Beyond Meat, Inc. Aktie

Thank you, everyone, and welcome to Beyond Meat's First Quarter 2026 Conference Call. [Operator Instructions] Please note, this event is being recorded.

It is now my pleasure to turn today's conference over to Mr. Paul Sheppard, Vice President of FP&A and Investor Relations. Please go ahead.

Thank you. Hello, everyone, and thank you for participating in today's call. Joining me are Ethan Brown, Founder, President and Chief Executive Officer; and Lubi Kutua, Chief Financial Officer and Treasurer.

By now, everyone should have access to our first quarter 2026 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. Before we begin, please note 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 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 March 28, 2026, to be filed with the SEC, our annual report on Form 10-K for the fiscal year ended December 31, 2025, 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 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. 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.

With that, I'd now like to turn the call over to Ethan Brown.

Thank you, Paul, and hello, everyone. Given that we have spoken recently, today I will briefly summarize our performance in the first quarter of 2026 before jumping right back into a progress report against the major priorities we are pursuing to position our enterprise for sustainable growth. First quarter net revenues of $58.2 million were in line with our expectations, although down year-over-year, reflecting continued headwinds in the plant-based meat category. Gross margin was up both sequentially and year-over-year, but significantly below what we believe to be an achievable target. A more substantial improvement in reported gross margin was frustrated by the flow-through of Q4 2025 inventory produced during a period of particularly low volume and overhead absorption, obscuring progress we are making on COGS, specifically conversion rates.

Adjusted EBITDA figures tell a similar story, sequential and year-over-year improvement, yet considerable ground left to cover. For the quarter, and perhaps what is the strongest data point that we are emerging from the most intensive cash component of our restructuring, while also starting to see the impact of earlier headcount, other SG&A, and inventory management measures, our cash use for the quarter was $11.8 million, down significantly sequentially and year-over-year. To our broader recovery activities, I'll continue to organize these in three main buckets. One, our transition to beyond the plant protein company and associated strategic entry into adjacent categories within the growing functional food and beverage space. Two, our distribution and portfolio strategy activities around our core product narrative and associated product development. Three, operations and manufacturing initiatives currently being executed via our standing transformation office.

As you will recall, we began our transition from Beyond Meat to Beyond, a plant protein company, earlier this year to bring the strength of our brand, expertise, and technology to adjacent growing categories in the functional food and beverage space. We believe that we are strongly positioned to compete and win based on what is now nearly two decades of work on the functionality, characteristics, cost, and presentation of plant-based inputs. It's possible that we've done this work, that is, we've innovated with plants under more scrutiny than any other company ever. I believe that because we've chosen to confront challenges, criticism, and incumbent industry campaigns against us by innovating more intensely, taking perceived weakness and seeking to create strength from it, we've developed disciplines and capabilities that allow us to produce winning products in adjacent categories.

Consider, for example, that many of the most dominant products in these fast-growing segments use ingredients that we long ago dismissed and learned to work around. More generally, our scientists have labored against the arduous task of making plant protein and other plant-based ingredients taste, behave, and feel like animal muscle. Delivering the attrition of plants in products with less formidable characteristics offers degrees of freedom previously unavailable to our technical teams. The first product to emerge from this broadened aperture is Beyond Immerse, a clear, lightly carbonated drink delivering protein, fiber, antioxidants, and electrolytes. One way to think about Beyond Immerse is to note that it is concurrently addressing four distinct beverage categories, each of which serve a specific need, protein drinks, fiber drinks, vitamin drinks, and electrolyte drinks.

The product delivers against each relevant need state within not 4, but 1 beverage, and does so with a refreshing, enjoyable delivery. The consolidation of these nutrients in a single platform is intuitive given the presence of each in the plant kingdom. It is this feature that gives the product its name, with the consumer immersing their body in the power of plants. 20 grams of clean protein, critical to support muscle health. 7 grams of fiber, vital to support a healthy gut. Antioxidants for immunity and recovery, and electrolytes for hydration, all with only 100 calories. The product is formulated without added sugar, artificial sweeteners or colors, stabilizers or dairy, and is designed for athletes, students, professionals, as well as GLP-1 users seeking a clean, functional beverage that delivers on nutrition without additives and with minimal calories.

As is our process, we've developed many, many iterations since its initial conception, each more refined than the last. I'm confident that as we launch in earnest across New York this summer, we are bringing a compelling product to market. Importantly, we are doing so with a world-class partner in Big Geyser, one of the nation's largest non-alcoholic beverage distributors and the #1 non-alcoholic beverage distributor in New York, with a footprint of more than 26,000 outlets across grocery, drug, convenience, mass merchandisers, club, and food service. Finally, before turning to the next set of key objectives driving our turnaround, I'll make two final comments on our entry into adjacencies within the functional food and beverage space.

One, though we are entering the clear protein beverage category initially, our thesis is that we have the brand and capabilities to deliver the power of plants across multiple related categories within functional food and beverage. Two, as I stated in our previous call, in broadening the company's aperture, we do not see a retreat from our core category. To the contrary, I believe that introducing consumers to our brand and our foundational commitment to great taste, clean ingredients, and plant-based nutrition in less controversial applications, we will bring back many to the center of the plate. With this context, I'll now move to our efforts to stabilize and grow anew the center of the plate business. We are approaching this task in at least 3 ways. One, we continue to focus on gaining distribution and building out brand blocks in the frozen retail set.

Last month, we began rolling out Beyond Chicken Pieces Spicy Buffalo, a bold new Beyond Chicken Pieces variety at over 2,000 Kroger stores nationwide, marking an exciting expansion of our chicken portfolio. Like the original, it offers the same craveable, satisfying taste and strong nutritional profile, 21 grams of plant protein per serving and just 0.5 grams of saturated fat from heart-healthy avocado oil, no cholesterol, and only 130 calories. I invite the listener to pause a moment on these nutritionals. 21 grams of protein to only 130 calories, all with 0.5 gram of saturated fat, no cholesterol, no antibiotics, no hormones. To compare against popular functional protein products, no gels, no gums, no artificial fat systems, flavors or colors.

As we move out from under the cloud of misinformation that has impeded our growth, I believe that it's this type of value proposition that will resonate strongly with the consumer. Both the original and Spicy Buffalo varieties are made with ingredients that comply with non-GMO project standards and are the first plant-based chicken products to be certified by the Clean Label Project. Two, we are rounding out the Beyond IV portfolio, recently announcing the nationwide rollout of our new Beyond Breakfast Sausage lineup at Kroger, Sprouts, and soon, Whole Foods Market. The new lineup includes Beyond Breakfast Sausage Links and Beyond Breakfast Sausage Patties in original and spicy. Crafted with simple ingredients and heart-healthy avocado oil, Beyond Breakfast Sausage are the first plant-based breakfast sausages to earn Clean Label Project certification. In an aggregate, we now hold more than 20 Clean Label Project certifications.

