Beyond Meat Q1 2025 Earnings Report

Beyond Meat EPS Results

• Actual EPS: -$0.67
• Consensus EPS: -$0.52
• Beat/Miss: Missed by -$0.15
• One Year Ago EPS: -$0.84

Beyond Meat Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $75.68 million
• Beat/Miss: N/A
• YoY Revenue Growth: -9.10%

Beyond Meat Announcement Details

• Quarter: Q1 2025
• Date: 5/7/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, May 7, 2025
• Conference Call Time: 5:00PM ET

Beyond Meat (NASDAQ:BYND), a plant-based meat company, develops, manufactures, markets, and sells plant-based meat products in the United States and internationally. The company sells a range of plant-based meat products across the platforms of beef, pork, and poultry. It sells its products through grocery, mass merchandiser, club stores, and natural retailer channels, as well as various food-away-from-home channels, including restaurants, foodservice outlets, and schools. The company was formerly known as Savage River, Inc. and changed its name to Beyond Meat, Inc. in September 2018. Beyond Meat, Inc. was incorporated in 2008 and is headquartered in El Segundo, California.

Beyond Meat Q1 2025 Earnings Call Transcript

Key Takeaways

• Q1 2025 Results: Net revenues fell 9.1% to $68.7 M with a gross margin of –1.5% and adjusted EBITDA loss of $42.3 M, driven by distribution gaps from refrigerated-to-frozen aisle shifts, macroeconomic headwinds, startup costs at the DeVault plant, and a sizeable inventory provision.
• Production and Margin Recovery: Management expects to rebuild most lost distribution, leverage seasonality, and achieve year-over-year cost and efficiency improvements as plant consolidations and internal production at the DeVault facility scale up.
• EBITDA-Positive Goal: The company is targeting a run-rate EBITDA-positive position by year-end 2026 through continued operating expense cuts, portfolio optimization, and rightsizing its manufacturing footprint to current revenue levels.
• Consumer Perception Campaigns: To dispel misinformation and boost demand, Beyond Meat is promoting its clean-label certifications via the “Planting Change” film and a “Real People, Real Results” 30-day social challenge, while rolling out new products like Beyond Chicken Pieces.
• Liquidity Enhancement: Beyond Meat closed a $100 M senior secured delayed-draw term loan facility at 12–17.5% interest, with warrants for up to 12.5% of shares, providing optionality to fund strategic priorities and potential convertible note refinancings.

Presentation

[Operator]

Please note this event is being recorded. I would now like to turn the conference over to Paul Shepherd, Vice President, FP and A and Investor Relations. Please go ahead, sir.

[Paul Shepherd, VP - FP&A and IR at Beyond Meat]

Thank you. Hello, everyone, and thank you for your participation on today's call. Joining me are Ethan Brown, Founder, President and Chief Executive Officer and Luby Couture, Chief Financial Officer and Treasurer. By now, everyone should have access to our first quarter twenty twenty five earnings press release filed today after market close. This document is available in the Investor Relations section of Beyond Meat's website at www.beyondmeat.com.

[Paul Shepherd, VP - FP&A and IR at Beyond Meat]

Before we begin, please note that all the information presented today is unaudited and that during the course of this call, management may make forward looking statements within the meaning of the federal securities laws. These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially from those described in these forward looking statements. Forward looking statements in our earnings release along with the comments on this call are made only as of today and will not be updated as actual events unfold. We refer you to today's press release, our quarterly report on Form 10 Q for the quarter ended 03/29/2025 to be filed with the SEC and our annual report on Form 10 ks for the fiscal year ended 12/31/2024, along with other filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward looking statements made today. Please also note that on today's call, management may reference adjusted EBITDA, adjusted loss from operations and adjusted net loss, which are non GAAP financial measures.

[Paul Shepherd, VP - FP&A and IR at Beyond Meat]

While we believe these non GAAP financial measures provide useful information for investors, any reference to this information is not intended to be considered in isolation or as substitute for the financial information presented in accordance with GAAP. Please refer to today's press release for a reconciliation of these non GAAP financial measures to their most comparable GAAP measures. And with that, I would now like to turn the call over to Ethan Brown. Thank you, Paul,

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

and good afternoon, everyone. The first quarter of twenty twenty five was clearly a disappointing one for us and a deviation from the previous two quarters in which we drove year over year revenue and gross margin growth, significantly reduced operating expenses and achieved large improvements in net income and adjusted EBITDA. In Q1 twenty twenty five, we experienced worsening category and macroeconomic conditions that impacted our top line recovery and reverberated throughout our P and L. Before going through what I believe is a very strong response to this interruption in our recovery, I'll provide some color around our results, including calling out at a high level some extraordinary and more transient drags on our performance. First, as we discussed in our previous earnings call, certain large retail customers in The United States elected to transition plant based meat from the refrigerated to the frozen aisle within their stores.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

In more than one retailer, this transition led to an interruption in availability of some of our core products throughout Q1 twenty twenty five. As category and macroeconomic headwinds more generally slowed velocities toward the latter half of the quarter, it became harder to overcome the volume implications of these distribution gaps. Looking forward across the balance of the year, however, we expect to build back much, though not all, of this and other loss distribution. These gains provide the opportunity, all things being equal, for better retail performance Moving from net revenues to gross margin. As I've shared previously, we've been consolidating our production network for a variety of reasons, including the rightsizing of our manufacturing footprint to current revenues.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

Through these measures and the commencement of increased internal production at our DeVault, Pennsylvania facility, we expect to see strong year over year improvements in our production efficiency and costs. Our Q1 results do not yet reflect these improvements for four primary reasons. One, lower than anticipated sales volumes led to lower levels of overhead absorption. Two, the change in product mix, in part reflecting the interruption in retail distribution of certain core items, and a larger percentage of sales coming from product with higher direct labor and utilities increased the baseline cost of goods produced. Three, we saw some delays and lower than planned line throughput as we scaled new capacity in our DeVault, Pennsylvania facility.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

These startup factors led to extended production over time and more changeovers than would be typical. Fourth, we recorded a particularly large inventory provision this quarter as we sought to dispose of certain inventories for strategic reasons. This inclusion in our COGS, which is a noncash impact, created a strong negative drag on margin for the quarter, but should benefit our real inventory carrying costs going forward. Moving now to margin. In the absence of further worsening category and macroeconomic trends, we expect overall volume as well as the volume of our core products to improve as we gain back retail distribution and benefit from seasonality, putting us in a better position to actually realize the planned benefits of a more efficient and appropriately sized production footprint.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

Turning to our operating expenses, I want to commend the team on managing tighter budgets, even as we need to be more aggressive, a subject I will touch upon in a moment. Though our total operating expense came in at $55,100,000 which still represents a $2,000,000 year over year reduction, it's important to distinguish between ongoing OpEx and extraordinary or transient expenses, which for the quarter totaled 7,000,000 These non routine charges include legal arbitration expenses relating to a previously disclosed contractual dispute with a former co manufacturer, additional incremental non cash charges arising from decisions to increase inventory provisions for certain items, and expenses related to the suspension of our operational activities in China. In addition to these aforementioned charges, I would also note that our OpEx in Q1 includes severance payments related to our February reduction in force. By setting aside these more transient costs, one can more clearly see evidence of progress with respect to our baseline operating expenses. Though this additional color provides greater visibility beyond the aggregate results, what is more important is what we're going to do to get back on track.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

We take this deviation from a recovery extremely seriously, and we're using it as an opportunity to strengthen our organization. Whatever our top line turns out to be in this current environment of uncertainty, our overarching goal remains the same: EBITDA positive on a run rate basis by year end 2026. To ensure that we achieve it, we are focusing additional internal and external resources on further driving our operational expenses down while optimizing our portfolio and manufacturing toward margin objectives. We will also continue and deepen our efforts to recast our value proposition with consumers through the development, sale, and marketing of clean and simple plant based protein to taste great and support health and wellness goals. I'll now turn to the second part of our recovery.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

To be exceedingly clear, while Beyond Meat can always and will always seek to improve our products, we believe the central issue impeding our return to sustain growth is perception, or more accurately misperception. According to a recent trend report, the consumer's interest in protein is only growing, with 61% of surveyed consumers reporting increasing their protein intake in 2024, up from 48% in 2019. Beyond Meat is, of course, a protein product, which depending on the specific offerings, enjoys certifications from the American Heart Association, the American Diabetes Association, and the Clean Label Project, among other organizations. Convenient products such as Beyond Steak deliver high levels of protein using simple and recognizable ingredients made through a process that is clean and efficient and absent cholesterol, drugs such as antibiotics and hormones, and of course, lacking the threat of zoonotic diseases. We should be a central part of satisfying consumer interest for protein, yet for reasons I will touch on momentarily, we need to reestablish ourselves within their decision set.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

