Beyond Meat, Inc.

good afternoon everyone and welcome to the beyond meet 2022 fourth quarter conference call all participants will be in a listen-only mode should you need assistance please signal conference specialist by pressing the star key followed by zero after today's presentation there will be an opportunity to ask questions to ask a question you may press star and then one on your touchstone telephone to withdraw your questions you may press star and two As you also know, today's event is being recorded. At this time, I'd like to turn the conference call over to Terry Witteman, Chief Legal Officer and Secretary. Please go ahead.

Thank you. Good afternoon and welcome. Joining me on today's call are Ethan Brown, Founder, President, and Chief Executive Officer, and Ruby Cotulla, Chief Financial Officer and Treasurer. By now, everyone should have access to the company's fourth quarter and full year 2022 earnings press release, filed today after the market closed. This document is available in the Investor Relations section of Beyond Needs website at www.beyondneeds.com. Before we begin, please note that all the information presented on today's call is unaudited. And during the course of this call, management may make forward-looking statements within the meaning of the federal security 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 the earnings release that we issued today, 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, the company's quarterly report on Form 10-Q for the quarter ended October 1st, 2022, and the company's annual report on Form 10-K for the fiscal year ended December 31, 2022, to be filed with the SEC and other filings with the SEC for a detailed discussion of the risk 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 make reference to adjusted EBITDA, which is a non-GAAP financial measure. While we believe this non-GAAP financial measure provides 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 GAAS. Please refer to today's press release for a reconciliation of adjusted EBITDA to its most comparable GAAS measure. And with that, I would like to now turn the call over to Ethan Brown.

Thank you, Teri, and good afternoon, everyone. The fourth quarter of 2022 ends a challenging year for our business and category, one marked by persistently high inflation and trading down by consumers among proteins, slowing economy in key markets, and increased competitive activity. Against this backdrop, we took decisive actions to set our business on a course to achieve cash flow positive operations within the second half of 2023, a target that we stand behind today. In order to accomplish this important milestone, as I shared in our last quarterly call, We are transitioning our business from an operating model that prioritizes growth above all to one that prioritizes cash flow and sustainable long-term growth, and we are executing well against this goal. While there is still much meaningful work to do, we are pleased to report net revenues toward the high end of our guidance range, along with 14 percentage points of sequential growth margin improvement in the fourth quarter and over $12 million of OPEX reduction versus the third quarter. We are achieving these early wins as we focus on the three pillars of our full force pivot. As a reminder, these are as follows. First, the implementation of lean value streams across our beef, pork, and poultry platforms with a laser focus on margin expansion and OpEx reduction. Second, an emphasis on cash flow accretive inventory management with a near-term focus on profit dollars versus maximizing percent margin. And third, a focus on opportunities to support near-term growth and consumer trial and adoption, particularly in our core SKUs, appropriately balanced against streamlined activities and support our most valuable long-term opportunities. In my comments today, I will share more detail on our progress with respect to each of these pillars. I will then turn to the broader moment facing plant-based meat and our focus on taste, health, and planet as we drive product innovation and connect with consumers on the very real benefits of our plant-based meats. Before diving in, let me pause here to bring back into focus the magnitude of what we are pursuing. We believe the transition to plant-based meat is an important part of our global response to a rapidly deteriorating climate. We believe it is as vast and sweeping an opportunity as any that presents itself as we seek to course correct and stabilize our global climate. And as the history of innovation and disruption teaches us, we can expect that the recent din surrounding our sector will reach its crescendo before succumbing to more reasoned reflection and expanding acceptance as our branded category achieves taste, health, and price milestones along the path to mainstream adoption. To move through this cycle, however, as aforementioned, we pivoted from growth above all what we believe is a sustainable long-term growth model. And nowhere is this transition more evident than in the centerpiece of our first pillar, the establishment of lean value stream management of our beef, pork, and poultry platforms. As anyone who has implemented a lean transformation knows, fundamental transition does not occur overnight. We are no exception. However, we have confidence that the effort properly done will over time generate outsized gains. we are demonstrating clear and meaningful early progress. Beginning with margin expansion, we were encouraged by the 14% improvement, which reflects, among other actions, our efforts to right-size our production networks, insource a greater share of our production volumes, and efficiently manage production staffing