Beyond Meat revenue tripled, but shares fall as losses return

Beyond Meat on Thursday reported quarterly revenue that topped analysts’ expectations but disappointed investors by falling shy of reporting a second profitable quarter.

Shares of the company fell 6% in extended trading.

Beyond reported a fiscal fourth-quarter net loss of $452,000, or 1 cent per share, narrowing its loss of $7.5 million, or $1.10 per share, a year earlier. The maker of meat substitutes reported its first quarterly profit in the third quarter.

The company’s adjusted earnings before interest, taxes, depreciation and amortization was $25.3 million. A year ago, the company recorded an adjusted EBITDA loss of $19.3 million.

Net sales rose 212% to $98.5 million, topping expectations of $79.5 million.

Sales to restaurants and food service outlets made up about 59% of Beyond’s revenue in the quarter. Even with increased competition from traditional food companies and meat producers, Beyond is continuing to rack up partnership deals with large national restaurant chains including KFC, Denny’s and McDonald’s. Starbucks said Wednesday it would be adding a breakfast sandwich made with Beyond Meat’s meatless sausage to Canadian cafes.

But Beyond’s products don’t always become permanent menu additions. In September, Tim Hortons pulled Beyond’s meatless burgers and sausage from its menus in all Canadian provinces except for Ontario and British Columbia. By late January, the items had disappeared from the remaining two provinces as the coffee chain tries to turn around its struggling Canadian business.

The company’s grocery business accounted for 41% of Beyond’s sales. Despite new entrants to the market, Beyond said that it discounted its products less than it was expecting.

In fiscal 2020, Beyond expects revenue in a range of $490 million to $510 million. Executives said that the revenue outlook excludes restaurant companies such as McDonald’s and KFC that are only testing regionally. The company is forecasting that its adjusted EBITDA will be unchanged from 2019 as it spends more on marketing, research and development and international expansion.

CEO Ethan Brown said the company will focus its 2020 marketing on explaining its ingredients and its manufacturing process as the plant-based meat industry faces backlash from the meat industry. The Center for Consumer Freedom, which is known for lobbying on behalf of the fast-food and tobacco industries, ran a regional Super Bowl ad alleging that meatless products from Beyond and rival Impossible Foods are not as healthy as they seem.

Beyond is also investing in expanding its production. At the start of the year, the company had enough capacity to make $700 million of its meatless products, but it expects to increase that capacity to $1 billion by the end of 2020. It also plans on nearly doubling its number of co-packers from six to 11 this year as it plots its international expansion.

Executive Chairman Seth Goldman announced on the conference call that he would be stepping down from the role, effective Thursday, and assuming the role of non-executive chairman.