Lastly, in the area of accreditations, both the Beyond Burger IV and Beyond Steak were recently recognized as the first plant-based meats to qualify as Climate Solutions under the Climate Solution Framework developed by the Exponential Roadmap Initiative and Oxford Net Zero. Three, we continue to push the envelope with regard to new center-of-the-plate protein offerings. In just one example, I encourage you to take a look at consumer reactions to Beyond Steak Filet, which is currently only offered through our direct-to-consumer platform, Beyond Test Kitchen. With 28 grams of protein, 3 grams of fiber, 1 gram of saturated fat from heart-healthy avocado oil, no cholesterol, and only 230 calories, it is gaining an enthusiastic following. Here, too, we are delivering outstanding protein levels enveloped in great taste, all with minimal saturated fat, no cholesterol, no hormones, no antibiotics, so on and so forth.

We expect to be able to bring this innovation to certain retail markets as production ramps up later this year. We are starting to see some benefit as we execute across our distribution and portfolio strategy in our retail business. These encouraging signs are not, however, present yet in our U.S. or international food service businesses. To this end, we are applying significant emphasis to impactful portfolio modifications within certain food service distribution channels and expect to be able to report out additional detail during our next call. Having offered commentary in what we are doing in an effort to stabilize and grow the top line from our transition to beyond the plant protein company and entry into adjacent functional food, beverage, food and beverage categories, to our focus on increasing distribution in our core business, including through product renovation and innovation, I'll now turn to our transformation initiative activities.

To date, we have achieved the following: consolidated our production network, activated our continuous production line in Columbia, Missouri, to allow us to internalize additional volume that was previously outsourced, made investments that are driving year-over-year improvement in conversion costs, implemented RFP actions intended to reduce material costs, secure secondary sourcing, and enhance our formulations, consolidated warehouses and lowered logistics costs, exited less profitable lines, finalized plans to exit China and dispositioned certain non-strategic assets, and realized significant reductions in inventory. As I mentioned at the beginning of my comments, the impact of these gains on gross margin was, as it has been in prior quarters, obscured by lower volume and associated lower overhead absorption, among other factors.

We are, however, as I touched on earlier, beginning to see the positive impact of our prior reductions in force and SG&A streamlining, the cessation of certain legal expenses alongside other transformation office operational efficiency measures. The combined impact of these and other savings netted an approximately $14 million year-over-year reduction in operating expenses. Finally, a key achievement of our transformation office in the first quarter of 2026 was the lowest quarterly cash use we've seen in over 2 years at the aforementioned $11.8 million. Clearly, we have work ahead across top-line recovery, margin expansion, and operating expense reduction, yet we are confident in the plan we are executing to deliver results in each case. We look forward to updating you on our progress in the months ahead.

With that, I'll now turn the call to Lubi to review our first quarter financials in greater detail.

Thank you, Ethan, and hello, everyone. I'll begin with a review of our first quarter financial results, and will then provide some brief comments on our outlook. Net revenues decreased 15.3% to $58.2 million in the first quarter of 2026 compared to $68.7 million in the year ago period. The decrease in net revenues was primarily driven by a 19.5% decrease in volume of products sold, partially offset by a 5.4% increase in net revenue per pound. The decrease in volume of products sold was primarily driven by lower sales of burger and chicken products to QSR customers in the international food service channel and by weak category demand and some loss of distribution in our U.S. retail and food service channels.

The increase in net revenue per pound was primarily driven by changes in product sales mix, including the impact of reduced sales to QSR customers, as I just noted, and was further aided by favorable changes in foreign currency exchange rates, though partially offset by a higher trade discount rate versus the year-ago period. Taking a closer look at our sales results by channel. U.S. retail net revenues decreased 15.3% to $26.6 million in the first quarter of 2026 Compared to $31.4 million in the year-ago period. Volume of products sold declined 14.7% versus the year-ago period, primarily driven by weak category demand and reduced points of distribution within certain channels.

Net revenue per pound in U.S. retail was down slightly, falling 0.6% year-over-year as higher trade discounts and favorable changes in product sales mix largely offset each other. In U.S. food service, net revenues decreased 29.7% to $6.6 million in the first quarter of 2026 compared to $9.4 million in the year ago period. The decrease in net revenues was primarily driven by a 31.8% decrease in volume of products sold, partially offset by a 3% increase in net revenue per pound. The decrease in volume of products sold was primarily driven by weak category demand and loss of distribution within certain channel segments, including sales of chicken products to a QSR customer in the year ago period that did not repeat in the first quarter of 2026.

The increase in net revenue per pound was primarily driven by changes in product sales mix and lower trade discounts, partially offset by price decreases of certain of our products. Turning to international. International retail net revenues increased 8.1% to $13.7 million in the first quarter of 2026 compared to $12.7 million in the year-ago period. Net revenue per pound increased 7.8% primarily due to favorable changes in foreign currency exchange rates and price increases of certain of our products, partially offset by higher trade discounts. Volume of products sold increased 0.3% year-over-year, primarily driven by improved demand and distribution gains in certain European markets, partially offset by limited distribution losses in Canada.

Finally, in international food service, net revenues decreased 25.9% to $11.3 million in the first quarter of 2026 compared to $15.3 million in the year-ago period. The decrease in net revenues was primarily driven by a 32.6% decrease in volume of products sold, mainly reflecting lower sales of burger and chicken products to certain QSR customers. Net revenue per pound in international food service increased 10.2% on a year-over-year basis, primarily driven by favorable changes in foreign currency exchange rates and lower trade discounts, partially offset by changes in product sales mix.

Moving down the P&L, gross profit in the first quarter of 2026 was approximately $2 million or a gross margin of 3.4% compared to a loss of $6.9 million or gross margin of minus 10.1% in the year ago period. Compared to the first quarter of 2025, gross profit and gross margin benefited from lower cost per pound and higher net revenue per pound, with the former mainly reflecting lower inventory provision and reduced manufacturing expenses, including depreciation, partially offset by increased materials costs. Improvements in our cost of production reflect, among other things, benefits from our recent SKU rationalization initiative and certain efficiency projects implemented within our U.S. manufacturing network.

Our cost of goods sold in the first quarter of 2026 was negatively impacted by the flow-through of inventory produced in the fourth quarter of 2025 that absorbed more fixed costs due to our significant curtailment of production volumes in that period. The decline in volume of products sold in the first quarter of 2026 also drove unfavorable fixed cost absorption compared to the year ago period, representing a drag on our Q1 gross margin. Gross profit and gross margin in the first quarter of 2026 also included approximately $0.5 million in expenses related to the shutdown of our business in China, which we expect to substantially complete by the end of the year.

Turning to operating expenses, total operating expenses were $43.1 million in the first quarter of 2026 compared to $57.4 million in the year ago period. Operating expenses in the first quarter of 2026 included $3.7 million in incremental share-based compensation expense stemming from our convertible debt exchange, $0.8 million in certain non-routine SG&A expenses, $0.4 million in amortization of costs related to the partial lease termination of a portion of our campus headquarters, and $0.2 million in incremental legal and other fees and expenses associated with arbitration proceedings related to a contractual dispute with a former co-manufacturer. Notwithstanding these items, the decrease in operating expenses compared to the first quarter of 2025 was primarily driven by lower product donation costs, lower legal expenses, and reduced salary and related expenses.