Regarding taste, we regularly see our products earn positive media and consumer reviews, including our flagship product, the Beyond Burger, which recently won its seventh first place position in seven years in the largest survey of its kind, one answered by millions of consumers. I find this win to be important given that in Beyond Four, the fourth and current iteration of the Beyond Burger, we drove significant nutritional gains yet clearly still satisfy consumers' taste buds. We will continue to hit on these themes of taste and health and simple and clean ingredients as we expand our portfolio. For example, after years of research and development, last week we announced the arrival of Beyond Chicken Pieces nationwide at Kroger. Though this product has its roots dating back to Beyond Meat's beginning sixteen years ago, over the last several years, we put considerable effort into Beyond Chicken Pieces' taste, texture, ingredients, and nutrition before reintroducing it.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

With a simple and clean ingredient deck, including avocado oil and 21 grams of protein, the product is versatile, convenient, and one of my personal favorites. This reality of Accolades, Press! And clean and simple plant protein products notwithstanding, in the main Beyond's value proposition remains obscured in doubt and misinformation. If we look inward, our highest priority is driving operating and margin improvements. Externally, our highest priority is on dispelling misinformation and empowering the consumer to make informed decisions around our products.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

To this end, I would encourage you to watch a short film we put together that is gaining traction on YouTube called Planting Change. Planting Change, which is just shy of ten minutes and which has over 2,000,000 views in its short time online, explores the origin of misinformation regarding our products. Gives a glimpse of the relentless research on health and nutrition, discusses the process we use to deliver protein from the field to the center of the plate, and features some of our farmers talking about what growing for beyond means for their livelihood, for their families, and for their communities. Looking forward, we are fast following planting change with the launch of our latest marketing campaign, Real People, Real Results. Real People, Real Results is a social first thirty day challenge that follows six people of various ages and backgrounds as they shift to a healthy plant based diet that includes Beyond Meat.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

The program was designed by Doctor. Matthew Lieberman, coauthor of Forks Over Knives Plan and the Whole Foods Diet, along with Doctor. Aluna Poldy. And in just thirty days, participants saw real, positive changes to their health while enjoying a plant based diet that included delicious meals with the Beyond Burger, Beyond Beef, and Beyond Steak, among other Beyond products. From lower total cholesterol, lower LDL cholesterol, to weight loss, better sleep, higher energy levels, and lower information, Real People, Real Result participants reported exciting benefits of a plant based diet that includes our products.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

The social campaign launched on Instagram and Facebook, TikTok, and YouTube, and we are amplifying it digitally across Connected TV, Google Performance Max, and digital out of home in the coming weeks. For the next six weeks, a new participant video drops each week documenting their personal journey. More generally, stay tuned as we'll be announcing more under the Real People, Real Results campaign and its accompanying thirty day challenge program across the balance of the year. Finally, with respect to strengthening our balance sheet, as we announced today, we have successfully closed on a financing facility providing up to $100,000,000 in new senior secured debt from Unprocessed Foods LLC, a wholly owned subsidiary of AHEMSA Foundation, a nonprofit organization focused on advocating for plant based diets. This facility provides us with an option for additional liquidity as we advance our strategic priorities and invest opportunistically in driving growth.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

We are pleased to welcome a new investor who deeply understands our industry and is mission aligned with our plant based ethos. I'll now turn the call over to Luby.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

Thank you, Ethan, and good afternoon, everyone. I'll begin by reviewing our financial results in a bit more detail before providing some brief comments on our outlook. In the first quarter of twenty twenty five, net revenues decreased 9.1 to $68,700,000 compared to $75,600,000 in the year ago period. The decrease in net revenues was primarily driven by an 11.2% decrease in volume of products sold, partially offset by a 2.4 increase in net revenue per pound. The decrease in volume of products sold was primarily driven by weak category demand in our U.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

S. Retail and foodservice channels, price elasticity effects resulting from twenty twenty four pricing actions, and some loss of distribution in our U. S. Channels. The increase in net revenue per pound was primarily driven by lower trade discounts and list price changes, partially offset by changes in product sales mix and unfavorable changes in foreign currency exchange rates.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

Breaking this down by channel, U. S. Retail channel net revenues decreased 15.4% to $31,400,000 compared to $37,100,000 in the year ago period. The decrease in net revenues was primarily driven by a 23.2% decrease in volume of products sold, partially offset by a 10% increase in net revenue per pound. This year over year decrease in volume represents a reversal from the more positive momentum we observed in the third and fourth quarters of last year.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

Consumption data suggests that consumer takeaway in U. S. Retail progressively weakened in the first quarter of twenty twenty five, which we believe contributed to meaningfully weaker shipments than we had expected. Although it is too early to tell and difficult to quantify, we believe broader macroeconomic concerns and reduced consumer confidence are negatively impacting our and other categories in general. In addition to this more general softness in our category, we were also impacted by the lapping of certain items in the year ago period that did not repeat this quarter.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

These included approximately $1,600,000 in ingredient sales, some level of forward buying by customers in anticipation of price increases, which we began implementing in the second quarter of last year, and to a lesser extent, sales of Beyond Meat jerky, which we were in the process of discontinuing a year ago. Furthermore, as I noted earlier, we experienced some loss of distribution as certain retailers transitioned our products from refrigerated to frozen aisles, although we expect to regain some portion of these losses beginning in the second quarter of twenty twenty five. And finally, we did experience some temporary disruptions in supply of a few of our products as we ramped up production on a new manufacturing line at our DeVault, Pennsylvania facility as part of our in sourcing initiative. The 10% increase in net revenue per pound in US retail was primarily driven by reduced trade discounts and the effects of our 2024 pricing actions, partially offset by changes in product sales mix. The impacts of volume and mix are worth calling out as they impacted not just our top line results, but also our gross margin performance, which I'll elaborate on momentarily.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

Turning to food service. US food service net revenues decreased 23.5% to $9,400,000 in the first quarter of twenty twenty five, compared to $12,300,000 in the year ago period. The decrease in net revenues was primarily driven by a 22% decrease in volume of products sold and a 2% decrease in net revenue per pound, primarily reflecting higher trade discounts and changes in product sales mix versus a year ago. The decrease in volume of products sold was primarily driven by weak category demand, reduced burger sales to a QSR customer, and some impact from distribution losses. Although we anticipate broader headwinds in this channel will persist in the near term, we're optimistic that efforts to build out our U.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

S. Foodservice team over the last several months, which are largely complete now, will begin to pay dividends soon. In international, our international retail channel net revenues increased 0.8% to $12,700,000 in the first quarter of twenty twenty five compared to $12,600,000 in the year ago period. The increase in net revenues was primarily driven by a 10.3% increase in net revenue per pound, partially offset by an 8.6% decrease in volume of products sold. The increase in net revenue per pound was primarily driven by changes in product sales mix and lower trade discounts, partially offset by unfavorable changes in foreign currency exchange rates and price decreases of certain of our products.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

The decrease in volume of products sold was primarily due to reduced sales of the company's ground beef products in The EU as a packaging transition led to some disruption and limited loss of distribution for those items. International foodservice channel net revenues increased 12.1% to $15,300,000 in the first quarter of twenty twenty five compared to $13,600,000 in the year ago period. The increase in net revenues was primarily driven by a 13.5% increase in volume of products sold, partially offset by a 1.2% decrease in net revenue per pound. The increase in volume of products sold was primarily due to increased sales of chicken products to a large QSR customer, while the decrease in net revenue per pound was largely driven by changes in product sales mix and the impact of FX partially offset by lower trade discounts. Moving down the P and L, gross profit in the first quarter of twenty twenty five was a loss of $1,100,000 or gross margin of negative 1.5% compared to gross profit of $3,700,000 or gross margin of 4.9% in the year ago period.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

Gross profit and gross margin included approximately $5,200,000 of extraordinary charges related to specific strategic inventory reduction initiatives and expenses related to the suspension of our operational activities in China. Excluding these items, COGS per pound was only marginally higher than year ago levels, reflecting higher inventory provision on a year over year basis, partially offset by lower materials and logistics costs. As I mentioned earlier, our underlying gross margin performance this quarter, which fell short of our expectations, also reflected the impact of lower sales volume as certain fixed costs were spread over fewer pounds sold. We also saw higher labor costs related to the installation and ramp up of a new production line and a tilt in our production mix towards certain products that are more labor intensive and incur higher variable overhead expenses, including utilities. This reflects changes in our sales mix more broadly, as our lower cost core products have borne the brunt of softer shipments in recent periods.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

