One and a half years after its debut on the public markets, it's clear that plant-based meat specialist Beyond Meat (NASDAQ: BYND) is locked in high-growth mode. Below, Motley Fool contributor Asit Sharma explores the company's last three annual cash flow statements to illustrate where Beyond's cash is going, and how this fits into the company's overall strategy to gain market share.
A full transcript follows the video.
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Asit Sharma: Let's just quickly look at the statement of cash flows for the last three years, you'll see a similar story. Losses aren't so deep on a book basis. Accounting speak, between accounts, I know there are some watching today, you're used to referring to GAAP, generally accepted accounting principles, as book numbers and then non-GAAP as tax numbers if you're a pure accountant. Sometimes I slip up and say book numbers, and no one knows what I'm talking about. If I say book, I mean numbers according to GAAP. This net loss according to generally accepted accounting principles, not so bad for the last three years. You can see there's not a lot going here in terms of non-cash add-backs.
This company is using its stock, especially after it has become public, to incentivize employees, so this is going to be rising in future years. This is that one-time item in remeasuring it's warrant liabilities. Not a tremendous amount going on here, you can see that the company is using cash though as it is trying to grow. A couple of reasons for that; one is the marketing of the product, the other is this amount of money that it is pouring into research and development, because in order to establish a moat, Beyond Meat made a critical decision. They're not trying to have the same type of burger that Impossible does.
Impossible spends a lot of money into replicating the full experience of having a burger, including visible haeme or almost like a blood-like substance seeping through when you first cook the burger. This company is more focused on that pea protein type of texture. Both companies spend a whole lot of money to perfect the presentation of the burger, that is so crucial in this industry. If you're going to convert people who are used to animal meat to a plant-based burger, it is, and I hate this term, but this is what people in the industry call it, mouthfeel. The texture in your mouth, the smell of the burger, what it looks like. Does it bleed a little bit when it's first put on the skillet?
All these things are so important. These companies are net users of cash in the short-term, and they're also investing in supply chains and distribution. Brian mentioned a global footprint that this company wants to expand on. It is putting money into supply chain distribution in places like China and that's going to be an increasing cash need. A net user of cash, but of course, the company did go public, raised some money that we'll see on the balance sheet in just a bit, and finished off last year with a pretty decent amount of cash. Started the year with $54 million, including the public offering, ended the year with about $276 million.
Asit Sharma has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Beyond Meat, Inc. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