Combined with the previously mentioned increase in gross profit, the net result was a reduction in loss from operations from $64.4 million in the year ago period to $41.1 million in the first quarter of 2026. Below the line, total other income net was $12.6 million in the first quarter of 2026 compared to $3.3 million in the year ago period. The increase was primarily due to non-cash gains from the remeasurement of derivative liability and gain on debt extinguishment resulting from the conversion of some of our 2030 convertible notes. These gains were partially offset by an increase in interest expense related to our delayed draw term loan facility and net realized and unrealized foreign currency transaction losses due to unfavorable changes in FX rates of the euro.

Net loss was $28.5 million or $0.06 per common share in the first quarter of 2026 compared to net loss of $61.1 million or $0.80 per common share in the year-ago period. Adjusted EBITDA was a loss of $27.8 million or minus 47.7% of net revenues in the first quarter of 2026 compared to an adjusted EBITDA loss of $50.5 million or minus 73.5% of net revenues in the year-ago period. Turning to our balance sheet and cash flow highlights, our cash and cash equivalents balance, including restricted cash, was $205.8 million as of March 28, 2026, or a decrease of approximately $11.8 million compared to our 2025 ending cash balance.

Excluding the impact from financing activities, this represents our lowest rate of quarterly cash consumption in over 2 years, reflecting the benefit of various capital and reflecting the benefit of various capital and cost reduction measures we have implemented over the last several quarters, unencumbered by many of the non-routine costs stemming from our transformation efforts that have burdened our P&L in recent periods. Total outstanding carrying value of debt, net of debt discount, was $411.6 million as of March 28, 2026, which included the total undiscounted future cash flows of the new 2030 notes recorded at the completion of our convertible debt exchange. Net cash used in operating activities was $5 million in the 3 months ended March 28, 2026, compared to $26.1 million in the year-ago period.

Capital expenditures totaled $2.5 million compared to $4.5 million in the year-ago period. Net cash used in financing activities was $4.5 million in the 3 months ended March 28, 2026, compared to $0.6 million in the year-ago period, primarily driven by withholding tax payments associated with equity awards related to our convertible debt exchange. It is also worth noting that subsequent to the end of the first quarter, an additional $62.6 million in aggregate principal amount of our 2030 convertible notes were converted into approximately $52.1 million shares of common stock, and an additional $3.9 million anti-dilution restricted stock units were also granted to management in accordance with the management incentive plan awards associated with the convertible debt exchange. Let me now touch briefly on our outlook before concluding my remarks.

As in recent periods, we are continuing to provide only limited net revenue guidance given ongoing levels of uncertainty and volatility within our operating environment, which we believe may continue to have unforeseen impacts on our actual realized results. To this end, in the second quarter of 2026, we expect net revenues to be in the range of approximately $60 million to $65 million.

And with that, I'll turn the call over to the operator to open it up for your questions. Thank you.

[Operator Instructions] Your first question today comes from Ben Theurer from Barclays.

Two quick ones, if you may allow. First one, clearly, a good improvement year-over-year on the gross margin. You laid out a few issues still like kind of like carrying over. I know you're not going to provide much of guidance beyond the sales part, but can you maybe help us just understand directionally what we should think about gross margin sequentially into the second quarter? Obviously, you should have about a give or take, 10% higher sales base sequentially, and hopefully some of that older higher cost inventory is being worked through by now. Just to understand a little bit like roughly trends, fair to assume that we're going to get a little bit of a better gross margin, that would be my first question. Anything you can share here.

Sure. I'll let Lubi tackle the specifics on that. I think in general, both on the operating expense as well as in margin, you're seeing a business that is kind of digging out from a lot of intense expense and drag. On the operating expense, it was really around a lot of legal fees as we were involved in several issues there and then a lot of the restructuring expense, just heavy OpEx and cash use.

And then on the margin side, you do continue to see some of this flow through, just as we right-size the business and things of that nature that have made it difficult for us, as I mentioned in my comments, to really demonstrate the progress that's occurring, let's say, at the conversion level at our plants where our conversion continues to improve, our cost of goods continue to get stronger. While we don't provide very specific guidance, on margin I'm absolutely confident that we'll be headed in a good direction in the next quarter. We don't give a particular number. Lubi, unless you want to.

Yes. Thanks for the question, Ben. I think Ethan covered it for the most part. I think the way you're thinking about it, though, is right in the sense that typically, the second quarter does tend to be just seasonally, right, a higher volume quarter for us. That always represents a benefit from a gross margin perspective and fixed cost absorption perspective. We also this effect that we talked about that impacted us in Q1 with the flow-through of high-cost inventory, we would expect that to not be not impact the Q2 to the same degree that it did in Q1.

And then also, not only do we have, generally speaking, seasonally, higher volumes in Q2 relative to Q1, but the mix of our sales, right, does tend to benefit us when we do sell some of the the more higher margin core products as a result of the summer grilling season. You know, we are continuing as part of the improvements in conversion costs that Ethan referenced, right, does reflect some of the good work that I think the team is doing in terms of some of the efficiency projects that we've been pursuing.

I think, like we would expect to build on those in the balance of the year, not necessarily expecting a step change from that, in the, in the next quarter. I think, like, gradually we should start to see more and more benefit from some of those projects that we've been working on.

Yes, I think if you look at COGS, you see something like a 8% good guy in terms of improvement. That's if the, if the folks in Columbia and in Pennsylvania are listening and elsewhere, Europe that's really due to their good work. It's about getting rid of the noise, so that those things start showing up.

Okay, perfect. You know, obviously you have a lot of the restructuring going on, but one of the projects really is, and you've talked about it, is really taking this from just Beyond Meat alternatives to more like Beyond the protein company transitioning here. Obviously, you've presented that beverage portfolio a few months ago. I was just wondering, like, where are we in kind of like the rollout of that? How should we expect this to kind of like be marketed? Just given the constraints from a cash perspective, how do you plan on rolling these products out, making them just promoted? Anything marketing? What is that kind of like the base plan here for all these new products?

Sure. I think there's a couple key words. First one I'll start with is leverage. You know, we are leveraging, as I think I joked last time we have been sort of a beverage company in hiding with the tremendous expertise we have on our board, whether it's Kathy Waller, CFO of The Coke; or Seth Goldman, our Chairman, is the founder of Honest Tea and Just Ice Tea; and Jim Koch, obviously founder of Boston Beer Company. Just leveraging that expertise to make sure that that's a lot of decades of combined expertise, to make sure that, we're going about this in the smartest way possible. I think the second word that I'd emphasize is focus. You know, we're not going broad here.

We're, if you think about the New York launch we're doing, it's very intentional. We want to go into that market with the best partner that I think you can get. You know, that's an example of how Seth was able to impact the business here. Big Geyser's been working with him for a very long time. Having the opportunity to go into New York with a world-class partner having tested the product now with many consumers online, I am super excited about the version that we're going to be sending over to New York. It has gotten better and better, it's a total winner.

