As a listener at the Beyond Meat ($BYND (-7,89%) ) analyst conference, I was able to gain deep insights into the company's current situation and future strategy.
Ethan Brown, the founder, president and CEO of Beyond Meatopened his remarks by pointing out that 2024 was a turning point for the company. After two years of declining sales, Beyond Meat achieved two consecutive quarters of sales growth in the second half of the year. sales growth in the second half of the year. This was particularly notable as the entire category and the brand itself had faced significant challenges, including widespread consumer confusion about the value proposition of the products.
Brown emphasized that the team has tackled these challenges head-on, from product development to marketing and partnerships. He said he was particularly proud of the launch of Beyond IVthe Sun Sausage line and the expansion of the Beyond Steak platformall of which have received various awards from the American Heart Association, the American Diabetes Association and the Clean Label Project.
A key aspect of Beyond Meat's success is a sustainable business sustainable business model. In 2024, the company was able to operating costs were reduced by over 50 million US dollars and the adjusted EBITDA was significantly improved. The net sales for the full year amounted to USD 326.5 million, a decrease of 4.9% compared to 2023, but growth in the last two quarters shows a significant slowdown in the decline. The gross margin reached 12.8% for the full year.
The following highlights were mentioned for the fourth quarter of 2024
- A Net sales of 76.7 million US dollarswhich corresponds to an increase of 4 % compared to the previous year.
- An improved gross margin of 13.1 %which was boosted by higher prices, lower advertising expenditure and lower COGS per pound.
- A reduction in operating costs by 29.1 million US dollars to 47.8 million US dollars.
With a view to 2025, Brown formulated the clear goal of positioning the company in such a way that achieve an adjusted EBITDA of zero by the end of 2026. To achieve this, four key targets have been defined for 2025:
Comparable net sales compared to the previous year.
Improvement of the gross margin to around 20% with the aim of exceeding 30% in the long term.
Further reduction in operating costs in the years 2025 and 2026.
Strengthening the balance sheet by examining options to improve liquidity and optimize the capital structure.
Lubi Kutua, CFO & Treasurerwent into more detail on the financial results for the fourth quarter of 2024 in more detail. Net sales increased 4% to $76.7 million primarily due to a 6.3% increase in net sales per pound, partially offset by a 2.1% decrease in product volume. In the US, retail sales increased by 5.7%, while foodservice sales decreased by 2.1%. Internationally, retail sales fell slightly by 1.7%, while sales in the food service sector rose by 9.2%. The gross profit margin improved significantly to 13.1% compared to -113.8% in the same quarter of the previous year. The net loss amounted to USD 44.9 million, compared to USD 155.1 million in the previous year. Adjusted EBITDA amounted to minus USD 26 million, compared with minus USD 125.1 million in the previous year.
For the full year 2025, Beyond Meat expects net sales net sales of between 320 and 335 million US dollars and a gross margin of around 20%. The operating costs are expected to be between 160 and 180 million US dollars, and capital expenditure are estimated at 15 to 20 million US dollars.
In the subsequent question-and-answer part of the conference, various topics were addressed by analysts.
Ben Theurer from Barclays asked about the perception of consumers and the market dynamics. Brown replied that the message of offering clean and simple products at a higher price seems to be working. Regarding the impact of the suspension of activities in China on the sales forecast, Brown explained that the conservative forecast was mainly based on the desire not to distract the team with short-term sales generation activities that would work against the goal of positive EBITDA.
Kaumil Gajrawala from Jefferies inquired about the core consumer and whether this had changed. Brown replied that the company is increasingly focusing on health-oriented consumers who are able to see through the misinformation spread by the established industry.
Ken Goldman from JPMorgan asked in more detail about the drivers for the expected gross margin improvement in 2025. Brown explained that the consolidation of the production network and targeted investments in automation and equipment are the main factors. Kutua added that price increases in the US and further rationalization of the production network would also play a role.
Robert Moskow from TD Cowen asked about the sales forecast for the first quarter and the new customersthat the company would like to win. Brown explained that there are some temporary challenges due to the consolidation of the network and the loss of distribution channels with a major customer. Kutua clarified that it was not about acquiring new customers, but about expanding its presence in various areas of the retail tradewhere Beyond Meat was previously underrepresented.
Alexia Howard from Bernstein asked about the price points and whether Beyond Meat was satisfied with the price gaps to animal meat. Brown replied that the company had already achieved this goal on one particular product in one particular market and that this continues to be a goal, particularly in the foodservice sector. She also asked about the relative growth relative growth rates of the markets in Europe and the USA. Brown explained that Europe is not homogeneous and that there are also headwinds in some European markets. He emphasized that the key to the category's growth lies in educating consumers about the simplicity and purity of the products.
Peter Saleh from BTIG asked whether the decline in the proportion of consumers who see plant-based meat as a healthy alternativehad stopped. Brown replied that the company is seeing a change within its own brand and that working with nutrition experts and emphasizing the health benefits of its products is helping to regain consumer confidence.
Overall, the analyst conference conveyed a picture of Beyond Meat as a company in a phase of transition and realignment. Despite the challenges facing the category as a whole, management is confident that through a combination of cost reductions, margin improvements and targeted innovation, Beyond Meat will be able to achieve positive EBITDA by the end of 2026, achieve positive EBITDA by the end of 2026.
A key success factor will be the educating consumers about the about the health benefits and simplicity of the products in order to regain trust in the brand and gain market share.
Emphasizing the scientific basis and cooperation with recognized institutions such as the American Heart Association and the American Diabetes Association should help to strengthen Beyond Meat's credibility and set it apart from misleading campaigns by the established meat industry.
