Beyond Meat Inc. reported better-than-expected financial results for its third quarter and nine months ended Sept. 28, 2019. Revenue for the company increased a whopping 250% to $92.0 million versus the same period last year. Gross profit was $32.8 million, or 35.6% of net revenues, compared to gross profit of $5.0 million, or 19.2% of net revenues, in the year-ago period. Net income was $4.1 million, or 6 cents per diluted common share, compared to net loss of $9.3 million, or $1.45 per common share in the year-ago period.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), which is a non-generally accepted accounting principle financial measure, was $11.0 million, compared to an adjusted EBITDA loss of $5.7 million in the year-ago period.
“We are very pleased with our third-quarter results, which reflect continued momentum across our business and mark an important milestone as we achieved our first ever quarter of net income,” Beyond Meat president and chief executive officer Ethan Brown said. “We remain focused on expanding our distribution footprint both domestically and abroad, building our brand, introducing new innovative products into the marketplace and bolstering our infrastructure and internal capabilities to fuel our future growth.”
According to the company, growth in net revenues in the third quarter of 2019 was due primarily to an increase in sales volumes of products in Beyond Meat’s fresh platform across retail, restaurant and foodservice channels, driven by expansion in the number of points of distribution, including new strategic customers, international customers and greater demand from existing customers.
The increase in gross profit and gross margin was due primarily to an increase in the volume of products sold, resulting in operating leverage and production efficiency improvements, Beyond Meat noted. A greater proportion of gross revenues from the company's fresh platform also contributed to the improvement in gross margin.
The improvement in income was driven entirely by the year-over-year increase in net revenues and the resulting increase in gross profit but was partially offset by higher operating expenses primarily to support the company’s expanded manufacturing and supply chain operations, higher administrative costs associated with being a public company, higher restructuring expense and continued investment in innovation and marketing capabilities.
Mark Nelson, Beyond Meat chief financial officer and treasurer, said, “We remain pleased with our continued strong sales growth trajectory and are equally pleased with our sequential improvement in profitability in the third quarter. Our 35.6% gross margin in the quarter is a validation of our team’s ongoing efforts to improve our operating efficiency and is a critical enabler of greater strategic flexibility in the future.”
Despite the strong results, shares of Beyond Meat fell as much as 15% in extended trading. However, about half of the losses were recovered.