Beyond Meat (BYND -0.31%), the leading maker of plant-based meat substitutes, is slated to report its second-quarter 2021 results on Thursday, Aug. 5, after the market close. An earnings call is scheduled the same day at 5 p.m. EDT.
Many investors will probably be approaching the company's report with a hefty dose of caution. In the last three quarters, Beyond Meat's top and bottom lines fell short of the Wall Street consensus estimates.
In these three quarters, the company's retail channel performed well, but its food-service business continued to struggle because of the pandemic. The net effect has been anemic total sales growth.
On the bright side, last quarter's year-over-year sales were an improvement over the prior two quarters. And with the U.S. economy and some other global economies more broadly opening in the last few months, there's reason to be optimistic that the company's food-service sales will continue to improve.
Beyond Meat stock often makes big moves following the company's earnings releases. Unfortunately, in more recent quarters, the trend has been for these moves to be down. However, if we go back to the first quarter of 2020, shares skyrocketed 26% following the release of results that crushed expectations on the top and bottom lines.
Shares of Beyond Meat (which held its initial public offering in May 2019) have seesawed wildly up and down from the get-go. In 2021 to date (July 22), the stock is up 2.5%, lagging the S&P 500's 17.2% return. However, it remains a winner since the first quarter affected by the pandemic. Since January 2020, it's up 69.4%, versus the broader market's 38.8% return.
Image source: Beyond Meat.
Beyond Meat's key numbers
Here are the year-ago period's results and Wall Street's estimates to use as benchmarks.
| Metric |
Q2 2020 Result |
Company's Q2 2021 Guidance |
Company's Projected Change |
Wall Street's Q2 2021 Consensus Estimate | Wall Street's Projected Change |
|---|---|---|---|---|---|
| Revenue | $113.3 million | $135 million to $150 million | 19% to 32% | $142.6 million | 26% |
| Adjusted earnings per share (EPS) | ($0.02) | N/A | N/A | ($0.23) | N/A. Loss expected to increase more than tenfold. |
Data sources: Beyond Meat and Yahoo! Finance. Note: The company didn't provide earnings guidance.
The second quarter marks the company's resumption of providing at least some guidance. It halted providing an outlook in the early part of the pandemic.
Beyond Meat is facing a challenging revenue comparable this quarter, thanks to strength in its retail business in the year-ago period. In the second quarter of 2020, total revenue soared 69% year over year, driven by a rush among consumers to load up their freezers with protein sources during the early stages of the pandemic.
As for earnings in the second quarter, I'll reiterate what I said last quarter: "Beyond Meat's bottom-line results have been moving in the wrong direction and that dynamic is expected to continue. ... There are a few reasons for this: The company is investing in capital-intensive growth initiatives, it has increased promotional activities intended to entice more new consumers to try its products, and the pandemic has hurt efficiencies."
For context, in the first quarter, Beyond Meat's revenue rose 11% year over year to $108.2 million, missing the $113.8 million analysts had expected. Adjusted for one-time items, net loss was $26.2 million, or $0.42 per share, down from net income of $3 million, or $0.05 per share, in the year-ago period. The adjusted loss per share was more than double the $0.19 the Street had anticipated.
Not surprisingly, investors sent shares down 7% on the day following the release. This sell-off wasn't too bad, however, because the company's Q2 revenue guidance came in line with what analysts had been estimating.
For additional context, the company's year-over-year sales growth in the last four quarters was: 11% (Q1 2021), 3.5% (Q4 2020), 2.7% (Q3 2020), and 69% (Q2 2020).
Channel and geographic performance
Here's how the distribution channels and geographic markets performed last quarter:
| Geographic Distribution Channel | Q1 2021 Revenue | Change (YOY) |
|---|---|---|
| U.S. retail | $63.8 million | 28% |
| U.S. food service | $16.7 million | (26%) |
| U.S. total | $80.6 million | 11% |
| International retail | $17.2 million | 189% |
| International food service | $10.4 million | (44%) |
| International total | $27.6 million | 13% |
| Total revenue | $108.2 million | 11% |
Data source: Beyond Meat. YOY = year over year.
We should see a sequential year-over-year improvement in the food-service channel's performance since the year-ago comparable in that business is an easy one. However, the retail business is facing an extremely tough comparable.
Early sales performance of chicken tenders
On July 8, Beyond Meat announced the launch of its new plant-based Beyond Chicken Tenders at 400 restaurants across the United States. Global consumer demand for chicken has always been high, but recently it's been "skyrocketing," in Beyond's words. Indeed, demand is so high that "the nation is currently facing a shortage," the company said in the press release.
This product will begin contributing to revenue in the third quarter. Investors can probably expect management to give an update on the earnings call as to how well the new plant-based chicken product is selling.
Third-quarter guidance
The stock market is a forward-looking machine, so third-quarter guidance should be particularly important and will likely be the biggest factor behind any post-earnings release move in Beyond Meat's stock.
For the third quarter, Wall Street is currently modeling for revenue of $153.7 million, representing robust growth of 63% year over year. On an adjusted basis, analysts expect the company's loss to narrow 36% to $0.18 per share, from $0.28 per share in the year-ago period.
