Living in a Meta world
BYND is a short
BYND reported revenue fell 1.6% in Q2 to $147.0M, and the company saw an EBIT loss of $89.7M. Retail $102.6M (-3% YoY) vs StreetAccount $99.0M; US $78.9M (+2.2% YoY) vs year-ago $77.2M; International $23.7M (-17% YoY) vs year-ago $28.5M.
Foodservice $44.5M (+1.8% YoY) vs SA $40.1M; US $23.4M (-2.4% YoY) vs year-ago $24.0M; International $21.1M (+7% YoY) vs year-ago $19.7M; Gross margin GAAP (4.2%) vs year-ago 31.7%. BYND's margins were negatively impacted by approximately ten full percentage points by sales to the liquidation channel, increased inventory reserves, and 6.7% related to Beyond Meat Jerky. Since coming public, the company has yet to deliver on any meaningful QSR customers yet continues to hold out the promise that it will happen in the next six -12 months. Instead, the company blamed the pandemic and consumers trading down among proteins in the context of inflationary pressures. The 2Q22 EBIT loss was ($89.7 million), only slightly improved from the 1Q loss of ($97.6 million).
The cash flow and balance sheet are a significant concern. On the balance sheet, BYND ended the quarter with a cash position of $454.7M after burning $88.8 million of cash in 2Q22. With a total outstanding debt of $1.131B and a significant cash burn of another $100 million for 2H22, liquidity concerns will only become more focused as 2023 approaches.
The CEO's optimism seems out of touch with the reality of the business: "Across the balance of the year, we are tightly focused on intensifying OpEx and manufacturing cost reductions, executing against a series of planned market activities for our global strategic partners, and strengthening our retail business through core support and the introduction of one of our best innovations to date. Through these and other measures, we are confident we will emerge from the current economic climate leaner, stronger, and well positioned for our next chapter of growth."
For the fiscal year 2022, BYND expects net revenues to be in the range of $470-$520 million, or between 1% to 12%. Previously, it had guided to $560-$620 million. Three main areas drove the significant majority of the decrease:
- Reductions in the outlook of Europe and the Middle East. "According to Nielsen data, plant-based meat across all our brands for burger, mince, meatballs, and sausage in our key European markets has decelerated from growth of approximately 7% in 2021 to shrinking approximately 14% year-over-year in the first half of 2022. Although we continue to gain share, the sustained headwind of the contracting segment is bigger than was anticipated."
- Second, reductions in US retail. "According to SPINS data, refrigerated plant-based meat has accelerated its rate of contraction from negative 3.6% in the 12 weeks ended March 20, 2022, to negative 12.5% in the 12 weeks into July 10. This broad pressure in our primary subcategory has more than offset any benefits gained from the recent expansion of distribution."
- Third, reductions in the forecast for Beyond Meat Jerky. Another BYND where this no demand!
At $31, the stock is trading close to 6x NTM sales and should trade closer to 1-2x or $10 in the next six months!
DASH - Growth Slowing in the CORE
DASH is SHORT
2Q22 results indicate that there is no leverage in the business model; the core restaurant business is slowing.
DASH reported 2Q22 EPS ($0.72) vs. est ($0.41) and 2Q revs $1.6B vs est $1.52B. In trying to make things look better than reality, the company reported (A)EBITDA of $103M vs. estimates of $57.5M and sees 3Q22 marketplace GOV to be in the range of $13.0-13.5B & (A)EBITDA $25-75M vs. estimates of $50.5M. The improved guidance can be attributed to a $100M QoQ increase in non-cash SBC. DASH's 2Q22 EBIT was a loss of $273 million vs. $173 million in 1Q22. The company "bought" order growth where total orders were up 5.4% sequentially and 23% YoY to 426M and a 25% improvement in marketplace GOV to $13.08B; including a double-digit increase in restaurant menu inflation.
While the company does not break out the business by lines of business, it can claim: "We have not seen evidence of a consumer slowdown in our new consumer acquisition metrics, as new consumers acquired in Q2 2022 were in line with the year-ago period. This is not to say there has been no impact, as it seems likely that our order volume would have been stronger in a healthier discretionary spending environment. Nonetheless, our consumer engagement metrics remained healthy in Q2, and we believe demand for our service has continued to grow faster than many other areas of e-commerce and local commerce."
How is the core restaurant business performing?
Moving forward, the company anticipates marketplace gross order volume to grow modestly from $13B to $13.5B in 3Q22. This flat-to-moderate growth is anticipated due to expectations of a softer spreading environment, even if that has not been evident to management yet. "Among other things, our Q3 and 2022 outlook anticipate a softer consumer spending environment in the second half of 2022 than what we experienced in the first half of the year. We caution investors that consumer spending could deteriorate faster or to a greater degree than anticipated, which could drive results below our expectations. Additionally, our increased international exposure heightens risks associated with operating in foreign markets, including geopolitical and currency risks. Changes in the international operating environment could negatively impact results versus our current outlook."
As the business slows in 4Q22, the lack of leverage and profitability becomes a bigger concern.