If you think about how we're going to market this, here's a very simple way to understand it, which I mentioned in the script. It's not necessarily just a protein drink, right? It's a system, and it's a system for people who want to tap into the tremendous nutritional benefits of plants in a really convenient way. You're getting your protein, and a substantial amount. You're getting 20 grams of protein. You're getting 7 grams of fiber, which is 25% daily value. You're getting your antioxidants with the, I think, a daily dose, full 100% of vitamin C, and you're getting electrolytes, something similar to what you'd get in a Gatorade.

You're getting all of these things without anything artificial, with a very limited ingredient list, a very clean ingredient list, a really convenient and great taste. We're going to go back to our playbook that we've used so successfully over so many years. If you think back to 2017, there was a Sports Illustrated article, the title of which, Are Veggie Burgers the New Gatorade? It had a bunch of NBA players who had invested in Beyond. You had Kyrie Irving, you had Chris Paul, you had JJ Redick. Others at the time were involved, DeAndre Jordan, et cetera. The idea there was they were using Beyond products to help them basically recover more quickly, build muscle, so on and so forth.

This drink is an incredible opportunity to go back to that storyline, right? I think you'll see us using athletes, using active people, being very focused in terms of who in New York we're going after, whether it's run clubs, fitness studios, folks that are active in hiking and outdoor sports competitive athletes, people that are really going to benefit from that system. Then it'll spread out to the general population from there.

This does actually conclude our question and answer session. I would now like to hand the conference back over for any closing remarks.

Thank you. Thanks for listening. We obviously are at a very pivotal point in the business, taking the brand, the technology expertise that we've built over what is now a generation, almost 18 years, and bring it into adjacent fast-growing markets in the functional food and beverage space. We're also continuing to focus very much on our core and seeing some, I think, promising signs within it, although there's a lot of work left to do. If you look at, in retail, you look at some of the largest conventional grocers that there are, and if you look at the 13-week data, in one of them, you see that we've started to return to very modest single-digit unit and dollar growth.

You look at another one which reports on a 12-week period, and you see the same, in fact, double-digit. That's being offset in other areas by, let's say, the loss of club business and things like that. But you can start to see signs of recovery. How quick in the core business? I can't say. We're not waiting around. We are going into the adjacencies so that when that core business does recover, which it will, we're also augmenting it with these additional product lines that leverage all the brand and expertise that we have here. I think our team is energized and focused on this, and we look forward to delivering results. Thanks.

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

Thank you, everyone, and welcome to the Beyond Meat, Inc. 2025 Fourth Quarter Conference Call. [Operator Instructions] Please note this event is being recorded. It is now my pleasure to turn today's conference over to [ Raphael ], partner of ICR, Inc. Please go ahead.

Thank you. Hello, everyone, and thank you for participating in today's call. Joining me are Ethan Brown, Founder, President and Chief Executive Officer; and Lubi Kutua, Chief Financial Officer and Treasurer. By now, everyone should have access to our fourth quarter and full year 2025 earnings press release filed today after market close. This document is available on the Investor Relations section of Beyond Meat's website at www.beyondmeat.com.

Before we begin, please note 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 27, 2025, and our annual report on Form 10-K for the fiscal year ended December 31, 2025, 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 today.

Please 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. 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'd now like to turn the call over to Ethan Brown.

Thank you, Raph, and hello, everyone. We entered a challenging year for our brand with an equally challenging quarter. We used this period, however, to accomplish a series of foundational building blocks for the company. First, we retired the majority of our 2027 convertible debt notes, and second, we raised significant capital, 2 measures that fundamentally changed and strengthened our balance sheet. Third, we invested in an enterprise-wide transformation initiative with a focus on rightsizing our operations and expanding our margins. Fourth, and as you will see reflected in our Q4 2025 numbers, we took another hard look at the assets, products and inventories, we believe, are not needed going forward and took action to disposition them. Fifth, we continue to lead the category in bringing clean plant-based meats to the consumer while hammering away at persistent misinformation promulgated by the incumbent industry. Finally, we laid the groundwork for repositioning Beyond Meat to Beyond the Plant protein company so that we can bring the strength of our brand, technology and expertise to adjacent categories.

Having touched on the significant actions we took to strengthen our balance sheet through the elimination of approximately $900 million in debt and the addition of approximately $149 million in cash on our previous earnings call, I will forgo further detail here. Instead, I will focus my comments on a quick financial review of Q4 2025 before turning to our transformation work, product narrative and our brand repositioning and entry into adjacent markets. What I hope will be clear from these comments, especially for the investor who desires to drill down a level deeper than headline numbers, is that we are highly focused on reducing baseline operating expense and cash use, increasing conversion efficiency in our production facilities and addressing category headwinds straight on even as we take significant steps to diversify Beyond It.

Financial results for the fourth quarter 2025 reflect persistent weak demand in the plant-based meat category, resulting in lower volumes, the impact of which ripple throughout our P&L. This negative pressure was coupled with a number of significant nonroutine charges, many of which, though not all, stem from our transformation activities. Sales were $61.6 million, down 19.7% from the year ago period. Lower sales led to lower overhead absorption, which together with higher trade, negatively impacted gross margin. More significant, however, were large nonroutine or unusual items. These include such items as increased provision for inventory obsolescence, partly reflecting the strategic discontinuation of certain lower-profit products and accelerated depreciation related to the cessation of our operational activities in China, the net result was a reported gross margin of 2.3%. Similarly, despite progress in reducing the baseline cost of operating our business, significant nonroutine items, including large noncash charges, increased our reported operating expenses to $134.2 million versus $47.8 million in the year ago period. These included $48.1 million in noncash charges related to the write-down to fair value of certain of the company's long-lived assets; a $38.9 million litigation-related accrual; and higher noncash stock compensation expense of approximately $13.3 million related to our convertible debt exchange transaction.

Stripping out these nonroutine items and the impact of the transaction-related change in noncash stock compensation, one can see that the run rate operating expense of our business is down considerably year-over-year. Finally, also reflecting the aforementioned transaction, net income of $409.9 million in the fourth quarter of 2025 compared to a loss of $44.9 million in the year ago period, reflecting a $548.7 million gain on debt restructuring.

To summarize, our fourth quarter 2025 results reflect both continuing challenges in the category as well as substantial noise in our reported numbers due to, among other factors, several of our transformation initiatives. I will now turn to this transformation activity, where we are encouraged by the progress of our transformation office led by our interim Chief Transformation Officer, John Boken. As I noted, we've seen further reduction in underlying operating expenses, excluding the nonroutine items and transaction-related stock compensation increase for both the fourth quarter and full year 2025 on a year-over-year basis, and we are pursuing other cost reduction measures going forward. Also setting aside certain nonroutine charges, we believe we are making progress against our goal to sustainably return to healthy gross margins. As previously shared, we've largely completed the consolidation of our production network and continue to improve asset utilization at our manufacturing facilities. Further, we're now in the process of optimizing our new continuous production line at our facility in Columbia, Missouri and are investing in automation. These and other measures are already showing up in a year-over-year improvement in conversion costs across our network, a key component of our COGS reduction initiatives. Further, through our transformation office, we are seeking to reduce material costs through RFP actions, the cultivation of secondary sources and formulation improvements. We are further consolidating our warehouse network and reducing logistics expenses. We are exiting less profitable product lines, and we are making substantial progress on driving down inventory. Finally, we remain very focused on cash management and significantly reduced our baseline cash use in the fourth quarter compared to prior periods, excluding extraordinary items.

