Beyond Meat(US:BYND)2023-05-11 03:43Financial Data and Key Metrics Changes - Net revenues for Q1 2023 were $92.2 million, a decrease of 16% year-over-year but a 15% sequential increase from Q4 2022, marking the strongest Q4 to Q1 percentage increase since Q1 2019 [21][14] - Gross profit was $6.2 million, representing 6.7% of net revenues, compared to $0.2 million or 0.2% in the same period last year [23] - Operating expenses decreased by approximately 35% year-over-year to $63.9 million, driven by lower marketing expenses and reduced non-production headcount expenses [25] - Net loss for Q1 2023 was $59 million, or a net loss per share of $0.92, compared to a net loss of $100.5 million or $1.58 per share in the prior year [26] - Adjusted EBITDA loss was $45.8 million, or -49.6% of net revenues, an improvement from a loss of $78.9 million or -72.1% in the year-ago period [26] Business Line Data and Key Metrics Changes - In U.S. retail grocery, the company is focusing on restoring growth in refrigerated offerings, which faced significant year-over-year challenges [9] - The frozen category saw unit sales grow by 20.3% and dollar sales increase by 28.8% sequentially from Q4 2022, and year-over-year, units grew by 31.5% and dollars by 36.4% [11] - International retail net revenues increased by 31%, while international foodservice net revenues jumped by 45% quarter-over-quarter [14] Market Data and Key Metrics Changes - The U.S. plant-based meat sector is experiencing demand weakness due to inflationary pressures driving consumers towards lower-priced animal protein [21] - The company noted a decline in household penetration from 27.8% to 25.5%, attributed to macroeconomic factors and increased competition in the plant-based category [42] Company Strategy and Development Direction - The company is focused on three central tenets: margin expansion and OpEx reduction, cash flow accretive inventory management, and prioritizing near-term growth opportunities [5] - A new generation of burger products is set to launch, emphasizing taste and sensory profile improvements [16] - The company aims to achieve price parity with animal protein while maintaining a focus on total profit dollars rather than percentage margins [68] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving cash flow positive operations in the second half of 2023, emphasizing the importance of inventory management and gross margin improvement [34][36] - The company anticipates a more muted sequential increase in revenues from Q1 to Q2 due to tough year-ago comparisons and ongoing macroeconomic challenges [21] - Management highlighted the importance of clear communication regarding health benefits and taste to re-engage consumers [58] Other Important Information - The company has established a $200 million at-the-market equity facility to bolster cash reserves, indicating a proactive approach to financing [38] - A change in accounting estimate regarding the useful lives of manufacturing equipment positively impacted gross margin guidance for the full year [30][51] Q&A Session All Questions and Answers Question: Can you prioritize the levers to return to cash flow positive in the second half of the year? - Management identified four levers: net revenue, margin, OpEx, and freeing up cash from inventory, with a strong focus on inventory management as a source of cash [34] Question: Can you elaborate on the decision to pursue the $200 million at-the-market equity facility? - The facility is intended to bolster cash reserves and will be used opportunistically, not as an immediate cash need [39] Question: What are the sales trends in U.S. retail and International Foodservice? - U.S. retail faced challenges, while International Foodservice saw significant growth, with no load-in factors affecting the positive results [53][60] Question: How do you balance moves to price parity while protecting near-term margin growth? - The focus is on total profit dollars rather than percent margin, emphasizing volume through strategic pricing programs [68]