This underscores the importance we are placing on our efforts to stabilize and ultimately restore growth within our core set of products, given the significance of gross margin expansion as a lever that supports our longer term objective of achieving sustainable operations. Operating expenses were $55,100,000 in the first quarter of twenty twenty five, compared to $57,100,000 in the year ago period. Operating expenses included a total of $7,200,000 in transient expenses, including $4,600,000 of incremental legal fees associated with arbitration proceedings related to a contractual dispute with a former co manufacturer, 1,300,000.0 in non cash charges arising from specific strategic decisions to increase inventory provision for certain inventory items, and 1,200,000 in expenses related to the suspension of our operational activities in China. Below the line, total other income net was $3,300,000 in the first quarter of twenty twenty five compared to total expense net of $900,000 in the year ago period, driven by an increase in net realized and unrealized foreign currency transaction gains. Overall, net loss was $52,900,000 in the first quarter of twenty twenty five compared to $54,400,000 in the year ago period.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

Net loss per common share was $0.69 in the first quarter of twenty twenty five compared to $0.84 in the year ago period. Adjusted EBITDA was a loss of $42,300,000 or negative 61.6% of net revenues in the first quarter of twenty twenty five compared to an adjusted EBITDA loss of $32,900,000 or negative 43.5% of net revenues in the year ago period. Turning to balance sheet and cash flow highlights. Our cash and cash equivalents balance, including restricted cash, was $115,800,000 and total outstanding debt was $1,100,000,000 as of 03/29/2025. Net cash used in operating activities was $26,100,000 in the three months ended 03/29/2025, compared to $31,800,000 in the year ago period.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

And capital expenditures were 4,500,000.0 the three months ended 03/29/2025, compared to 1,200,000.0 in the year ago period. As it relates to our balance sheet and as Ethan mentioned, we are pleased to announce that we have closed on a financing facility providing up to $100,000,000 in new senior secured debt. Under the terms of the agreement, Unprocessed Foods has provided us with a senior secured delayed draw term loan facility of $100,000,000 Any drawdowns would accrue interest of 12% prior to the initial maturity date of 02/07/2030, and 17.5% following that date, in each case payable in kind. The initial maturity date may be extended with the consent of both parties. Furthermore, as part of the transaction, Unprocessed Foods will receive warrants in proportion to the amount drawn down on the facility, giving them the right to purchase up to 12.5% of the company's currently outstanding shares at an exercise price of 115 percent of the thirty day VWAP period beginning 05/08/2025, with a minimum and maximum exercise price of $2 and $3.75 respectively.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

Complete terms are disclosed in a report on Form eight ks filed with the SEC. Although we have no near term debt maturities, in line with our strategic priorities for 2025, we continue to focus on strengthening our balance sheet for the long term, including evaluating potential transactions to address our existing convertible notes prior to maturity in 2027. In this regard, we will provide further updates as and when appropriate. Finally, a brief word on our outlook. As with many other companies, we are experiencing an elevated level of uncertainty in our operating environment as a result of the uncertain and volatile macroeconomic conditions, which could have unforeseen impacts on our actual realized results.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

In light of this uncertainty, we believe it is prudent to withdraw our previous full year guidance, and we are limiting our revised outlook to our second quarter net revenue expectations only. Specifically, in the second quarter of twenty twenty five, we expect net revenues to be in the range of 80,000,000 to $85,000,000 reflecting, among other things, the anticipated impact of ongoing softness in demand in our category and the consumer sector more generally. With that, I'll turn the call back over to the operator to open it up for your questions. Thank you.

[Operator]

We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. Please go ahead.

[Benjamin Theurer, Analyst at Barclays Capital]

Hey, good morning and well, good afternoon, and thank you very much for taking my question. So Ethan, Luby, two ones. One, I guess, for Ethan and another one for Luby. So Ethan, if you look at the performance in the first quarter and definitely the challenges to overcome, With all the struggle, particularly in The U. S.

[Benjamin Theurer, Analyst at Barclays Capital]

Market, what potential initiative could you take to boost somehow or to at least stop the decline in volumes? What are you thinking about in terms of like just getting stabilization on the top line in The U. S? And then my second question, it would be probably more for Luby. Can you share any more details as to the financing agreement of that $100,000,000 in terms of like expected interest expense?

[Benjamin Theurer, Analyst at Barclays Capital]

How should we think about this maturities? Any more details you can share that might not be just readily available? Thank you.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

Great question, good to hear from you. I'll take the first and then hand it to Louie. So I think it's in a couple different buckets that I think about this and one is easier than the other. And the first really is around distribution. And so as I explained in my prepared remarks, two large retailers, one very large, migrated our products from the fresh or refrigerated section to the frozen section, but it didn't do so in a continuous manner.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

So it took them out of distribution as they were doing their resets for a pretty sustained period, which encompassed all of Q1, right? And then they're gonna be putting them into the frozen in the coming months. And so talking to our sales team, our sales leader, they feel good about the distribution they're gaining back across the balance of the year in The U. S. Retail.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

And I think about 70% of our declines or so could be explained in the first quarter by that distribution gap. Seeing it come back, the distribution comes back, then the challenge becomes velocity. And that's the harder challenge. But we did see toward the end of last year in stores where we had not lost distribution, so where there was comps that were same stores, we were starting to see, particularly with the Beyond Four lineup, a slightly positive trend on velocity. Now that has not occurred in the first quarter as I think we see some consumer slowdown in general.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

But that second bucket is really the one that we need to focus on, not from a blocking and tackling of distribution, but on how do we get back into the consumer decision set on our products. And I think we did the hard work over the last two years of trying to clear up some of this misinformation. If you think about where we were in mid two years ago, it was kind of the height of this intense misinformation campaign where there's something wrong with the ingredients, there's the process and so on and so forth. And we still have some of that. But you can feel it waning a little bit and it's sort of more of the truth starting to come out.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

And the way we dealt with that, right, was all these programs, certifications from the American Heart Association, the American Diabetes Association, Clean Label Project and other organizations to help counter that negative narrative that was out there by not only the meat industry but also by the pharmaceutical industry who didn't want to lose sales from selling antibiotics to livestock. So we kind of made it through that really intense pressure cooker, and now I think it's about, we did the Stanford study, did all these things I talk about a lot, But now it's really about making that digestible for the consumer, no pun intended. And what I mean by that is how do we put that message out on social media, how do we get folks to understand that in a relatable way? And that's what this Real People, Real Results program is about. And to see the first batch of these folks go through the program, and it's again being administered by a terrific doctor, Doctor.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

Lieberman, he was one of the main doctors behind the Forks Over Knives plan, as well as the Whole Foods diet, with Whole Foods in the store. And to see him use our products and plant based eating in general to transform people's health outcomes, whether it's the energy levels, the cholesterol levels, even there's good weight loss occurring, things of that nature, is impactful and powerful. And so if we can continue to clear that message up and get into decisions that as I mentioned, that study I mentioned was from Cargill. And it shows that very significant increase among US consumers in protein. And part of that has to do with the use of the weight loss drugs and the need to increase protein intake if you're on one of those drugs or perceived need anyway.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

So we're seeing that intensification of interest in The U. S. Consumer around protein. We are a very clean source of protein. So how do we continue to chip away at the misconception and drive a more positive perception around our brand and we're doing that.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

So two parts, one, restore this distribution, two, make sure we get the narrative in front of the consumer and I think we're doing some of those things. So I view this really as an aberration versus a trend. I think if you look at our Q2, Q3, and Q4 results, what I hope you'll see is the impact of some of that increased distribution.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

Ben, I'll address your second question, which was around the financing. I think I provided some of the detail in my prepared remarks, but happy to sort of cover those again. The initial term of the, facility is 4.75, just under five years, with some options to extend. And as I mentioned in my prepared remarks, it is a delayed draw facility, and any drawdowns, in the initial period would accrue interest at 12%. That's through the maturity date of February 7, 02/1930.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

And then, they would accrue interest at 17.5%, following, that date. And as I mentioned on the call, it would be payable, in kind interest, initially. So I I think that, pretty much, you know, covers the the the sort of, key terms of of that financing, but, you know, happy to happy to address if there are further questions.

[Benjamin Theurer, Analyst at Barclays Capital]

No. No. Just maybe a a real quick follow-up on that. How do you think about what you you stated about in the press release that you continue to look into other alternatives. I mean, I know there's there's an ATM facility and all that kind of stuff.

[Benjamin Theurer, Analyst at Barclays Capital]

So so what else is currently within consideration of the company to kind of, like, support the cash needs that you might have?

