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Beyond Meat’s Gross Margin Likely to Expand in 2019

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First-quarter performance

For the first quarter of 2019, Beyond Meat (BYND) reported a gross profit of $10.8 million, representing a gross margin of 26.8%, an expansion of over 10.5% from 16.1% in the corresponding quarter of 2018. Operating leverage from increased product sales and improvements in production effectiveness drove the company’s gross margin during the quarter. Increased revenue from higher-margin fresh platform products also contributed to the expansion of its gross margin.

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BYND’s adjusted EBITDA came in at -$2.1 million compared to -$4.3 million in the corresponding quarter of 2018. Revenue growth and the expansion of its gross margin led to the improvement in its adjusted EBITDA. However, the increase in its operating expenses due to higher research and development and selling, general, and administrative expenses offset some of the improvements in its adjusted EBITDA. The company’s adjusted EPS for the quarter were -$0.14 compared to -$0.13 in the first quarter of 2018.

Analysts’ estimates for 2019

For 2019, analysts expect BYND’s gross profit to be $60.8 million, representing an EBITDA margin of 27.5%, an improvement from 20.0% in 2018. Analysts expect the company’s adjusted EBITDA to be -$0.9 million in the same period.

For 2019, analysts expect the company to post EPS of -$0.27 compared to -$0.64 in 2018.

Management’s guidance

BYND’s management expects its adjusted EBITDA to break even this year. In the long run, the company’s management expects its gross margin to approach the mid-30% range and its EBITDA margin to be in the mid-teens.

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