levels during a period of subdued volumes. We restructured certain agreements and successfully reduced our North American external manufacturing footprint from a peak of eight co-manufacturers in 2022 down to three today. This difficult but much needed work to consolidate our networks substantially reduces or eliminates altogether our exposure to certain underutilization or idle time penalties, allowing us to avoid an estimated 8 million of potential fees in 2023. We plan to continue this optimization work with our co-manufacturing network, as well as insourcing more of our volume as we progress. Also in support of margin restoration, we are restructuring certain operating activities related to Beyond Meat Jerky intended to drive further gains in the margin profile of this product line. Though we can't get into specifics today, we look forward to providing further information around these efforts in the near future. Turning now to operating expenses, we were pleased that in 2022 we reduced our OPEX from $97.8 million in Q1 to $62.8 million in Q4, a 36% decrease that put operating expense below our mid-60s target that we provided during the Q3 earnings call. On a sequential basis, we reduced OpEx by $12.1 million, or approximately 16%, reflecting early delivery against the $39 million in annualized cost savings we communicated in October. In the near term, we think Q4 is generally representative of our expected level of spending on a quarterly basis. However, over the long term, beyond 2023, we expect to pursue further efficiencies through our lean program generally, greater investments in automation and business process optimization, tighter transportation management, and source to procure processes, among others. Importantly, these investments are either already underway or in the late stages of evaluation. Additionally, as we exit 2023, we expect to benefit operationally from the ongoing consolidation of our real estate footprint here in the Los Angeles area as we transition all of our LA-based employees to our new headquarters facilities and begin to exit some of our other existing leases. We believe that fast-paced innovation, specifically the Beyond Meat Rapid and Relentless Innovation Program, is not well served by the dispersed workforce that characterized COVID and much of the last several years. As we bring more of the employees into our new headquarters and enforce our operating model in which remote work is the exception and not the norm, we expect to benefit from the immensely valuable energy and productivity that comes from sustained, focused, in-person collaboration and problem solving. Moving now to our second pillar, aggressive management and reduction of our inventory. We can report that we've reduced our inventory balance by 48 million, or 17%, from Q1 to Q4, allowing us to deliver on our 2022 objective of having inventory be a net generator of cash for the year. We intend to accelerate this momentum in 2023. Here again, we are relying on lean value streams across beef, pork, and poultry to increase visibility into and focus on optimal inventory levels, and have recently invested in systems that we believe will substantially improve our ability to manage inventories across our global network of manufacturing sites and warehouses. Big-ticket items include the pace and timing of our committed pea protein deliveries, resetting our WIP and finished goods stock to levels to better align with our anticipated production volumes and demand levels, and exploring alternative avenues for inventory items with greater than required current stock levels, among others. Increasing sales velocity, especially on our core items, is, of course, the most effective and cash flow-accretive way to work down our inventory levels. In this regard, as we shared on our last call, we have designed certain time-bound trials and pricing programs to drive stronger velocities, and we are encouraged by early results. Specifically, where we have implemented such programs, we have been pleased to see not only an acceleration in unit velocity, but importantly, increase in takeaway dollar growth as well. Success of these pricing tests and programs reinforce at least two important points about our current and long-term value proposition. First, as I've noted previously, it seems reasonable that consumers may retreat from protein that can be 2x the price of its animal-based equivalent during periods of intense inflation and reduced buying power, and that a reduction in price given this dynamic would spur increased consumption. Second, the success of these time limited pricing tests points to the centrality of our cost and initiative, and our goal of putting in place unit economics that support price parity of animal protein over time. I'll now move to our third pillar, that is specific actions to encourage near-term growth, even as we remain committed to our most valuable long-term opportunities. We continue to focus on restoring growth in our core product offerings in the fresh section of grocery by working closely with our retailers on target promotions, bringing innovation to our core fresh product set, and clear messaging around the taste, health, and planetary benefits of going beyond. Two, we are expanding our brand block in the frozen section, including increasing distribution of our latest award-winning products beyond stake, as well as bringing new innovation from our Pulte platform to this part of the store. Three, turning to general food service, we are seeing some early wins in a more narrowly focused set of priority segments and look forward to sharing these with you as the year progresses. On the subject of strategic partners, we are thrilled to highlight