I'll now turn briefly to our ongoing efforts to dispel the persistent cloud of misinformation regarding our products. As I have noted countless times in these calls, the incumbent industry did a masterful job of seeding doubt in the mind of the consumer. For the time being, we operate in an upside down world with proteins from peas, lentils, fava beans and brown rice, mixed with avocado oil and a limited number of other clean ingredients, is disingenuously, though broadly cast, as less than healthy. I believe this confusion will ultimately clear. In the interim, we remain focused on innovating around taste and health and helping to communicate the latter via various accreditations and certifications including our now 20-plus certifications from the Clean Label Project.

For our latest center to plate innovations, such as Beyond Steak Fillet or Beyond Ground Fava, consumers can now order directly from Beyond Test Kitchen, our direct-to-consumer platform. These products, they're great taste, simple and clean ingredients and the impressive macro nutrient content are winning accolades from consumers even before they reach retail stores. Beyond Steak Fillet boasts 28 grams of protein, fava beans, wheat gluten and mycelia, and only 1 gram of saturated fat from avocado oil, while boosting 0 cholesterol and only 230 calories.

Beyond Ground Fava delivers 27 grams of protein from fava beans and potato, 4 grams of fiber from psyllium husk, has no saturated fat or cholesterol and is only 140 calories. Moreover, Beyond Ground Fava is made from only 4 ingredients: water, fava protein, potato protein and psyllium husk and performed extremely well in niches such as tacos, Bolognese and protein bowls.

Finally, I'll now turn to a key and central communication. Notwithstanding the many changes occurring through our transformation office that I've discussed above, what I noted late last year that going forward, you should not expect more of the same, I was most of all referring to the broadening of the aperture that you see as we move from Beyond Meat to Beyond The Plant Protein Company. I believe that no company has innovated with plants under more scrutiny than Beyond ever. We're now bringing the results in hard-fought expertise and capabilities, our commitment to health and clean ingredients and our brand to adjacent categories where we believe we can be disruptive and win.

Our first foray in this broader delivery of the power of plants to consumers is our exciting new drink platform Beyond Immerse. The Beyond Immerse platform, a clear and slightly carbonated beverage, is designed to provide the consumer with protein, fiber, antioxidants and electrolytes, effectively immersing the body in the nutritional benefits of plants. We launched Beyond Immerse as we now plan to do with all new retail innovation on the Beyond Test Kitchen to early fanfare and excitement, generating over 3 billion media impressions and selling out of our first limited-run inventory quickly. Beyond Immerse is formulated to support muscle health and recovery, gut health, immune function and hydration. Each serving contains 10 or 20 grams of protein, 7 grams of fiber, and only 60 or 100 calories depending on the level of protein. Beyond Immerse is made without added sugar, sugar alcohols, artificial sweeteners or flavors, stabilizers, carrageenan and many other ingredients present in many popular protein drinks. Easier to drink than a thick protein shake and made without whey so it's dairy free, the product is designed for the casual to competitive athlete as well as the busy student or professional who wants protein, fiber, antioxidant and electrolytes at the gym, home, work or on the go. Moreover, we believe it is particularly well suited for GLP-1 users. I personally find it satisfying post workout at breakfast or late afternoon when I'd like a boost between meals. It's been fun to watch consumers enjoy it. And like all things Beyond, we continue to innovate and iterate based on what we believe is a state-of-the-art science and consumer use and suggestions.

Far from stepping away from our mission to change the source of protein at the center of the plate from animals to plants, we reaffirm it and take to these promising adjacencies to introduce our brand to a much larger number of consumers and currently participating in a plant-based meat category. We do so not to dabble but with a firm and serious belief that our technology, our brand and our commitment to human health and the power of plants allows us to successfully deliver unique and compelling value within the certain segments we've identified. In the end, it is our aspiration that though indirect, this expansion will lead more consumers back to Beyond at the center of the plate as they enjoy our brand, clean ingredients and commitment to their health in a less controversial, more convenient products like Beyond Immerse. As such, I close today's comments as I have many others that we remain focused on building tomorrow's global protein company of size and significance.

With that, I'll now turn the call over to Lubi.

Thank you, Ethan, and good afternoon, everyone. I'll begin with a review of our fourth quarter financial results before providing some brief comments on our outlook and additional matters regarding some of our recent disclosures.

Total company net revenues decreased 19.7% to $61.6 million in the fourth quarter of 2025 from $76.7 million in the year ago period. The decrease was primarily driven by a 22.4% decrease in volume of products sold, partially offset by a 3.5% increase in net revenue per pound. Ongoing softness in volume of products sold primarily reflects weak category demand in many of our key geographies and channels and lower sales of chicken and burger products to QSR customers, both in the U.S. and abroad. Net revenue per pound increased primarily as a result of changes in product sales mix, favorable changes in foreign exchange rates and price increases of certain of our products, partially offset by higher trade discounts.

Breaking this down by channel, U.S. retail channel net revenues decreased 6.5% to $31.7 million in the fourth quarter of 2025 compared to $33.9 million in the year ago period. The decrease was primarily volume driven, which again largely reflects weak category demand, while net revenue per pound was flat. Although volume headwinds persist, we are beginning to see some benefit from recently announced distribution gains in the mass channel, which is helping to mitigate the general softness.

In U.S. foodservice, net revenues decreased 23.7% to $8 million in the fourth quarter of 2025 compared to $10.5 million in the year ago period. The decrease was primarily driven by a 25.1% decrease in volumes of products sold, partially offset by a slight year-over-year increase in net revenue per pound. Although category dynamics in the foodservice channel also remain weak, much of the decline in our business was due to the lapping of sales of chicken products to a U.S. QSR customer in the year ago period.

Turning to International. International retail channel net revenues decreased 32.5% to $8.8 million in the fourth quarter of 2025 compared to $13.1 million in the year ago period. The decrease in net revenues was primarily driven by a 33.5% decrease in volume of products sold, partially offset by a 1.5% increase in net revenue per pound. The decrease in volume of products sold was primarily driven by reduced burger sales in the EU and certain retail channels in Canada. Although our Canadian business generally remains healthy, year-over-year comparisons were negatively impacted in part by stocking activity in the year ago period in anticipation of potential tariffs. Finally, in International Foodservice, net revenues decreased 31.8% to $13.1 million in the fourth quarter of 2025 from $19.3 million in the year ago period. The decrease in net revenues was driven by a 34.1% decrease in volume of products sold, partially offset by a 3.4% increase in net revenue per pound. The decrease in volume of products sold was primarily attributable to reduced sales of our chicken and burger products to certain QSR customers. The increase in net revenue per pound primarily reflected favorable changes in foreign currency exchange rates and changes in product sales mix, partially offset by higher trade discounts.