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

You were you were a little bit hard to hear on that question, Ben, but I think you were asking about what what else can we do to support our Yeah. Our cash needs. Is that it? Correct. Correct.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

Yes. Yeah. So, you know, obviously, you know, having access to this, capital, is is certainly beneficial, you know, for for the business. But I would say that that doesn't change any of the, you know, sort of key initiatives, right, that that we are pursuing, in support of this, EBITDA positive goal of ours. So in order for us to get there, and I think we discussed this on the last earnings call, we have to stabilize the top line.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

So it gets to the question that you had asked Ethan. We have to expand gross margin, and we have to kind of maintain pretty tight operating expense, expenditures and look for further opportunities to reduce that. We really have to do all three of those things. And and, you know, if we if we can achieve that, then obviously, you know, the rate of cash consumption of the business will will be, reduced. But obviously, having some flexibility with this with this capital is also very beneficial to us.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

Yeah, I think if I could just add to that, get to other questions as well. I wanna overemphasize this point that what's most important to the business, and this is obvious, but just so it's understood, is not necessarily driving some sort of spectacular growth at this time. Like what we're really focused on, right, is making sure that our expense base fits into whatever revenue is going to occur this year. And then second, that the margin gets to where it needs to be. If you look at the factors that impacted the gross margin in the first quarter, which we went over in our prepared remarks, but happy to talk about as well.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

A lot of these should not persist. And so we ended the consolidation of the network, got into the Pennsylvania facility, new line that we set up, it was slower than we expected. The volumes going through there were somewhat diminished because of the things we just talked about on the top line that we had these larger inventory reserves that we pushed through in a particularly dark quarter. So all of those things as you get into '2 and '3, particularly Q2 and Q3, particularly with the seasonality benefit and how that benefits our core, we expect to see much better progress on margin and hopefully a return to some of the trends you were seeing in Q3 and Q4 of last year.

[Benjamin Theurer, Analyst at Barclays Capital]

Okay. I'll leave it here. Good luck with that. Thank you very much, Ethan. Thank you.

[Operator]

The next question is from Peter Salla with BTIG. Please go ahead.

[Peter Saleh, MD - Restaurants at BTIG]

Great. Thanks for taking the question. Luby, I think you mentioned in your prepared remarks you you're working on building out the food service team. If I heard you correctly, can you just elaborate a little bit on on that in in The US? What is gonna be the focus there?

[Peter Saleh, MD - Restaurants at BTIG]

How is this strategy going to be different than prior years? And just give us a little bit more detail on that. You.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

Sure. I can cover that. So I was just on a call before getting onto this with the head of that department. And I think the way to think about US Food Services, we've had a particularly tough run at it recently and the kind of distribution gains that I was talking about in retail, while it's not as cut and dry, it's not like summer coming back and things of that nature. That team is now more fully built out and we expect to see improvement in The U.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

S. Foodservice performance. Now it depends, that's one of the first places you start to see consumer concerns. So if that category continues to struggle, you look at Chipotle, McDonald's, etcetera, I can't guarantee it, but we are starting to pick up more wins. And I think it has to do with we've done better historically in the non comm space, universities, hospitals, things like that.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

But we've now really started to focus on that commercial space again. And I don't think it's I don't think you should expect us to pick up a massive name QSR in The U. S. Right now. But we're focusing more on that smaller national account and we are making some progress there.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

And you'll hear fun stuff or encouraging news rather as we progress through the year. But not kind of massive names, but maybe a tear down from that places that you would recognize.

[Peter Saleh, MD - Restaurants at BTIG]

Thank you very much.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

Thank you.

[Operator]

The next question is from Robert Moskow with TD Cowen.

[Robert Moskow, Managing Director at TD Cowen]

Luby, your 2025 outlook, you're pulling guidance for the year, but the reasoning was a little vague. You talked about elevated uncertainty in the operating environment. So does that have anything to do with tariffs and things that we've heard from other CPG companies? Or is it really just kind of like, hey, the demand here in The U. S.

[Robert Moskow, Managing Director at TD Cowen]

Is hard to predict right now? Is there anything specific you're seeing with retailer changes that you don't want to opine on? Like, I'm trying to dig a little deeper into what the verbiage means.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

Yeah. No, Louie can provide additional commentary. But the main point is you see the uncertainty that is unfolding right now in consumer spending. And those are ripple for some companies. You look at like a you cover a lot of the sector, you look at J and J Snacks, you look at the stuff I just mentioned with Botle and McDonald's, etcetera.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

But for us that can be significant, right? So we just don't know and there's no lurking concern other than that. And I really want this team focused entirely on reaching profitability versus chasing a number arbitrarily. I've been behind that, but we'll have to just take it quarter by quarter right now. And the main point here is to get this EBITDA positive goal done and stabilize the business.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

I mean, over time, and you and I have talked about this a lot, I have zero doubt that this business is going to be the very large business we've expected it to be. But trying to drive an upside right now in this environment at the expense of stabilizing and reaching EBITDA and profitability, obviously not a good idea. And so it's really around let's take some of that pressure off, let's make sure we get the internal stuff right, let's make sure we get the margins right, and let's reach this EBITDA positive goal in a run rate basically by the end of twenty six. Louis?

[Robert Moskow, Managing Director at TD Cowen]

Okay. Yeah. Sorry.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

Go ahead, Louis. I was just gonna say, you know, to add to that. So, you know, it's obviously, there's a lot of discussions around, tariffs and, you know, how that may impact various sectors, in the broader macroeconomic environment. You know, it's obviously still pretty early days, but, you know, I would say, you know, we've we've obviously been focused on it as well and and we've done some analysis to try to understand what the implications might be. Look, there's no guarantees, but I think at this point, we think the direct impact, on our business is relatively minimal.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

But, you know, nonetheless, I think that is causing, right, some discomfort, you know, across the consumers more generally. And what we've seen in the past is, you know, a skittish consumer, you know, does not help our category. Back in, I believe it was 2022 when sort of, inflation was peaking across various portions of the grocery store, we saw sort of a lot of trading down or whatever you want to call it from the plant based meat category into animal protein. And remember that still a vast majority of our consumers, are flexitarians. So all of our consumer surveys indicate that people who are purchasing our products are also purchasing, animal protein.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

And so I think, you know, there's definitely some correlation just between when you have, you know, concerns or, you know, consumer confidence is shaken, that, you know, typically, does does not have a has a negative impact on on our category, I think, relative to animal protein. So when when we're talking about the, you know, sort of uncertainty in the in the, macroeconomic environment and and the challenges that presents to our business. You know, obviously, you know, you've seen, you know, in the numbers that we reported, you know, there's there's some, you know, fairly large, declines in volumes in some portions of our business. And as you know, that can be a pretty meaningful swing factor, right, for our P and L down to gross profit. And so we're just kind of weighing all of those factors together.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

I think it would be difficult for us to provide any sort of long term outlook, right, that's almost a year out, with any high degree of certainty. And so we believe it's more prudent to look much closer in.

[Robert Moskow, Managing Director at TD Cowen]

Okay. And just in SG and A, you mentioned some onetime expenses in first quarter, some are legal expenses. So can you give us kind of like a real run rate SG and A for second, third and fourth quarter? I guess, is it $7,000,000 less than what we have in first quarter? Is that the right way to look at it?

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

Yes. So what we reported in our Q1 results, you're correct. There was about, a slightly over 7,000,000, of extraordinary items in there. I think our legal expenses were elevated relative to what I would sort of characterize as normal course business. And part of that was related to this arbitration that we talked about.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

And then there was some strategic decisions around inventory provision, specifically as it relates to donations as well as our China. So all of those combined. Now we will continue to see some impact, although it'd be split between COGS and OpEx from the, from the shutdown of our operations in China. I I would say, you know, we we currently expect to see a little bit of normalization on the in terms of the legal expenses. And then obviously the strategic decisions that sort of impacted the donations that we called out in the press release, wouldn't expect that to repeat.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

But unless there was sort of other similar type of strategic decisions.

[Robert Moskow, Managing Director at TD Cowen]

Okay, thank you.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

Thanks Rob.

[Operator]

The next question is from Kamil Gajrawala with Jefferies. Please go ahead.

[Kaumil Gajrawala, Managing Director at Jefferies Financial Group]

Hey guys. I guess a little bit of a follow-up to Rob's question on what we're hearing across a lot of the rest of CPG. But to maybe drill down on one of the things we're also hearing is on destocking, maybe a little bit more on hard goods than on food. But curious if that's also something that you're seeing and you're dealing with. And then the second question on maybe some of the it sounds like kind of one times you had just mentioned.

[Kaumil Gajrawala, Managing Director at Jefferies Financial Group]

Are there any additional things that are similar to that we should be aware of for the coming couple of quarters?

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

I think on destocking, we've heard some of that from our team, but we can't quantify it. But there was some discussion around that. More so it was I think in that latter part of the quarter just a general slowdown in consumer behavior. But we did hear that as well, but don't have a firm hold on the percent contribution.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

Yeah, and just on that first point, I mean, and I mentioned this in my prepared remarks, you guys have access to the scanner data. And, certainly what we saw was a, sort of progressive weakening in the category, takeaway data, in the first quarter. And so when you have those types of trends, obviously, risk of inventory starting to build within the retail channel, does increase a little bit. But I would say at this point, we're not hearing like that, broadly as potential risk. But certainly, you have an environment that's softening, that could potentially be a factor.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

Your second question in terms of the sort of one time items, the only thing that at this point I think that's really worth noting is that China, you know, the costs related to the suspension of our activities in China. That will, the way we're treating, those expenses from an accounting perspective, excuse me, is we are, you know, accelerated depreciation, on those, expenses through the end of twenty twenty six. And so each quarter, we will call that out. But, each quarter, there will be some impact related to that decision.

