Beyond Meat Shares Sink Despite Company Turning First Profit

Meat alternative company Beyond Meat reported its first profit this week, topping estimates, but still saw its shares go down.

The company even raised its revenue outlook for the year but Wall Street didn’t look too impressed.

Beyond Meat saw its shares crash as much as 15% in after-hours trading on Monday before gaining back roughly half of those losses.

For the third quarter, the company reported earnings per share of 6 cents while analysts had expected just 3 cents. Revenue at $92 million was also better than the $82.2 million that was expected.

Beyond Meat saw sales grow across both its grocery and restaurant divisions, as its meatless meats drew in more customers and kept existing customers coming back.

Sales to restaurants and foodservice took up roughly 45% of Beyond’s revenue for the quarter.

The company has extended restaurant partnerships with McDonald’s, Yum Brands’ KFC and Subway during the third quarter.

Beyond CEO Ethan Brown told analysts that he has “every expectation” that the McDonald’s test will result in continued work with the fast-food giant.

According to Brown, Beyond is trying to become an international company.

Brown said on the earnings call, “We generated very strong results for Q3, measured both by financial metrics as well as a series of marquee partnerships to position our company well for future growth. Specifically, we recently initiated tests at McDonald’s, Kentucky Fried Chicken and Subway and announced the national rollout of our Beyond breakfast sausage at 9,000 Dunkin’ locations starting next month.”

He added, “Looking forward, we’ve made significant additions to our team, including senior leadership in operations and marketing while investing in aggressive international expansion. Q3 net revenue increased 250% to $92 million compared to the prior-year period. We grew our points of distribution to greater than 58,000 outlets across retail and foodservice globally. Further, we generated strong velocity growth of 144%, resulting in a roughly 1,200-basis-point improvement in market share through the end of Q3.”

He also said, “For the 12-week period ending October 6, 2019, with only six SKUs in the marketplace, Beyond Meat has become the second largest plant-based meat brand in retail nationwide, outpacing the leading brand in terms of sales growth by a factor of nearly 20x according to SPINS data for total U.S. multi outlet, natural and specialty channels. In addition, during that same period, the Beyond Burger was the No. 1 selling plant-based meat item across all SPINS channels and was up 162% in units and 155% in dollars.”

He continued, “Gross profit margin expanded over 1,600 year-ago points to 35.6%, with strong cost and expense leverage, leading to the first quarter of positive net income in the company’s history. Adjusted EBITDA improved more than $16 million to $11 million, representing a 12% adjusted EBITDA margin. In summary, Q3 financial results outpaced our expectations. And as a result of this growth and our outlook for the remainder of the year, we are raising our 2019 full-year financial outlook.”

The company’s locked up period expires on Tuesday.

Disclaimer: We have no position in Beyond Meat Inc. (NASDAQ: BYND) and have not been compensated for this article.