Moving down the P&L. Gross profit in the fourth quarter of 2025 was $1.4 million or gross margin of 2.3% compared to gross profit of $10 million or gross margin of 13.1% in the year ago period. Gross profit and gross margin in the fourth quarter of 2025 included $2.4 million in noncash charges related to SKU rationalization initiatives and $1.5 million in expenses related to the shutdown of our China business. Additionally, gross profit and gross margin in the fourth quarter of 2025 were negatively impacted by increased cost of goods sold per pound, partially offset by increased net revenue per pound.

Reduced production volumes in response to weak demand continue to represent a meaningful headwind in terms of fixed cost absorption even as we have been encouraged by improvements in our variable conversion costs. Overall, by cost bucket, the increase in cost of goods sold per pound primarily reflects higher materials costs and increased inventory provision, partially offset by lower manufacturing expenses, including depreciation and lower logistics costs.

Operating expenses were $134.2 million in the fourth quarter of 2025 compared to $47.8 million in the year ago period with a significant year-over-year increase on a reported basis, reflecting the inclusion of certain large noncash charges. Specifically, and of note, operating expenses in the fourth quarter of 2025 included $48.1 million in noncash charges related to the loss from write-down of assets held for sale, reflecting certain PP&E assets which were no longer deemed core to our strategic objectives going forward, a $38.9 million litigation-related accrual and $13.3 million in incremental share-based compensation expenses related to the convertible debt exchange. Excluding these and other lesser items, the decrease in operating expenses compared to the year ago period was primarily driven by decreased marketing expenses. Below the line, total other income net was $542.6 million in the fourth quarter of 2025 compared to total other expense net of $7 million in the year ago period. The increase was primarily due to a gain on debt restructuring, resulting from our debt exchange and to a lesser extent, a gain from remeasurement of warrant liability, partially offset by a loss from remeasurement of derivative liability and an increase in interest expense.

Net income was $409.9 million in the fourth quarter of 2025 or $0.84 per common share compared to a net loss of $44.9 million in the year ago period or a loss of $0.65 per common share. Adjusted EBITDA was a loss of $69 million in the fourth quarter of 2025 compared to a loss of $26 million in the year ago period, although I would note that adjusted EBITDA in the fourth quarter of 2025 includes the previously mentioned loss from write-down of assets held for sale.

Turning to our balance sheet and cash flow highlights. Our cash and cash equivalents balance, including restricted cash, was $217.5 million as of December 31, 2025, and total outstanding carrying value of debt was $415.7 million, which includes the total undiscounted future cash flows of the new 2030 notes in accordance with TDR accounting guidelines. Net cash used in operating activities was $144.9 million in the year ended December 31, 2025, compared to $98.8 million in the year ago period. Capital expenditures totaled $12.3 million in the year ended December 31, 2025, compared to $11 million in the year ago period. Net cash provided by financing activities was $223.4 million in the year ended December 31, 2025, compared to net cash provided by financing activities of $45.8 million in the prior year. In 2025, net cash provided by financing activities included $100 million in draws from our delayed draw term loan facility, partially offset by related debt issuance costs and aggregate net proceeds of approximately $148.7 million from sales of common stock under our ATM program.

As a reminder of the key highlights -- as a reminder of the key highlights of our Q4 debt exchange, we exchanged over 97% of the $1.15 billion aggregate principal amount of the 2027 convertible notes for approximately $209.7 million in aggregate principal amount of new second lien 2030 convertible notes and approximately 318 million new shares of common stock. This leaves approximately $29.5 million of the 2027 convertible notes outstanding today. In combination with the nearly $150 million in net proceeds we raised from our ATM program in Q4, we believe these actions have meaningfully strengthened our balance sheet and support our continued efforts to execute our business transformation plan.

Let me now touch briefly on our outlook. We continue to experience elevated levels of uncertainty and therefore, low visibility within our core category of plant-based meat. Accordingly, we believe it remains prudent to provide only limited and very near-term guidance until we begin to see more clear signs of stabilization within our operating environment. With that context, we are providing the following revenue guidance for the first quarter of 2026. We expect net revenues to be approximately $57 million to $59 million.

Finally, I'll close by making a few remarks on some of our recent disclosures regarding the company's internal controls over financial reporting. As part of our fourth quarter and full year 2025 financial close procedures and in addition to a previously identified material weakness related to the account for nonroutine and complex transactions, we identified an additional material weakness related to controls associated with the accounting for inventory provision, including amounts recorded for the provision of excess and obsolete inventory. We are clearly disappointed with these findings and are actively working on plans to remediate the identified deficiencies. In part, while assessing the impact of these material weaknesses in our financial statements, we identified certain errors related to our previously issued interim condensed consolidated financial statements for 2025, which we determined were immaterial to those interim financial statements. We intend to correct those prospectively when we file our quarterly reports in 2026, and we have also furnished as corrected amounts for certain key affected financial measures in today's press release. We want to assure all our stakeholders that we are fully committed to our efforts for remediating the identified issues and strengthening our controls as applicable, and we have already taken measures to advance these objectives.

Lastly, as we noted in our earnings release, we are unable to file our annual report on Form 10-K for the fiscal year ended December 31, 2025, within the prescribed deadline as we require additional time to complete our fourth quarter and year-end financial close procedures. We are working diligently to address these matters. However, at this time, we are unable to estimate when the Form 10-K will be filed. As a result, the company will be considered an untimely filing and will no longer be eligible to use Form S-3 registration statements until it regains timely filer status by filing in a timely manner, all reports required to be filed under the Securities Exchange Act of 1934 as amended for a period of 12 calendar months.

And with that, I'll turn the call over to the operator to open it up for your questions. Thank you.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Ben Theurer with Barclays.

A few ones -- so maybe to kick it off a little bit on like the outlook for new products and product lines which you've talked a little bit about the beverage opportunities here. And then obviously, you've talked about a pipeline of potential new products under the new branding umbrella. So I really want to understand, Ethan, from you, is that to be seen as like really pivoting away from kind of like the initial mission of Beyond was to really look to diversify the portfolio. And we would like to understand where you are in terms of researching and developing those products to get a better understanding in terms of the time line when we can expect those products to come to market? That would be my first question.

Thank you, Ben. I appreciate it. So I think, first and foremost, no, it is not in any way abandoning the original mission and focus that we have had. It's simply broadening the aperture of our business and meeting consumer where they are today. And if I could just comment a little bit on why we're making this pivot and then get into kind of the timing and focus of the pivot.

If I thought that Beyond, in our original value proposition, were struggling during a period when the role of science and public discourse and social media, media and government was pronounced and effective when our pricing and economic stability and buying power are all favorable and the American political landscape were characterized by a sense of common ground versus the vision, and Beyond were really suffering, I would be very concerned for our long-term prospects and for the plant-based meat category overall. But none of that is true, right? This is a very difficult period for the world, it's a difficult period for our country, and I think one of the things that is most significant for our business in terms of what's impacting it is this kind of surround sound of pseudoscientific jargon and positioning and promotion that really overwhelms what is decades and decades and decades of science. And I think nothing in our lane is more obvious than -- is more obvious presentation of this troubling trend and the resurgence of red meat. And I've spent over 17 years now seeking and listening to the council some of the very best cardiologists in the country at some of our most prestigious institutions, and I can only look at these current trends with a mixture of sadness for the folks that are going to be impacted by it and increased in patients for those that are seeking to profit from it.