[Kaumil Gajrawala, Managing Director at Jefferies Financial Group]

Okay. Got it. Thank you.

[Robert Moskow, Managing Director at TD Cowen]

Sure.

[Operator]

This concludes the question and answer session. I would now like to turn the conference back over to Ethan Brown for any closing remarks.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

I appreciate the good questions. I think we're, as I've said, just very focused this year on trying to make sure we're positioning the business for the EBITDA positive goal in latter part of twenty twenty six on a run rate basis. And yes, whatever the top line is, that's what we got to go deliver. I think we're making the right moves to do that. So I look forward to reporting out in August. Thanks.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Afternoon, and welcome to the Beyond Meat First Quarter twenty twenty five Conference Call. All participants are in a listen only mode.

[Operator]

After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Paul Shepherd, Vice President, FP and A and Investor Relations. Please go ahead, sir.

[Paul Shepherd, VP - FP&A and IR at Beyond Meat]

Thank you. Hello, everyone, and thank you for your participation on today's call. Joining me are Ethan Brown, Founder, President and Chief Executive Officer and Luby Couture, Chief Financial Officer and Treasurer. By now, everyone should have access to our first quarter twenty twenty five earnings press release filed today after market close. This document is available in the Investor Relations section of Beyond Meat's website at www.beyondmeat.com.

[Paul Shepherd, VP - FP&A and IR at Beyond Meat]

Before we begin, please note that all the information presented today is unaudited and that during the course of this call, management may make forward looking statements within the meaning of the federal securities laws. These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially from those described in these forward looking statements. Forward looking statements in our earnings release, along with the comments on this call, are made only as of today and will not be updated as actual events unfold. We refer you to today's press release, our quarterly report on Form 10 Q for the quarter ended 03/29/2025 to be filed with the SEC and our annual report on Form 10 ks for the fiscal year ended 12/31/2024, along with other filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward looking statements made today. Please also note that on today's call, management may reference adjusted EBITDA, adjusted loss from operations and adjusted net loss, which are non GAAP financial measures.

[Paul Shepherd, VP - FP&A and IR at Beyond Meat]

While we believe these non GAAP financial measures provide useful information for investors, any reference to this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Please refer to today's press release for a reconciliation of these non GAAP financial measures to their most comparable GAAP measures. And with that,

[Paul Shepherd, VP - FP&A and IR at Beyond Meat]

I would now like to turn the call over to Ethan Brown.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

Thank you, Paul, and good afternoon, everyone. The first quarter of twenty twenty five was clearly a disappointing one for us and a deviation from the previous two quarters in which we drove year over year revenue and gross margin growth, significantly reduced operating expenses and achieved large improvements in net income and adjusted EBITDA. In Q1 twenty twenty five, we experienced worsening category and macroeconomic conditions that impacted our top line recovery and reverberated throughout our P and L. Before going through what I believe is a very strong response to this interruption in our recovery, I'll provide some color around our results, including calling out at a high level some extraordinary and more transient drags on our performance.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

First, as we discussed in our previous earnings call, certain large retail customers in The United States elected to transition plant based meat from the refrigerated to the frozen aisle within their stores. In more than one retailer, this transition led to an interruption in availability of some of our core products throughout Q1 twenty twenty five. As category and macroeconomic headwinds more generally slowed velocities toward the latter half of the quarter, it became harder to overcome the volume implications of these distribution gaps. Looking forward across the balance of the year, however, we expect to build back much, though not all, of this and other loss distribution. These gains provide the opportunity, all things being equal, for better retail performance in subsequent quarters.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

Moving from net revenues to gross margin. As I've shared previously, we've been consolidating our production network for a variety of reasons, including the rightsizing of our manufacturing footprint to current revenues. Through these measures and the commencement of increased internal production at our DeVault, Pennsylvania facility, we expect to see strong year over year improvements in our production efficiency and costs. Our Q1 results do not yet reflect these improvements for four primary reasons. One, lower than anticipated sales volumes led to lower levels of overhead absorption.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

Two, the change in product mix, in part reflecting the interruption in retail distribution of certain core items, and a larger percentage of sales coming from product with higher direct labor and utilities increased the baseline cost of goods produced. Three, we saw some delays and lower than planned line throughput as we scaled new capacity in our DeVault, Pennsylvania facility. These startup factors led to extended production over time and more changeovers than would be typical. Fourth, we recorded a particularly large inventory provision this quarter as we sought to dispose of certain inventories for strategic reasons. This inclusion in our COGS, which is a non cash impact, created a strong negative drag on margin for the quarter, but should benefit our real inventory carrying costs going forward.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

Moving now to margin. In the absence of further worsening category and macroeconomic trends, we expect overall volume as well as the volume of our core products to improve as we gain back retail distribution and benefit from seasonality, putting us in a better position to actually realize the planned benefits of a more efficient and appropriately sized production footprint. Turning to our operating expenses, I want to commend the team on managing tighter budgets even as we need to be more aggressive, a subject I will touch upon in a moment. Though our total operating expenses came in at $55,100,000 which still represents a $2,000,000 year over year reduction, it's important to distinguish between ongoing OpEx and extraordinary or transient expenses, which for the quarter totaled $7,000,000 These non routine charges include legal arbitration expenses relating to a previously disclosed contractual dispute with a former co manufacturer, additional incremental non cash charges arising from decisions to increase inventory provisions for certain items, and expenses related to the suspension of our operational activities in China. In addition to these aforementioned charges, I would also note that our OpEx in Q1 includes severance payments related to our February reduction in force.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

By setting aside these more transient costs, one can more clearly see evidence of progress with respect to our baseline operating expenses. Though this additional color provides greater visibility beyond the aggregate results, what is more important is what we're going to do to get back on track. We take this deviation from our recovery extremely seriously, and we're using it as an opportunity to strengthen our organization. Whatever our top line turns out to be in this current environment of uncertainty, our overarching goal remains the same, EBITDA positive on a run rate basis by year end 2026. To ensure that we achieve it, we are focusing additional internal and external resources on further driving our operational expenses down while optimizing our portfolio and manufacturing toward margin objectives.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

We will also continue and deepen our efforts to recast our value proposition with consumers through the development, sale, and marketing of clean and simple plant based proteins that taste great and support health and wellness goals. I'll now turn to the second part of our recovery. To be exceedingly clear, while Beyond Meat can always and will always seek to improve our products, we believe the central issue impeding our return to sustained growth is perception, or more accurately, misperception. According to a recent trend report, the consumer's interest in protein is only growing, with 61% of surveyed consumers reporting increasing their protein intake in 2024, up from 48% in 2019. Beyond Meat is, of course, a protein product, which depending on the specific offerings, enjoys certifications from the American Heart Association, the American Diabetes Association, and the Clean Label Project, among other organizations.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

Convenient products such as Beyond Steak deliver high levels of protein using simple and recognizable ingredients made through a process that is clean and efficient and absent cholesterol, drugs such as antibiotics and hormones, and of course, lacking the threat of zoonotic diseases. We should be a central part of satisfying consumer interest for protein, yet for reasons I will touch on momentarily, we need to reestablish ourselves within their decision set. Regarding taste, we regularly see our products earn positive media and consumer reviews, including our flagship product, the Beyond Burger, which recently won its seventh first place position in seven years in the largest survey of its kind, one answered by millions of consumers. I find this win to be important given that in Beyond Four, the fourth and current iteration of the Beyond Burger, we drove significant nutritional gains yet clearly still satisfy consumers' taste buds. We will continue to hit on these themes of taste and health and simple and clean ingredients as we expand our portfolio.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

For example, after years of research and development, last week we announced the arrival of Beyond Chicken Pieces nationwide at Kroger. Though this product has its roots dating back to Beyond Meat's beginning sixteen years ago, over the last several years, we put considerable effort into Beyond Chicken Pieces' taste, texture, ingredients, and nutrition before reintroducing it. With a simple and clean ingredient deck, including avocado oil and 21 grams of protein, the product is versatile, convenient, and one of my personal favorites. This reality of Accolades, Press, and clean and simple plant protein products notwithstanding, in the main Beyond's value proposition remains obscured in doubt and misinformation. If we look inward, our highest priority is driving operating and margin improvements.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

Externally, our highest priority is on dispelling misinformation and empowering the consumer to make informed decisions around our products. To this end, I would encourage you to watch a short film we put together that is gaining traction on YouTube called Planting Change. Planting Change, which is just shy of ten minutes and which has over 2,000,000 views in its short time online, explores the origin of misinformation regarding our products, gives a glimpse of the relentless research on health and nutrition, discusses the process we use to deliver protein from the field to the center of the plate, and features some of our farmers talking about what growing for beyond means for their livelihood, for their families, and for their communities. Looking forward, we are fast following planting change with the launch of our latest marketing campaign, Real People, Real Results. Real People, Real Results is a social first thirty day challenge that follows six people of various ages and backgrounds as they shift to a healthy plant based diet that includes Beyond Meat.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

