Beyond Meat Falls After Backing Away From Cash-Flow Target

Beyond Meat Inc. fell in late trading after the plant-based burger company said it’s unlikely to hit its goal of becoming cash-flow positive in the second half of the year. The company also trimmed its sales outlook.

(Bloomberg) — Beyond Meat Inc. fell in late trading after the plant-based burger company said it’s unlikely to hit its goal of becoming cash-flow positive in the second half of the year. The company also trimmed its sales outlook. 

Beyond Meat and its plant-based peers have experienced declining sales as consumers lose interest in the products amid high prices and questions over the products’ taste, texture and health benefits. The company has burned through cash in recent quarters as it revamps its business and slashes spending to achieve a sustainable footing. Weakness in the US, however, is proving to be a significant challenge. 

The stock fell 16% in US trading before exchanges opened. The shares had gained 24% this year through Monday’s close. 

“With respect to the company’s previously stated target of achieving cash-flow positive operations within the second half of 2023, in light of greater-than-expected consumer and category headwinds and their anticipated impact on net revenues, the company now believes this is unlikely to be met in the stated timeframe,” Beyond Meat said. 

Management remains focused on “achieving cash-flow positive operations” by reducing costs, and expects “meaningfully reduced cash consumption” for the rest of 2023. 

Second-quarter revenue of $102 million fell short of the average analyst estimate compiled by Bloomberg. The company reported weakness in the US market and trimmed its 2023 revenue outlook to a range of $360 million to $380 million, down from a previous range of as much as $415 million.  

See Also: Beyond Meat Drops on Outlook Cut, Cash Flow Woes: Snapshot

“The guidance cut is disappointing, especially considering the decent start to the year,” said Arun Sundaram, an analyst at CFRA. “We’re now back to talking about cash burn and the need to raise capital, as it is now highly unlikely that the company will be cash-flow positive anytime this year. Something needs to change to prevent this ship from sinking.” 

Chief Executive Officer Ethan Brown said Beyond Meat expects modest sales growth in the third and fourth quarters from a year earlier. In a call with analysts, he said that recent heat waves reinforce the need to reduce greenhouse gases. 

Brown remained adamant that broad consumption of plant-based meat is inevitable. Still, he recognized it was an uphill battle. “What we initially thought was going to be a quicker pace to mainstream adoption has proven to be slower,” he said.

Beyond Meat, which in May announced the sale of as much as $200 million in an equity offering, is being hit by a broader slump in the category of plant-based meat: By volume, sales of refrigerated meat alternatives slid 22% in the 52 weeks ending July 16 from the same period a year earlier, according to market-data tracker Circana. Frozen meat alternatives fell 10% by the same measure.

The company laid off workers and trimmed operational costs to preserve liquidity. As of July 1, the company had $211 million of cash on hand — down from the $259 million reported the previous quarter. 

In the US, sales fell in both retail and foodservice, despite some increased discounts and less product being sent to liquidation. The company cited “weak overall demand” for the drop in foodservice sales.

International sales remained a bright spot, outpacing analysts’ estimates. International foodservice posted a 19% increase in volume of products sold, thanks to fast-food customers in Europe, the company said. 

(Updates share trading)

More stories like this are available on bloomberg.com

©2023 Bloomberg L.P.