Beyond Meat will keep costs and inventory lean as it aims to turn cash-flow positive this year despite some budget-conscious consumers opting for cheaper alternatives to plant-based proteins, executives said on the company’s fourth quarter earnings call Thursday.
The company reported a narrower fourth-quarter net loss of $66.9 million compared to $80.4 million in the year-ago period as net revenue fell 21% year over year to $79.9 million.
The company was one of a growing number of firms that included layoffs and real estate consolidation as part of their belt-tightening strategies. In October the company announced plans to slash its workforce by about 200 employees or about 19% of its total global workforce.
“We believe persistently high inflation, a slowing economy, increased competition and trading down behavior by consumers among proteins are all negatively impacting growth for our category and our brand, but we do believe this is transitory,” CFO Lubi Kutua, who was promoted to finance chief in October, said on the earnings call.
CEO and founder Ethan Brown also sought to highlight what he characterized as the firm’s sweeping role as a disruptor seizing the opportunity to “course correct and stabilize our global climate.” He noted that the current “din surrounding our sector” will ultimately subside as the products ultimately become mainstream.
But for now, the company has pivoted from a model focused on growth above all to “lean value stream management,” Brown said.
Brown and Kutua ticked off numerous metrics that underscore its recent rightsizing strategy. For example, fourth quarter operating expenses fell 32% year-over-year in the fourth quarter to $62.8 million, due to lower general and administrative expenses, including a decrease in consulting fees, reduced production trial activities, lower marketing expenses and reduced people expenses, including stock-based compensation. The company also reduced its inventory balance by $48 million or 17% from the first quarter to the fourth quarter.
The company also consolidated its real estate footprint in the Los Angeles area and moved employees to its new headquarters and began to exit some leases, Brown said.
Going forward it will maintain its “strong focus on drawing down inventory as a key lever to achieving our cash flow positive objective within the second half of the year,” Kutua said, adding that capital expenditures are expected to be in the $30-$35 million range for the full year, down from $70.5 million in the year earlier.
The earnings quality was “reasonable,” according to a William Blair report titled “A work in progress” from research analysts led by Jon Andersen. The adjusted EBITDA loss of $56.5 million was “modestly better” than William Blair’s expectation of a $59 million loss, the report stated.
“Our thesis is that Beyond Meat has the potential to deliver unique financial and societal benefits, given its vast addressable market, marketable plant-based meat products and potential brand building and scale,” the report states. “However, we feel current pressures on the category persist and the company’s pivot to cash generation and sustainable growth could take some time.”
The company’s shares rose about 10% Friday to close at $18.86.
Editor’s note: This story was updated to correct the size of the company’s fourth quarter 2022 and 2021 net losses.