The program was designed by Doctor. Matthew Lieberman, coauthor of Forks Over Knives Plan and the Whole Foods Diet, along with Doctor. Aluna Poldy. And in just thirty days, participants saw real, positive changes to their health enjoying a plant based diet that included delicious meals with the Beyond Burger, Beyond Beef, and Beyond Steak, among other Beyond products. From lower total cholesterol, lower LDL cholesterol, to weight loss, better sleep, higher energy levels, and lower information, Real People, Real Result participants reported exciting benefits of a plant based diet that includes our products.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

The social campaign launched on Instagram and Facebook, TikTok, and YouTube, and we are amplifying it digitally across Connected TV, Google Performance Max, and digital out of home in the coming weeks. For the next six weeks, a new participant video drops each week documenting their personal journey. More generally, stay tuned as we'll be announcing more under the Real People, Real Results campaign and its accompanying thirty day challenge program across the balance of the year. Finally, with respect to strengthening our balance sheet, as we announced today, we have successfully closed on a financing facility providing up to $100,000,000 in new senior secured debt from Unprocessed Foods LLC, a wholly owned subsidiary of Foundation, a nonprofit organization focused on advocating for plant based diets. This facility provides us with an option for additional liquidity as we advance our strategic priorities and invest opportunistically in driving growth.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

We are pleased to welcome a new investor who deeply understands our industry and is mission aligned with our plant based ethos. I'll now turn the call over to Luby.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

Thank you, Ethan, and good afternoon, everyone. I'll begin by reviewing our financial results in a bit more detail before providing some brief comments on our outlook. In the first quarter of twenty twenty five, net revenues decreased 9.1% to $68,700,000 compared to $75,600,000 in the year ago period. The decrease in net revenues was primarily driven by an 11.2% decrease in volume of products sold, partially offset by a 2.4% increase in net revenue per pound. The decrease in volume of products sold was primarily driven by weak category demand in our U.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

S. Retail and foodservice channels, price elasticity effects resulting from twenty twenty four pricing actions, and some loss of distribution in our US channels. The increase in net revenue per pound was primarily driven by lower trade discounts and list price changes, partially offset by changes in product sales mix and unfavorable changes in foreign currency exchange rates. Breaking this down by channel, U. S.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

Retail channel net revenues decreased 15.4% to $31,400,000 compared to $37,100,000 in the year ago period. The decrease in net revenues was primarily driven by a 23.2% decrease in volume of products sold, partially offset by a 10% increase in net revenue per pound. This year over year decrease in volume represents a reversal from the more positive momentum we observed in the third and fourth quarters of last year. Consumption data suggests that consumer takeaway in U. S.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

Retail progressively weakened in the first quarter of twenty twenty five, which we believe contributed to meaningfully weaker shipments than we had expected. Although it is too early to tell and difficult to quantify, we believe broader macroeconomic concerns and reduced consumer confidence are negatively impacting our and other categories in general. In addition to this more general softness in our category, we were also impacted by the lapping of certain items in the year ago period that did not repeat this quarter. These included approximately $1,600,000 in ingredient sales, some level of forward buying by customers in anticipation of price increases, which we began implementing in the second quarter of last year, and to a lesser extent, sales of Beyond Meat jerky, which we were in the process of discontinuing a year ago. Furthermore, as I noted earlier, we experienced some loss of distribution as certain retailers transitioned our products from refrigerated to frozen aisles, although we expect to regain some portion of these losses beginning in the second quarter of twenty twenty five.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

And finally, we did experience some temporary disruptions in supply of a few of our products as we ramped up production on a new manufacturing line at our DeVault, Pennsylvania facility as part of our in sourcing initiative. The 10% increase in net revenue per pound in U. S. Retail was primarily driven by reduced trade discounts and the effects of our 2024 pricing actions, partially offset by changes in product sales mix. The impacts of volume and mix are worth calling out as they impacted not just our top line results, but also our gross margin performance, which I'll elaborate on momentarily.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

Turning to food service. US food service net revenues decreased 23.5% to $9,400,000 in the first quarter of twenty twenty five, compared to $12,300,000 in the year ago period. The decrease in net revenues was primarily driven by a 22% decrease in volume of products sold and a 2% decrease in net revenue per pound, primarily reflecting higher trade discounts and changes in product sales mix versus a year ago. The decrease in volume of products sold was primarily driven by weak category demand, reduced burger sales to a QSR customer, and some impact from distribution losses. Although we anticipate broader headwinds in this channel will persist in the near term, we're optimistic that efforts to build out our U.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

S. Foodservice team over the last several months, which are largely complete now, will begin to pay dividends soon. In international, our international retail channel net revenues increased 0.8% to $12,700,000 in the first quarter of twenty twenty five compared to $12,600,000 in the year ago period. The increase in net revenues was primarily driven by a 10.3% increase in net revenue per pound, partially offset by an 8.6% decrease in volume of products sold. The increase in net revenue per pound was primarily driven by changes in product sales mix and lower trade discounts, partially offset by unfavorable changes in foreign currency exchange rates and price decreases of certain of our products.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

The decrease in volume of products sold was primarily due to reduced sales of the company's ground beef products in The EU as a packaging transition led to some disruption and limited loss of distribution for those items. International foodservice channel net revenues increased 12.1% to $15,300,000 in the first quarter of twenty twenty five compared to $13,600,000 in the year ago period. The increase in net revenues was primarily driven by a 13.5% increase in volume of products sold, partially offset by a 1.2% decrease in net revenue per pound. The increase in volume of products sold was primarily due to increased sales of chicken products to a large QSR customer, while the decrease in net revenue per pound was largely driven by changes in product sales mix and the impact of FX partially offset by lower trade discounts. Moving down the P and L, gross profit in the first quarter of twenty twenty five was a loss of 1,100,000 or gross margin of negative 1.5% compared to gross profit of $3,700,000 or gross margin of 4.9% in the year ago period.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

Gross profit and gross margin included approximately $5,200,000 of extraordinary charges related to specific strategic inventory reduction initiatives and expenses related to the suspension of our operational activities in China. Excluding these items, COGS per pound was only marginally higher than year ago levels, reflecting higher inventory provision on a year over year basis, partially offset by lower materials and logistics costs. As I mentioned earlier, our underlying gross margin performance this quarter, which fell short of our expectations, also reflected the impact of lower sales volume as certain fixed costs were spread over fewer pounds sold. We also saw higher labor costs related to the installation and ramp up of a new production line and a tilt in our production mix towards certain products that are more labor intensive and incur higher variable overhead expenses, including utilities. This reflects changes in our sales mix more broadly as our lower cost core products have borne the brunt of softer shipments in recent periods.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

This underscores the importance we are placing on our efforts to stabilize and ultimately restore growth within our core set of products, given the significance of gross margin expansion as a lever that supports our longer term objective of achieving sustainable operations. Operating expenses were $55,100,000 in the first quarter of twenty twenty compared to $57,100,000 in the year ago period. Operating expenses included a total of $7,200,000 in transient expenses, including 4,600,000.0 of incremental legal fees associated with arbitration proceedings related to a contractual dispute with a former co manufacturer, 1,300,000.0 in non cash charges arising from specific strategic decisions to increase inventory provision for certain inventory items and $1,200,000 in expenses related to the suspension of our operational activities in China. Below the line, total other income net was $3,300,000 in the first quarter of twenty twenty five compared to total expense net of $900,000 in the year ago period, driven by an increase in net realized and unrealized foreign currency transaction gains. Overall, net loss was $52,900,000 in the first quarter of twenty twenty five compared to $54,400,000 in the year ago period.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

Net loss per common share was $0.69 in the first quarter of twenty twenty five compared to $0.84 in the year ago period. Adjusted EBITDA was a loss of $42,300,000 or a negative 61.6% of net revenues in the first quarter of twenty twenty five compared to an adjusted EBITDA loss of $32,900,000 or negative 43.5% of net revenues in the year ago period. Turning to balance sheet and cash flow highlights. Our cash and cash equivalents balance, including restricted cash, was $115,800,000 and total outstanding debt was 1,100,000,000 as of 03/29/2025. Net cash used in operating activities was $26,100,000 in the three months ended 03/29/2025, compared to $31,800,000 in the year ago period.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

