Beyond Meat, Inc.

Good afternoon, and welcome to the Beyond Meat fourth quarter and full year 2024 conference call. All participants are in a listen-only mode. Should you need assistance, please signal a 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, then one on a touch-tone phone. And to withdraw your question, please press star and then two. Please note that this event is being recorded. I would now like to turn the conference over to Paul Shepard, Vice President, FP&A, and Investor Relations. Please go ahead, sir.

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 Kusur, Chief Financial Officer and Treasurer. By now, everyone should have access to our fourth quarter and full year 2024 earnings press release filed today after market closed. This document is available in the investor relations section of Beyond Meat's website at www.beyondmeat.com. 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 September 28, 2024, and our annual report on Form 10-K for the fiscal year ended December 31, 2024, to be filed with the SEC, 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-GAF financial measures. 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, I would now like to turn the call over to Ethan Brown.

Thank you, Paul, and good afternoon, everyone. I'll begin my remarks by highlighting milestones achieved in the full year of 2024, briefly summarize our Q4 performance, and then turn to our strategic focus for 2025. I believe the past year reflects an important inflection point in Beyond Meat's journey. In the second half of the year, we registered two consecutive quarters of year-over-year net revenue growth following more than two years of declining sales. This encouraging sign comes as a category in our brand continues to endure a significant reset, one driven by broad consumer confusion regarding the value proposition of our product lines, among other factors. I am proud the team took this ambiguity, much of it engineered by incumbent industry interests, head on and vigorously went on the offensive, leaving no stone unturned from product design and emphasis to marketing and partnerships. I've often summarized the team's response with such commentary as, iron sharpens iron, and the toughest wins make the strongest branches. And I'm truly grateful they took considerable adversity and used it to make our products even better. Specifically, with the launch of Beyond Four, the Sun Sausage line, and the recent extension of our award-winning Beyond State platform, all of which enjoy various accreditations from the American Heart Association, American Diabetes Association and clean label project Beyond meat is making eating delicious plant-based center-of-the-plate protein even healthier and at the same time making a statement No matter the level of misinformation and misdirection All of which do a serious disservice to the consumer who may otherwise make positive changes in their diets lives and health we will stay the course continue to innovate and perfect our craft and and ultimately prevail for the benefit of the consumer, our shareholders, the planet, and the rest of life with whom we share it. Needless to say, the key to staying the course and winning is having a sustainable business model. We made great strides in this direction in 2024. Namely, we took out just over $50 million in operating expenses, excluding a $7.5 million settlement and dramatically improved adjusted EBITDA, all while, as stated earlier, delivering two consecutive quarters of year-over-year net revenue growth after nine quarters of decline. For the full year, we generated $326.5 million in net revenues. While this was down 4.9% versus 2023, One can see that the rate of decline slowed substantially versus the previous two years as we produced growth in the last two quarters of the year, as previously mentioned. Growth margin reached 12.8% for the full year, and while lower than our expectations, it reflects strong progress across COG. Specifically, a full year 2024 COGS per pound of $4.07 was roughly 40 cents or 9% lower than 2023 after adjusting for the impact of certain non-cast charges. And our Q4 COGS per pound achievement of $3.91 represented our best quarterly achievement since Q2 2021. However, Relative to our expectations, these COGS gains were somewhat obscured by lower than expected net revenue per pound, reflecting changes in product sales mix, a slower build of the U.S. price increase than anticipated, and unfavorable changes in foreign currency exchange rates. We achieved these improvements in net revenues and gross margin while significantly reducing expenses. The combination of these factors drove a nearly $100 million year-over-year improvement in adjusted EBITDA, after adjusting for the impact of certain non-cast charges. Now turning more specifically to the fourth quarter, I'll briefly mention a few key highlights. We generated net revenues of $76.7 million, reflecting a 4% increase year-over-year. The combination of higher pricing, lower promotional spending, and reduction in COGS per pound strengthened gross margin to 13.1%, up substantially year-over-year. Operating expenses in the fourth quarter were $47.8 million, a $29.1 million reduction from $76.9 million in the year-ago period, or approximately $11.5 million after adjusting for the impact of certain non-cast charges. The net effect of these outcomes was a meaningful reduction in adjusted net loss year over year. I applaud our team for these large strides towards sustainable operations and know they share in my enthusiasm for continued progress to this end in 2025. Globally, in the fourth quarter of 2024, we continue to see encouraging momentum, though inconsistent, in its distribution. For example, in France, McDonald's launched Veggie McPlant Nuggets in more than 1,500 restaurants, joining McDonald's in seven other European countries offering beyond products. We are encouraged by this progress, as well as broader consumer trends in France, where 68% of the population is reducing meat consumption and 27% regularly incorporates plant-based alternatives, according to a 2023 study. Moreover, in France, beginning this month, we launched Beyond Steak in retail. This expands our presence in this important EU market, where we already sell Beyond Burger, Beyond Mince, Beyond Chicken, Beyond Meatballs, and Beyond Sausage. Other areas of recent expansion in Europe include the introduction of smash burgers at Tesco UK and the plant burger at Wendy's for a limited time in the country of Georgia. Looking forward, having cut operating expenses, expanded gross margin, and made substantial progress in adjusted EBITDA across 2024, we now look ahead to 2025 with a clear governing objective. Position the business to achieve run rate EBITDA positive operations by year-end 2026. We expect to do so by attacking four key goals for 2025. These are as follows. One, deliver a comparable year-over-year top-line net revenues. Though we welcome substantial growth in 2025, it is more important that the team understand the premium importance of achieving EBITDA-positive operations and act with discipline when considering near-term growth opportunities that may conflict with this governing objective. Accordingly, we are targeting roughly comparable net revenues with, as I note below, considerably less operating expenses and higher gross margin. Moreover, we expect to regain as well as increase distribution in certain channels that should help with margin-accretive top-line performance. Finally, with respect to top-line performance, we will continue to lean into and expand our health-related products and marketing as we bring new innovation to market this year. Two, improve gross margin to approximately 20% on a path to longer-term gross margin exceeding 30%. Having nearly completed the consolidation of our production network, the focus for the year is stabilizing and then optimizing our internal production processes while making targeted investments in equipment, automation, and consolidated lines to further expand gross margins. We believe that these measures, together with select pricing actions and the restoration of distribution at certain channels that are important to overall mix, will support further gross margin expansion. Three, further reduce operating expenses over the two-year period 2025 and 2026. As implied by our guidance, we are pursuing further meaningful reductions in operating expenses this year. To this end, yesterday we initiated an additional reduction in force, have identified and are aggressively reducing programmatic spend in the U.S., and are suspending our operational activities in China. As I hope is clear, we deeply value our employees and making this necessary adjustment to our operating base is not done lightly. We are fortunate to have a tremendously talented, dedicated, and resilient team at BEYOND. And parting with folks who have done so much for BEYOND, our customers, consumers, shareholders, and mission over the years is difficult. We are truly and deeply grateful for their many contributions. Four, strengthen our balance sheet. In 2025, we will continue to evaluate options to further improve liquidity and optimize our capital structure so that we're well-positioned to achieve our growth plans and unlock long-term value. We have no secure debt, and our unsecured indenture provides us with significant flexibility to pursue a range of potential transactions. In closing, we look back at 2024 as a key year of transition for BeyondMeet. From this vantage point, we eagerly look forward to executing our four strategic priorities for 2025, remain highly confident in our ability to lead the category through what has been a challenging correction born of manufactured ambiguity, and believe unequivocally in the inevitable and central role that plant-based meat will play in our global future. I look forward to taking your questions later, and we'll now turn the call over to Luby.