Beyond Meat's (BYND -0.17%) second-quarter 2021 earnings report, released after the market close on Thursday, did not satiate investors as a whole. Shares closed down 4.6% in Thursday's after-hours trading session.
The leader in plant-based meat substitutes turned in solid Q2 revenue growth, which beat the Wall Street consensus estimate. But second-quarter earnings and third-quarter revenue guidance fell short of analysts' expectations. The weaker-than-expected outlook was probably the main catalyst behind the stock's sell-off.
In 2021, shares of Beyond Meat are down 2.5% through Thursday's regular trading session. The S&P 500 has returned 18.9% over this period. The stock remains a winner, however, since its initial public offering in May 2019. It's up 387% since then, as of Thursday's regular trading session.
Image source: Getty Images.
Beyond Meat's key numbers
|
Metric |
Q2 2021 |
Q2 2020 |
Change |
|---|---|---|---|
|
Revenue |
$149.4 million | $113.3 million | 32% |
|
Operating income |
($18.6 million) | ($8.2 million) | N/A. Loss widened 127% |
|
Net income |
($19.7 million) | ($10.2 million) | N/A. Loss widened 93% |
|
Adjusted net income |
($19.7 million) | ($1.2 million) | N/A. Loss widened 1,542% |
|
Earnings per share (EPS) |
($0.31) | ($0.16) | N/A. Loss widened 94% |
| Adjusted EPS | ($0.31) | ($0.02) | N/A. Loss widened 1,450% |
Data source: Beyond Meat. Adjusted figures exclude expenses attributable to the COVID-19 pandemic and other one-time items.
Revenue growth was largely driven by a rebounding in the food-service business (which has been significantly hurt by the pandemic), due to the broad reopening of many economies around the world.
Wall Street was looking for an adjusted loss of $0.23 per share on revenue of $142.6 million, as outlined in my earnings preview. So Beyond Meat easily beat analysts' top-line expectation and met its own guidance, which was for sales between $135 million and $150 million. But its bottom line fell short of the consensus estimate.
The company used $89.7 million in cash running its operations during the quarter, compared with $27.1 million in the year-ago period. It ended the quarter with $1 billion in cash and cash equivalents and total debt of $1.1 billion.
For context, in Q1, Beyond Meat's revenue rose 11% year over year to $108.2 million, missing the $113.8 million the Street had expected. Adjusted for one-time items, net loss was $0.42 per share, compared with net income of $0.05 per share in the year-ago period. This result was more than double the loss of $0.19 per share that analysts had forecast.
Revenue breakdown
| Geographic Distribution Channel | Q2 2021 Revenue | Change (YOY) |
|---|---|---|
| U.S. retail | $77.2 million | (14%) |
| U.S. food service | $24.0 million | 269% |
| U.S. total | $101.2 million | 4.8% |
| International retail | $28.5 million | 198% |
| International food service | $19.7 million | 173% |
| International total | $48.3 million | 187% |
| Total revenue | $149.4 million | 32% |
Data source: Beyond Meat. YOY = year over year.
U.S. retail was the only category whose sales fell year over year. Its 14% decline was actually a solid performance given its tough comparable. In Q2 2020, U.S. consumers' pandemic-driven stockpiling of frozen protein sources was at its height, which powered the category's sales up 195% year over year.
What the CEO had to say
Here's most of what CEO Ethan Brown had to say in the earnings release:
We are pleased to report record net revenues and the return to growth in foodservice as our customers welcomed consumers back to their venues. We are also proud of our retail performance, where we drove year-over-year growth despite cycling last year's demand surge driven by consumer panic-buying.
We continue to make substantial investments in our long-term growth here in the U.S. and abroad. ... We are thrilled with the response to our new Beyond Chicken product and the continued accolades we are receiving for our latest iteration of the Beyond Burger. ... I'm optimistic about what lies ahead. That said, given the recent uptick of COVID-19 cases, which could disrupt demand patterns, we believe caution for the balance of the year generally remains appropriate.
Third-quarter revenue guidance lighter than expected
Management guided for Q3 sales in the range of $120 million to $140 million, representing growth of 27% to 48% year over year. Going into the release, Wall Street had been modeling for sales of $153.7 million, or growth of 63% year over year. So management's outlook was considerably lighter than analysts had been expecting.
As Brown said in his statement, management is being cautious with guidance due to the uncertainty surrounding the pandemic. Additional factors affecting the outlook include the company's expectation of a "sequential moderation in growth in foodservice channels following pipeline restocking activity in the second quarter" and "dampening of U.S. and international foodservice revenue growth due to recent losses of distribution and operator challenges due to labor issues."
A mixed report
Beyond Meat's Q2 sales growth is encouraging and its larger-than-expected loss isn't overly concerning at this early stage in its status as a publicly traded company.
However, it makes sense that investors are concerned about the Q3 sales guidance, given the company will have an easy comparable. In Q3 2020, its total sales grew just 2.7% year over year. That said, keep in mind that management is being cautious with its outlook, which is prudent since the market usually hammers the stocks of companies that miss their own guidance.