I was very glad to see the American Heart Association today take a stand, I think a major newspaper, I actually got a clipping of it, summarize it as that new nutrition guidance from the American Heart Association advises getting proteins from plants rather than meet, choosing low fat or fat-free dairy and using olive, soybean and canola oil instead of beef tallow and butter. So you have a kind of an independent institution backed by science that is saying the exact opposite of where our culture is going on diet. But the good news is that this is a pendulum, it's going to swing and it's going to swing back, and I'm very comfortable that Beyond will prosper when it does. But I'm not going to wait around for that. And because of the work we've done, particularly over the last 10 years, to really lead the category and developing extremely clean, healthy products, we're really well positioned to look outside the category and take that technology, take that science, take that brand. into segments that are -- and categories that are many, many, many times the size of the plant-based meat category. So you have a great brand. We just for example, again, got the Time Magazine list best brands in the world. You take the science that continues to win awards and accolades for some of the development work we've done around the plant-based protein for the center of the plate and you take a massive trend within the consumer that is around protein and fiber and things like that, you say, okay, where can we apply all this? And the first, we did a lot of work over the last year understanding which adjacent markets we can get into. And the first one that we've identified and been public about and others will follow is the beverage category. And we launched an initial version online earlier and sold out very quickly that initial inventory. And what we're doing is, as we did with Beyond Ground Fava, learning from the consumer what they like and don't like and making adjustments. And that process is going great. And so the product that we're going to be launching soon, I think, is going to be one of the best protein drink markets, protein drinks on the market. It satisfies so many different needs for the consumer, whether it's protein, fiber, antioxidants, electrolytes, does so in a really clean way. And fascinating for me as we get into these other categories and I start looking at some of the key competitors in those categories, the really big ready-to-drink protein companies, they're putting things in their products that we could never put in our products because of the scrutiny we're under, because of our guidelines around clean ingredients. When you're looking at, I think, one of the top ones is sucralose, there's carrageenan, there's [indiscernible] and potassium, another one has artificial flavors and all of the above. Another one has hexametasulfates as well as all of the above, it just goes on and on, things that we put in, they'd be kind of front page news from our friends in the incumbent industry.

So we're going to take that relentless innovation. We're going to take that to clean ingredients. We're going into those categories. And so I think the drink category is the one that's most clearly on the horizon for us, the one that I'm willing to most speak most publicly about. And so I think this summer, you'll see us be pretty active there.

Okay. Got it. And then this is maybe more for Lubi. If we kind of like look at the balance sheet and like in connection with the cash flow statement, clearly, throughout the quarter, you got a little bit of a relief on where we are on the cash balance. But if we kind of look at just the underlying trends within cash from operations, it continues to be somewhat in that range, 40 million, 50 million-ish negative on a quarterly basis shaping out at about 140, 150 for the year. So what are the things that you can kind of like work on, just given where the intent [indiscernible] for 1Q clearly points to not necessarily a top line-driven recovery in 2026. So all that operating leverage continues to be probably a headwind or the lack of operating leverage put it this way. So what are the levers you can pull to kind of like maybe further reduce with any incremental cash burn with durations that you're facing?

I can just give a quick answer and then turn it to Lubi. One, I think you'll see that we're doing some really interesting things with inventory. So that's going to give us some favorability. And then second, I think you just got to back out some of these onetime charges that have been so difficult for us. And once you do that, you see a dramatically slowing use of cash. So you do it this quarter, for example, you are down significantly from where we were a year ago, if you back out those onetime charges or some of the extraordinary stuff related to convertible debt exchange. And I think you'll only see that as we go forward, it will continue to be favorable for us.

Yes, Ben, I appreciate the question. Yes, I would probably echo a lot of what Ethan just mentioned. We have been focused now for a while on our working capital management and in particular ensuring that our stocking levels of inventory are appropriately sized given where the business is. I think the team has done a really good job in managing the inventory down, but I think there's more to come in that regard. The other important thing to -- and again, Ethan mentioned this, is in the last couple of quarters, we have had some fairly large what we would consider sort of nonordinary course business expenses, right, in the fourth quarter? In particular, these were related to the debt exchange. The business -- we continue to execute our transformation plan, all right, for this business. And so from time to time, we will see some of these unusual items, all in sort of service of trying to reposition this business more appropriately towards our goals to profitability. But I would expect that in 2026, some of the larger items, certainly that we saw in recent quarters should not recur. Recall as well that last year in 2025, we unfortunately did have a couple of reductions in force and the associated severance payments that are related with that -- related to that. And then just lastly, I would say that we are focused on trying to expand our gross margin. Ethan, in his prepared remarks, mentioned that we're standing up our sort of first continuous production line or we do end-to-end production, and we're going to be -- that's going to give us an opportunity to internalize additional volume that's previously outsourced and increase our internal asset utilization. So I think all of those measures taken together should help to reduce that rate of cash consumption.

Next question comes from Kaumil Gajrawala with Jefferies.

I guess first question -- congratulations on the financing and all of that. Maybe are there things that you can now do that maybe you're prohibited from doing before as you sort of execute the turnaround? And then also, I guess, in the context of the of the refinancing in the -- as it relates to the filing and some of the financial disclosure issues, does that change anything related to the transactions that you've done? Or is there anything that we just need to be aware of if for some reason the 10-K comes out even later than planned, just things that we should know about that could happen.

Thanks. I'll take the first one and then pass it on to Lubi. I don't think we're going to be making any outsized investments as a result of the cash we brought on. I think we're just continuing to focus on EBITDA positive target and minimize cash use. But there are some things that we now have the ability to do. So if you look at last year, we cut way back, and I think part of the issue with our fourth quarter results on the top line, we didn't market a lot. And we were just in cash conservation mode as we were doing our debt exchange, which was incredibly expensive. And so I pulled back considerably on marketing. So this year, we won't do that, particularly as we as we get into some of these exciting categories where marketing is important.

And then just on like the automation and on continuous lines and things like that, you will see us make CapEx investments that will allow us to drop down more cash out of just general sales and operations. But I do think if you take a step back and look at our P&L for the quarter, as we were talking about on operating expense, there's just a lot of noise in these numbers, and I tried to touch upon that. Like I think if you look at gross margin, for example, we did have lower volumes, which led to some of this lower fixed overhead absorption. But we did have these charges, right? We had some of the SKU rationalization charges. We had expenses related to shutting down our China business. Then we had much higher inventory provisions than normal, things like that, so that's masking these kind of lower conversion costs throughout our plants, lower logistics costs and things of that nature. And so if you take a step back to, okay, the company is converting materials at a lower rate than it has before, right, and then you go to OpEx and you say, okay, strip out all those onetime charges, the company is operating this business at a much lower rate than it was before. And so now it's just incumbent and cash is too, same thing. If you take out all of those onetime charges, cash consumption is lower. And so if you start to put that picture together, you say, what this company really needs to do this fix this top line. And I've tried for years to do that through the existing category. And I think the headwinds are going to be here for a little bit longer. And it's something we got to get outside the category to address, and that's why you see us in some of these adjacencies. So it's difficult for people to see if they just look at the top line numbers, but take a step back, what the missing piece really is becoming now is just getting a top line to be where we need to be, and we're very focused on that.