And capital expenditures were $4,500,000 in the three months ended 03/29/2025, compared to $1,200,000 in the year ago period. As it relates to our balance sheet and as Ethan mentioned, we are pleased to announce that we have closed on a financing facility providing up to $100,000,000 in new senior secured debt. Under the terms of the agreement, Unprocessed Foods has provided us with a senior secured delayed draw term loan facility of $100,000,000 Any drawdowns would accrue interest of 12% prior to the initial maturity date of 02/07/2000 thirty and seventeen point five percent following that date, in each case payable in kind. The initial maturity date may be extended with the consent of both parties. Furthermore, as part of the transaction, Unprocessed Foods will receive warrants in proportion to the amount drawn down on the facility, giving them the right to purchase up to 12.5% of the company's currently outstanding shares at an exercise price of 115% of the thirty day VWAP period beginning 05/08/2025, with minimum and maximum exercise price of $2 and $3.75 respectively.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

Complete terms are disclosed in a report on Form eight ks filed with the SEC. Although we have no near term debt maturities, in line with our strategic priorities for 2025, we continue to focus on strengthening our balance sheet for the long term, including evaluating potential transactions to address our existing convertible notes prior to maturity in 2027. In this regard, we will provide further updates as and when appropriate. Finally, a brief word on our outlook. As with many other companies, we are experiencing an elevated level of uncertainty in our operating environment as a result of the uncertain and volatile macroeconomic conditions, which could have unforeseen impacts on our actual realized results.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

In light of this uncertainty, we believe it is prudent to withdraw our previous full year guidance, and we are limiting our revised outlook to our second quarter net revenue expectations only. Specifically, in the second quarter of twenty twenty five, we expect net revenues to be in the range of 80,000,000 to $85,000,000 reflecting, among other things, the anticipated impact of ongoing softness in demand in our category and the consumer sector more generally. With that, I'll turn the call back over to the operator to open it up for your questions. Thank you.

[Operator]

We will now begin the question and answer session. The first question is from Ben Thorer with Barclays. Please go ahead.

[Benjamin Theurer, Analyst at Barclays Capital]

Hey, good morning and well, good afternoon and thank you very much for taking my question. So Ethan, Luby, two ones. One, I guess, for Ethan and another one for Luby. So Ethan, if you look at the performance in the first quarter and definitely the challenges to overcome, With all the struggle, particularly in The U. S.

[Benjamin Theurer, Analyst at Barclays Capital]

Market, what potential initiatives could you take to boost somehow or to at least stop the decline in volumes? What are you thinking about in terms of like just getting stabilization on the top line in The U. S? And then my second question, it would be probably more for Luby. Can you share any more details as to the financing agreement of that $100,000,000 in terms of like expected interest expense?

[Benjamin Theurer, Analyst at Barclays Capital]

How should we think about this maturities? Any more details you can share might not be just readily available? Thank you.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

Great question, good to hear from you. I'll take the first and hand it to Louie. So I think it's in a couple different buckets that I think about this and one is easier than the other. And the first really is around distribution. And so as I explained in my prepared remarks, two large retailers, one very large migrated our products from the fresh or refrigerated section to the frozen section, but it didn't do so in a continuous manner.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

So it took them out of distribution as they were doing their resets for a pretty sustained period, which encompassed all of Q1, right? And then they're gonna be putting them into the frozen in the coming months. And so talking to our sales team, our sales leader, they feel good about the distribution they're gaining back across the balance of the year in The U. S. Retail.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

And I think about 70% of our declines or so could be explained in the first quarter by that distribution gap. Seeing it come back, distribution comes back, then the challenge becomes velocity. And that's the harder challenge. But we did see toward the end of last year in stores where we had not lost distribution, so where there was comps that were same stores, we were starting to see, particularly with the BEYOND four lineup, a slightly positive trend on velocity. Now that has not occurred in the first quarter as I think we see some consumer slowdown in general.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

But that second bucket is really the one that we need to focus on not from a blocking and tackling of distribution, but on how do we get back into the consumer decision set on our products. And I think we did the hard work over the last two years of trying to clear up some of this misinformation. If you think about where we were maybe two years ago, it was kind of the height of this intense misinformation campaign where there's something wrong with the ingredients, there's the process and so on and so forth. And we still have some of that. But you can feel it waning a little bit and it's sort more of the truth starting to come out.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

And the way we dealt with that, right, was all these programs, certifications from the American Heart Association, the American Diabetes Association, Clean Label Project and other organizations to help counter that negative narrative that was out there by not only the meat industry but also by the pharmaceutical industry who didn't want to lose sales from selling antibiotics to livestock. So we kind of made it through that really intense pressure cooker, and now I think it's about, we did the Stanford study, all these things I talk about a lot, but now it's really about making that digestible for the consumer, no pun intended. And what I mean by that is how do we put that message out on social media, how do we get folks to understand that in a relatable way? And that's what this Real People, Real Results program is about. And to see the first batch of these folks go through the program, and it's again being administered by a terrific doctor, Doctor.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

Lieberman, he was one of the main doctors behind the Forks Over Knives plan, as well as the Whole Foods diet with Whole Foods in the store. And to see him use our products and plant based eating in general to transform people's health outcomes, whether it's the energy levels, the cholesterol levels, even there's good weight loss occurring, things of that nature, is impactful and powerful. And so if we can continue to clear that message up and get into decisions as I mentioned, that study I mentioned was from Cargill. And it shows that very significant increase among US consumers in protein. And part of that has to do with the use of the weight loss drugs and the need to increase protein intake if you're on one of those drugs or perceived need anyway.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

So we're seeing that intensification of interest in The U. S. Consumer around protein. We are a very clean source of protein. So how do we continue to chip away at the misconception and drive a more positive perception around our brand?

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

And we're doing that. So two parts, one, restore this distribution, two, make sure we get the narrative in front of the consumer. And I think we're doing some of those things. So I view this really as an aberration versus a trend. I think if you look at our Q2, Q3 and Q4 results, what I hope you'll see is the impact of some of that increased distribution.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

Ben, I'll address your second question, was around the financing. And I think I provided some of the detail in my prepared remarks, but happy to sort of cover those again. The initial term of the, facility is four point seven five years, just under five years, with some options to extend. And as I mentioned in my prepared remarks, it is a delayed draw, facility, and any drawdowns, in the initial period would accrue interest at 12%. That's through the maturity date of February 7, 02/1930.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

And then, they would accrue interest at 17.5%, following, that date. And as I mentioned on the call, it would be payable, in kind interest, initially. So I I think that, pretty much, you know, covers the the the sort of, key terms of of that financing, but, you know, happy to happy to address if there are further questions.

[Benjamin Theurer, Analyst at Barclays Capital]

No. No. Just maybe a real quick follow-up on that. How do you think about what you you stated about in the press release that you continue to look into other alternatives. I mean, I know there's there's some ATM facility and all that kind of stuff.

[Benjamin Theurer, Analyst at Barclays Capital]

So so what else is currently within consideration of the company to count, like, the cash needs that you might have?

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

You were you were a little bit hard to hear on that question, Ben, but I think you were asking about what what else can we do to support our Yeah. Our cash needs. Is that it? Correct. Correct.

[Benjamin Theurer, Analyst at Barclays Capital]

Yes.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

Yeah. So, you know, obviously, you know, having access to this, capital, is is certainly beneficial, you know, for for the business. But I would say that that doesn't change any of the, you know, sort of key initiatives, right, that that we are pursuing, in support of this, EBITDA positive goal of ours. So in order for us to get there, and I think we discussed this on the last earnings call, we have to stabilize top line so that it gets to the question that you had asked Ethan. We have to expand gross margin, and we have to maintain pretty tight operating expenditures and look for further opportunities to reduce that.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

We really have to do all three of those things. And and, you know, if we if we can achieve that, then obviously, you know, the rate of cash consumption of the business will will be, reduced. But, obviously, having some flexibility with this capital is also very beneficial to us.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

Yeah, think if I could just add to that and I'll get to other questions as well. I wanna overemphasize this point that what's most important to the business, and this is obvious, but just so it's understood, is not necessarily driving some sort of spectacular growth at this time. Like what we're really focused on, right, is making sure that our expense base fits into whatever revenue is going to occur this year. And then second, that the margin gets to where it needs to be. If you look at the factors that impacted the gross margin in the first quarter, which we went over in our prepared remarks, but happy to talk about as well, a lot of these should not persist.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

And so we ended the consolidation of the network, got into the Pennsylvania facility, new line that we set up, it was slower than we expected. The volumes going through there were somewhat diminished because of the things we just talked about on the top line that we had these larger inventory reserves that we pushed through in a particularly dark quarter. So all of those things as you get into '2 and '3, particularly Q2 and Q3, particularly with the seasonality benefit and how that benefits our core, we expect to see much better progress on margin and hopefully a return to some of the trends you were seeing in Q3 and Q4 of last year.

[Benjamin Theurer, Analyst at Barclays Capital]

Okay. I'll leave it here. Good luck with that. Thank you very much, Ethan. Thank you.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

Thank you.

[Operator]

The next question is from Peter Salla with BTIG. Please go ahead.

