El Segundo / CA. (bmi) Beyond Meat Inc., a leader in plant-based meat, is making a strategic shift in pursuit of a more sustainable growth model that emphasizes the achievement of cash flow positive operations.
President and CEO Ethan Brown commented, «Beyond Meat is implementing measures to drive more sustainable growth, emphasizing the achievement of cash flow positive operations within the second half of 2023. While we believe the current headwinds facing our business and category – including record inflation – are transient, our mission, brand, and long-term opportunity endure. To manage through the current environment and realize the opportunity ahead, we are significantly reducing expenses and sharpening our focus on a set of key growth priorities.»
Brown added, «We continue to make strong progress against the levers of mainstream adoption – taste, health, and price – and are steadfastly advancing key strategic partnerships. The global climate crisis underway dictates greater, not less, urgency in the adoption of all solutions of which ours is among the most immediate and powerful. We believe our decision to reduce personnel and expenses throughout the Company, including our leadership group, reflects an appropriate right-sizing of our organization given current economic conditions. We remain confident in our ability to deliver on the long-term growth and impact expected from our global brand.»
Reduction in Force
The Company is reducing its current workforce by approximately 200 employees, representing approximately 19 percent of the Company’s total global workforce.
The Company currently estimates that it will incur one-time cash charges of approximately USD 4 million in connection with the reduction in force, primarily consisting of notice period and severance payments, employee benefits, and related costs. The Company expects that the majority of these charges will be incurred in the fourth quarter of 2022, and that the reduction in force will be substantially complete by the end of 2022, subject to local law and consultation requirements, which may extend the process beyond the end of 2022 in certain countries. The charges the Company expects to incur are subject to assumptions, including local law requirements, and actual charges may differ from the estimate disclosed above.
Revision to 2022 Full Year Revenue Outlook
The Company is also reducing its full year revenue outlook. Based upon preliminary results, the Company now expects third quarter 2022 net revenues of approximately USD 82 million, a decrease of approximately 23 percent versus the prior-year period. Full year 2022 net revenues are expected to be in the range of approximately USD 400 million to USD 425 million, representing a decrease of approximately 14 percent to 9 percent compared to the full year 2021. This compares to the Company’s previous expectation of full year 2022 net revenues in the range of USD 470 million to USD 520 million.
While the Company continues to review the drivers behind recent performance, the Company believes it has been negatively impacted by ongoing softness in the plant-based meat category overall, especially in the refrigerated subsegment, and by the impact of increased competition. Inflation is believed to be an underlying factor exerting pressure on the category as consumers trade down into cheaper forms of protein, including animal meat. Additionally, the Company believes it was negatively impacted by decisions made by distributors and customers, such as changes in inventory levels and postponed or canceled promotions. Delayed and/or canceled product promotions, programs and introductions relative to the Company’s plans also negatively impacted management’s revenue outlook. The Company expects gross margin to be negatively impacted as a result of the reduced revenue outlook.
Preliminary results remain subject to the completion of normal quarter-end accounting procedures and adjustments and therefore are subject to change.
Estimated Operating Expense Savings
In aggregate, over the next twelve months, the reduction in force, combined with the elimination of certain open positions and changes to the executive leadership team, including as described in our Form 8-K filed with the Securities and Exchange Commission («SEC») today, is expected to result in approximately USD 27 million in cash operating expense savings, and an additional approximately USD 12 million in non-cash savings related to previously granted, unvested stock-based compensation which would have vested over the next twelve months. In addition, as a result of these actions, the Company expects to recognize approximately USD 3 million of one-time non-cash savings related to the reversal of previously expensed, unvested stock-based compensation in the third and fourth quarters of 2022.