Past Meat (BYND) lack of earnings in fourth quarter of 2020

Beyond Meat “Beyond Burger” patties made from vegetable substitutes for meat products stand on a shelf for sale in New York City.

Angela Weiss | AFP | Getty Images

Beyond Meat announced Thursday that it had signed deals with fast-food giants McDonald’s and Yum Brands, but stocks fell on a disappointing earnings report.

The company posted a better-than-expected quarterly loss as the cost of global expansion and weak restaurant sales weighed on business.

The company’s shares fluctuated in expanded trading, falling first in earnings news and then rising in supply contract, fueled by hopes the new restaurant deals will spur growth. Recently, stocks were down about 3%.

The company reported, relative to Wall Street expectations based on an analyst survey by Refinitiv:

  • Loss per share: adjusted 34 cents compared to expected 13 cents
  • Revenue: $ 101.9 million versus $ 103.2 million expected

The company reported a net loss of $ 25.1 million, or 40 cents per share, for the fourth quarter, increasing to a loss of $ 452,000, or 1 cent per share, last year.

Excluding the costs caused by the pandemic, Beyond lost 34 cents per share, more than the loss of 13 cents per share that Refinitiv surveyed had expected.

Net sales rose 3.5% to $ 101.9 million, missing the $ 103.2 million expectation. U.S. grocery revenue rose 76% for the quarter, despite the company finding that retail demand has weakened since the crisis began.

CEO Ethan Brown said Beyond is still the best plant-based meat alternative in grocery stores, according to IRI data.

On the flip side, U.S. food service revenue fell 42.6% in the fourth quarter as the pandemic continued to weigh on restaurant demand for meat substitutes. However, years of partnerships with McDonald’s and Yum show that restaurant companies still believe that consumers want plant-based alternatives.

Under the new three-year deal with McDonald’s, Beyond will be the preferred patty supplier for its McPlant burger, which is being tested in some markets around the world. McDonald’s and Beyond will also work together to develop new substitutes for pork, chicken, and egg.

Likewise, Beyond and Yum will work together to create exclusive menu items for KFC, Taco Bell and Pizza Hut over the next several years. The financial terms for both strategic partnerships were not disclosed.

Executives declined to elaborate on the financial implications of the two partnerships during the conference call. Brown told analysts, however, that the impact of the deals in 2021 is likely to be “pretty modest”.

“These deals are huge,” said Brown. “These are the biggest deals you could put together in our grocery sector. And we don’t want people to outdo themselves.”

He also declined to provide more detailed information on his joint venture with PepsiCo, which was set up to manufacture and distribute plant-based drinks and snacks.

The deals also come when Beyond tries to position itself as a global player. International sales fell 16.5% in the quarter, negatively impacted by declines in the food service segment. The company said it spent more on expansion in Europe and China.

Additional costs of growing business included increasing the number of employees as the workforce increased, more was spent on marketing and development, and invested in information technology infrastructure.

Brown also said the company will release two updated versions of its meatless burger patties this spring. Brown says they are both the juiciest burgers, and one has 55% less saturated fat than a traditional 80/20 beef patty. The other has 35% less saturated fat, consistent with its current iteration.

Beyond Meat declined to provide an outlook for 2021, citing the uncertainty caused by the pandemic.

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