Beyond Meat, Inc. BYND posted second-quarter 2020 results, wherein the bottom line fell short of the consensus mark. However, sales were robust on the back of strong retail volumes stemming from higher at-home consumption amid the pandemic. However, this was partly negated by sluggishness in the foodservice channel due to the coronavirus-led increased stay-at-home mandates across several regions. This led to limited operations or closure of a number of foodservice customers of Beyond Meat.
Though many foodservice customers have reopened, they are operating as per local restrictions and continue to reel under an uncertain pandemic-led scenario. Management kept its outlook for 2020 suspended due to the uncertainty surrounding the duration and impact of COVID-19. Nonetheless, based on its solid sales momentum in the second quarter, the company remains optimistic about its ability to capitalize on the opportunities ahead.
The company posted an adjusted loss of 2 cents per share, which was wider than the Zacks Consensus Estimate of a loss of a cent.
Beyond Meat, Inc. Price, Consensus and EPS Surprise
Beyond Meat, Inc. price-consensus-eps-surprise-chart | Beyond Meat, Inc. Quote
Net revenues of $113.3 million surged 69% year over year and surpassed the Zacks Consensus Estimate of $99 million. Revenues were backed by elevated volumes, partly offset by reduced net price per pound resulting from increased promotional investments. Volumes were driven by higher retail channel sales, stemming from domestic and international distribution gains, increased sales velocities for current retail customers and contributions from new products. Volumes were partly negated by lower foodservice channel sales due to the pandemic.
U.S. net revenues more than doubled to $96.5 million, with retail revenues surging considerably to roughly $90 million and foodservice revenues slumping 60.7% to $6.5 million. International net revenues declined 16.8% to $16.8 million, wherein retail revenues more than doubled to $9.6 million but foodservice revenues plunged 56.5% to $7.2 million.
Adjusted gross profit jumped 74.5% to $39.6 million and the adjusted gross margin was 34.9%, up 110 basis points (bps) year over year. This upside was mainly fueled by lower direct packaging and material input costs, direct labor efficiencies and higher volumes sold. Adjusted gross profit and margin exclude $5.9 million of repacking costs, which were a result of the company’s efforts to shift some foodservice inventory to retail products amid the pandemic-led shift in consumer demand.
SG&A expenses increased from $15.5 million to $34.4 million in the quarter. Nonetheless, adjusted EBITDA jumped 69.6% to $11.7 million. Adjusted EBITDA margin expanded 10 bps to 10.3%.
Other Financial Updates
The company concluded the quarter with cash and cash equivalents of $222.3 million, total outstanding debt of $50 million and total shareholders’ equity of $389.9 million. In the first six months ended Jun 27, the company used net cash from operating activities of $44.3 million, while capital expenditures for the period totaled $26 million. Capital expenditures increased from $7.5 million in the year-ago period due to sustained investments in production equipment and facilities associated with capacity expansion endeavors.
On Apr 22, management announced that it entered into a new five-year secured revolving credit facility of $150 million, with a feature to extend it up to an incremental $200 million. Long-term borrowings under Beyond Meat’s latest credit facility were $50 million as of Jun 27.
This Zacks Rank #3 (Hold) stock has surged 42% in the past three months compared with the industry’s growth of 7.9%.
Looking for Solid Food Stocks? Check These
Tyson Foods TSN, which currently carries a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 5.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Kraft Heinz KHC, which also carries a Zacks Rank #1, has a long-term earnings growth rate of 6%.
TreeHouse Foods THS, with a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 6.5%.
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