stack Burger on August 02, 2023, and declared that the company's newest product innovation would be joining its lineup of burger offerings.  Beyond Meat, Inc. unveiled Beyond Steak on October 24, 2022, a cutting-edge product that combines the health and environmental advantages of plant-based meat with the succulent, juicy, and mouthwatering bite of grilled steak tips.

References

1. ^ https://www.bloomberg.com/profile/person/19494708
2. ^ https://www.prnewswire.com/news-releases/beyond-meat-named-first-ever-official-plant-based-meat-partner-of-madison-square-garden-new-york-knicks-and-new-york-rangers-301954408.html
3. ^ https://finance.yahoo.com/news/beyond-meat-debuts-beyond-stack-131500355.html
4. ^ https://finance.yahoo.com/news/beyond-steak-1-plant-based-130000030.html
5. ^ https://www.marketscreener.com/quote/stock/BEYOND-MEAT-INC-57878377/news/Beyond-Meat-Inc-Announces-the-Launch-of-Beyond-Steak-42078980/
6. ^ https://www.nasdaq.com/articles/pizza-hut-beyond-meat-launch-plant-based-beyond-italian-sausage-crumbles-in-canada-quick
7. ^ https://www.nasdaq.com/press-release/beyond-meatr-reports-third-quarter-2023-financial-results-2023-11-08
8. ^ https://www.globenewswire.com/en/news-release/2021/03/03/2185821/0/en/Beyond-Meat-Inc-Prices-Upsized-1-Billion-Convertible-Senior-Notes-Offering.html
9. ^ https://www.tbsnews.net/bloomberg-special/fake-meat-was-supposed-save-world-it-became-just-another-fad-571714
10. ^ https://www.reuters.com/article/idUSKBN27P2G3/