the growing success of the McClant platform as illustrated by, among other developments, the addition of McPlant nuggets in Germany as a regular menu item across 1400 locations nationwide along with the McPlant Burger. McPlant Nuggets are the second plant-based protein co-developed by Beyond Meat as part of the McPlant platform and will also be offered as an option in Happy Meals in Germany. We are also pleased to share that after successful launch of the McPlant Burger in the UK and Ireland last year, the Double McPlant was recently introduced across UK and Ireland restaurants nationwide for a limited time. In Austria, the Smoky BBQ McPlant Burger was recently introduced for a limited time Joining the McPlant Burger is now a regular menu item. McPlant Burger continues to be offered for a limited time across Portugal, while remaining a regular menu item in the U.K., Ireland, Austria, and the Netherlands. Turning to Yum! are products of regular menu items at Pizza Hut restaurants across Canada, the U.K., Singapore, El Salvador, Guatemala, and Sweden. I'd like to now turn focus to the important topic of the health and nutritional profile of our products. The drummed up misperception that our products are overly processed and utilize complex ingredients, coupled with misguided comparison of our products to whole vegetables instead of the animal meats they are intended to replace, comes at a cost. The cost, in my view, can be measured in human health. I return to our five-year research program with the Stanford University School of Medicine, the Plant-Based Diet Initiative. You may recall the program's first clinical trial, published in the prestigious American Journal of Clinical Nutrition, assessed a group of healthy adults who alternated between an eight-week period consuming animal protein two or more times a day and an eight-week period consuming Beyond Meat products two or more times a day. Now, here is the important part to focus on. For the eight-week period when the participants consumed beyond meat, researchers found a statistically and clinically significant drop in LDL cholesterol, what is commonly referred to as bad cholesterol. Researchers further found a decline in TMAO, a compound found in the gut that is associated with heart disease and certain cancers. We will continue to support such studies without control over design or outcomes. As we've announced, we have recently expanded our work in this area through a three-year agreement with the American Cancer Society to advance research on plant-based meat and cancer prevention while expanding the relevant clinical database. One of the most recent and exciting embodiments of our commitment to health is BeyondStake. I'm very proud of all those who've worked so hard to bring BeyondStake to life. It is a shining example of our brand promise to tirelessly innovate toward a North Star that not only delights in terms of taste, but also delivers clear nutritional benefits relative to animal protein equivalents. As I've noted, this product had the distinct honor of being named Time Magazine's Best Inventions of 2022, with a headline describing it as, quote, a healthier steak and a cover mention highlighting Beyond Steak's delicious taste. Let's unpack why the product earned the headline of a healthier steak. Beyond Steak boasts 21 grams of protein and contains only 1 gram of saturated fat and 170 calories per serving with no cholesterol and no added hormones or antibiotics. This can be contrasted with a serving of a leading brand of animal protein steak strips with Beyond Steak offering 15% more protein, 62% less saturated fat, and zero cholesterol compared with 50 milligrams per serving. Beyond Steak's clean ingredient deck is also worthy of focus. It is as follows. Water. Wheat gluten. Baba bean protein. Speller press canola oil. Salt. Natural flavor. There is then less than 1% of the following, spice, garlic powder, onion powder, pomegranate concentrate, yeast extract, sunflower lecithin, fruit and vegetable juice color. As with our other products, the striated muscle structure of the steak piece itself is accomplished by running plant protein through heating, cooling, and pressure, a physical rather than chemical process which utilizes intellectual property we've developed on equipment that in other sectors of the food industry is used to produce such staples as pastas and cereals. Moving past our process and ingredient deck, before leaving Beyond Steak, I'd like to now turn to the fava bean itself. I will be traveling next week to the Dakotas to meet with some of the farmers who grow the fava beans from which our protein is sourced. As I've spoken about many times, I have deeply rooted respect for the American farmer, including those whose family farms center on animal agriculture. I am intimately aware of the entrepreneurial journey they are on, often across generations, the difficulty and financial risk associated with their work, and the critically important role they play in our culture and economy. It is my strong and informed belief that the innovation and shift in protein we are pursuing is broadly an economic win for American agriculture. And in our messaging this year, I look forward to taking the consumer back to the farm to learn about how the protein for our plant-based steak is grown, the expanded economic benefits that accrue to the farmer, and the attendant sustainability gains for soil, climate, and water. There is goodness here, and along with our growers, we are proud of it. With that, I'll turn it over to Luby, our Chief Financial Officer and Treasurer. to walk through our fourth quarter financial results in greater detail, as well as our outlook for 2023. Thanks, Ethan.