[Peter Saleh, MD - Restaurants at BTIG]

Great. Thanks for taking the question. Luby, I think you mentioned in your prepared remarks you you're working on building out the food service team. If I heard you correctly, can you just elaborate a little bit on on that in in The US? What is gonna be the focus there?

[Peter Saleh, MD - Restaurants at BTIG]

How is this strategy going to be different than prior years? And just give us a little bit more detail on that. You.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

Sure. I can cover that. So I was just on a call before getting onto this with the head of that department. And I think the way to think about the US Food Services, we've had a particularly tough run at it recently and the kind of distribution gains that I was talking about in retail, while it's not as cut and dry, it's not like summer coming back and things of that nature. That team is now more fully built out and we expect to see improvement in The U.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

S. Foodservice performance. Now it depends, that's one of the first places you start to see consumer concerns. So if that category continues to struggle, you look at Chipotle, McDonald's, etcetera, I can't guarantee it, but we are starting to pick up more wins and I think it has to do with we've done better historically in the non comp space, universities, hospitals, things like that. But we've now really started to focus on that commercial space again.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

And I don't think it's I don't think you should expect us to pick up a massive name QSR in The U. S. Right now. But we're focusing more on that smaller national account and we are making some progress there. And you'll hear think some fun stuff or encouraging news rather as we progress through the year.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

But not kind of massive names, but maybe a tear down from that places that you would recognize.

[Peter Saleh, MD - Restaurants at BTIG]

Thank you very much.

[Kaumil Gajrawala, Managing Director at Jefferies Financial Group]

Thank you.

[Operator]

The next question is from Robert Moskow with TD Cowen.

[Robert Moskow, Managing Director at TD Cowen]

Luby, your 2025 outlook, you're pulling guidance for the year, but the reasoning was a little vague. You talked about elevated uncertainty in the operating environment. So does that have anything to do with tariffs and things that we've heard from other CPG companies? Or is it really just kind of like, hey, the demand here in The U. S.

[Robert Moskow, Managing Director at TD Cowen]

Is hard to predict right now? Is there anything specific you're seeing with retailer changes that you don't want to opine on? Like, I'm trying to dig a little deeper into what the verbiage means.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

Yeah. No. Louie can additional commentary. But the main point is, you see the uncertainty that is unfolding right now in consumer spending. And those are ripple for some companies, you look at like a, You cover a lot of the sector, you look at J and J Snacks, you look at the stuff I just mentioned with Vale and McDonald's, etcetera.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

But for us that can be significant, right? So we just don't know and there's no lurking concern other than that. And I really want this team focused entirely on reaching profitability versus chasing a number arbitrarily. So I've been behind that, but we'll have to just take it quarter by quarter right now. And the main point here is to get this EBITDA positive goal done and stabilize the business.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

I mean over time, and you and I have talked about this a lot, I have zero doubt that this business is going to be the very large business we've expected it to be. But trying to drive an upside right now in this environment at the expense of stabilizing and reaching EBITDA and profitability, obviously not a good idea. And so it's really around let's take some of that pressure off, let's make sure we get the internal stuff right, let's make sure we get the margins right, and let's reach this EBITDA positive goal a run rate basically by the end of 'twenty six.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

Sorry. Go ahead, Louis. I was just gonna say, you know, to add to that. So, you know, it's obviously, there's a lot of, discussions around, tariffs and, you know, how that may impact various sectors in the broader macroeconomic environment. It's obviously still pretty early days, but I would say we've obviously been focused on it as well and we've done some analysis to try to understand what the implications might be.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

Look, there's no guarantees, but I think at this point, we think the direct impact, on our business is relatively minimal. But nonetheless, I think that is causing, right, some discomfort across the consumers more generally. And what we've seen in the past is, you know, a skittish consumer, you know, does not help our category. Back in, I believe it was 2022 when sort of, inflation was peaking across various portions of grocery store. We saw sort of a lot of trading down or whatever you want to call it from the, plant based meat category into, animal protein.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

And remember that, you know, still a vast majority of our consumers, are. So, you know, all of our consumer surveys indicate that people who are purchasing our products are also purchasing, animal protein. And so I think, you know, there's definitely some correlation just between when you have, concerns or consumer confidence is shaken, that typically does not have a negative impact on our category, I think relative to animal protein. So when we're talking about the, you know, sort of uncertainty in the macroeconomic environment and the challenges that presents to our business, you know, obviously, you know, you've seen, you know, in the numbers that we reported, there's some fairly large declines in volumes in some portions of our business. And as you know, that can be a pretty meaningful swing factor, right, for our P and L down to gross profit.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

And we're just kind of weighing all of those factors together. I think it would be difficult for us to provide any sort of long term outlook, right, that's almost a year out, with any high degree of certainty. And so we believe it's more prudent to look much closer in.

[Robert Moskow, Managing Director at TD Cowen]

Okay. And just, in SG and A, you mentioned some onetime expenses in first quarter. Some are legal expenses. So can you give us kind of like a real run rate SG and A for second, third and fourth quarter? I guess, is it $7,000,000 less than what we have in first quarter? Is that the right way to look at it?

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

Yes. So what we reported in our Q1 results, you're correct. There was about slightly over $7,000,000 of extraordinary items in there. I think our legal expenses were elevated relative to what I would sort of characterize as normal course business. And part of that was related to this arbitration that we talked about.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

And then there was some strategic decisions around inventory provisions, specifically as it relates to donations and as well as our China. So all of those combined. Now the the we will continue to to see some impact, although it'd be, you know, split between COGS and OpEx from from the shutdown of our operations in China. I I would say, you know, we we currently expect to see a little bit of normalization on the on in terms of the the legal expenses. And then, obviously, the the strategic decisions that sort of impacted the donations that we called out in the press release, wouldn't expect that to repeat unless there was sort of other similar type of strategic decisions.

[Robert Moskow, Managing Director at TD Cowen]

Okay. Thank you.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

Thanks Rob.

[Operator]

The next question is from Kamil Gajrawala with Jefferies. Please go ahead.

[Kaumil Gajrawala, Managing Director at Jefferies Financial Group]

Hey, guys. I guess a little bit of a follow-up to Rob's question on what we're hearing across a lot of the rest of CPG. But to maybe drill down on one of the things we're also hearing is on destocking, maybe a little bit more on hard goods than on food. But curious if that's also something that you're seeing and you're dealing with. And then the second question on Luby, some of the it sounds like kind of one times you just mentioned.

[Kaumil Gajrawala, Managing Director at Jefferies Financial Group]

Are there any additional things that are similar to that we should be aware of for the coming couple of quarters?

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

I think on the destocking, we've heard some of that from our team, but we can't quantify it. But there was some discussion around that. More so it was I think in that latter part of the quarter, just a general slowdown in consumer behavior. But we did hear that as well, but don't have a firm hold on the percent contribution.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

Yeah, and just on that first point, I mean, and I mentioned this in my prepared remarks. You guys have access to the scanner data. And, you know, certainly what we saw was a, sort of progressive weakening, in the category, takeaway data, in the first quarter. And so when you have those types of trends, obviously, the risk of inventory starting to build within the retail channel, does increase a little bit. So but I would say at this point, we're not hearing like that, broadly as potential risk.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

But certainly when you have an environment that's softening, that could potentially be a factor. Your second question in terms of you know, the sort of one time items. The only thing that, you know, at this point, I think that's really worth noting is the China, you know, the the costs related to the suspension of our activities in China. That will the way we're treating, those expenses from an accounting perspective, excuse me, we are, you know, taking accelerated depreciation, on those expenses through the end of twenty twenty six. And so each quarter, we will call that out.

[Lubi Kutua, CFO & Treasurer at Beyond Meat]

But each quarter, there will be some impact related to that decision.

[Kaumil Gajrawala, Managing Director at Jefferies Financial Group]

Okay, got it. Thank you.

[Robert Moskow, Managing Director at TD Cowen]

Sure.

[Operator]

This concludes the question and answer session. I would now like to turn the conference back over to Ethan Brown for any closing remarks.

[Ethan Brown, Founder, President, CEO & Board Member at Beyond Meat]

Appreciate the good questions. I think we're, as I've said, just very focused this year on trying to make sure we're positioning the business for the EBITDA positive goal in latter part of twenty twenty six a run rate basis. Whatever the top line is, that's what we got to go deliver. I think we're making the right moves to do that. So I look forward to reporting out in August. Thanks.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Paul Shepherd, VP - FP&A and IR
• Ethan Brown, Founder, President, CEO & Board Member
• Lubi Kutua, CFO & Treasurer

Analysts

• Benjamin Theurer, Analyst at Barclays Capital
• Peter Saleh, MD - Restaurants at BTIG
• Robert Moskow, Managing Director at TD Cowen
• Kaumil Gajrawala, Managing Director at Jefferies Financial Group