Yes. And Kaumil, maybe if I would just add a couple of things to that. So as far as what putting the sort of balance sheet restructuring behind us now enables us to do. I think Ethan sort of covered that well and the raising of the additional proceeds from the ATM allow us to, I think, spend a little bit more on the marketing front, which we do think will be important to stabilize the top line and as we start to expand into some of these adjacent categories. But I think the other thing as well is just the focus, right, that we are able to reallocate to the primary business.

As you guys know, I mean, we had been talking about the debt restructuring for quite some time on these earnings calls. And so that did consume quite a bit of the management team's focus. And so it's a relief to put that behind us and really focus now on the very important steps and measures that we need to continue to make to turn the business around.

Your question regarding the disclosures around the material weakness and the impacts that's had on our financial statements. I would say it doesn't necessarily change anything immediately. But obviously, we're very focused on ensuring that we can file our 10-K as quickly as possible, notwithstanding the fact that we were not able to do so within the prescribed time line.

Got it. And then as it relates to the [ Benefit ] product, what does the supply chain look like for something like that? Can you leverage your current PP&E assets to produce it? Do you use third-party co-packers? It sounds like it just sounds different from the core of what you're doing that, yes, it's cool, likely to be promising, but how does that impact the actual practicality of production and such?

Yes. That's a very, very good question. Before I answer, I want to just note one thing on the core business that I moved over to too quickly. If you look at the results on a segment-by-segment basis, in U.S. retail, we were down 6.5%. And to me, that's actually encouraging. Because if you look at the overall numbers, they were down more than that, right? But if you start to see stabilization in the U.S. retail in our core business, which I think we're going to see, though I can't say exactly when, then everything we're doing on these adjacencies is kind of additive, right, if you can turn around that retail position in terms of the retail number. And so I was very encouraged by that, and it has to do with some of the new distribution we've been able to obtain in some of the larger mass stores. So as we layer in things like drinks, I think getting the reconnected to the U.S. retail consumer seems like it's within reach.

On the supply chain side, I guess, the first thing I would say is that despite our past, we actually have a lot of beverage expertise. We have some of the -- I think, some of the best minds and beverage on our Board with Seth and Justice and Jim and Boston Beer, Kathy and Coke, so it's not like we're coming into this without a lot of experience. It's just something we haven't done before as the company. And so the supply chain is actually pretty similar from an ingredient perspective. We're dealing with protein. We're dealing with fiber. We're dealing with flavor, things like that. So that is not a stretch for us at all.

And the production, if you think about turning plants into needs for the center of the plate and you think about blending together protein and fibers and flavor in a drink, the latter is much easier. And so this is not something that we're worried about from a logistics perspective. Co-packing is readily available throughout the United States. It has much less arduous terms from a scale-up perspective. Often, we have to go teach the co-packer how to make our products. That's obviously not the case here. And I think what you're really going to see is our ability to understand all the characteristics of plant materials, the proteins, the fiber and how to optimize their taste for the consumer is going to shine in these drinks, and that's what I'm excited about.

The next question comes from John Baumgartner with Mizuho.

Maybe first off, Ethan, just to build on that last line of thinking. Just sticking with the expectations for the beverage expansion and the adjacencies more broadly. Can you walk us through how you plan to scale it, how you'll manage distribution, the specific channels that you'll enter? How you will allocate budget to enter these categories? Just how do think about milestones you ramp up and the impact on cash burn?

Sure. So we're taking a pretty careful approach. So you'll see the same pattern that we've just done with drinks now initially launching D2C getting feedback from the consumer making adjustments. And then you'll see us go into a particular regional distribution, likely emphasis on natural and then into mass. And so we'll take a step by step. That as we see success or failure, we'll adjust how much we're spending. But so far, and this is very early days, the indications we're getting from the drink are very positive.

In terms of distributor interest and things like that, all of it is speculative at the moment. So I don't want to promise anything. But I think what you'll see is a kind of measured approach from us, and we'll spend a certain amount, make sure that we're still on track, then it's an additional amount. But one of the neat things is that we're not necessarily creating entirely new brands, right? Like so the drink is called Beyond Immerse, but we're relying on the fact that Beyond is a very well-known brand. So we don't have to kind of reinvent the wheel. And we have a strong consumer base that's particularly interested in what we're doing. And so that gives us an advantage relative to someone who's just starting out, right? We're able to sell additional product to a consumer that's already buying Beyond. I don't know, Lubi, if you have any comments.

No. I think you covered it well, Ethan. What I would say is to your question around potential impact on cash burn, I think one of the things that's attractive about the beverage category -- can be attractive about the beverage category, particularly at scale, is the margin profile, right? So obviously, as we are in relatively limited distribution and producing at much smaller quantities, the economics won't look quite as favorable as if we are successful and begin to scale up. But certainly the margin profile for that category of products would be attractive. And so with the supply chain that we have in place and these co-packer agreements, et cetera, we actually think that the impact on the total cash use will not be overly burdensome.

Okay. And then I'm curious about your vision for the Beyond Meat portfolio going forward as you work through this SKU rationalization. I guess where have you chosen to retrench in terms of product or new products? And what have you identified as the foundation for the core going forward? Is it steak? Is it burgers? How should we think about that?

Yes. So as I mentioned in my comments, we have 20-plus products that are clean label project certified. And I really focus on those. And the Beyond portfolio, for example, and because just in my own taste and my own health. And areas where maybe there's less differentiation than I'd like to see. You can make sure what that might be, some of the breaded items, things like that, less interested in that, more interested in where we can deliver really unique value to the consumer. And so Beyond Steak Fillet is a good example. That's 20 grams of protein. It's 1 gram of saturated fat from avocado oil. It's got mycelium, which is a terrific ingredient; it's got fava beans, et cetera. So focusing on things that really help tell the story around Beyond and tell the clean ingredient and healthy narrative are the ones that we're focusing on going forward.

The next question comes from Peter Saleh with BTIG.

Great. Maybe Ethan, I guess the first question I had was on the beverage lineup. You mentioned initially getting some feedback and then making adjustments. So maybe can you talk a little bit about the initial -- what feedback you may have gotten and any adjustments you've made? And then if you could just help us out here, what is the target customer here for this beverage lineup. And then I have a follow-up as well.

Sure. So I think one of the things we're learning about beverages is unlike where we have a really clear North Star, what does this taste like a beef burger or not, the reason there are so many definitions in markets that people have different tastes, right? And so what we're trying to do is find that sweet spot where we can appeal to a broad group of consumers, taste profiles. And so I think what we found is the 10-gram we put out kind of home run. The 20-gram, a lot of people are going to love it or didn't like it much. And enough people, thankfully, love it, that we're able to keep going. But that was more polarizing than the 10 gram. And so what we've done is tap back some of the intensity of the flavors in the 20-gram and some of the sweetness in the 20 gram. And the product that they've developed, and we're probably on our sixth or seventh iteration since we launched, is just phenomenal. Again, I put -- I stand behind us. I think it's going to be one of the best protein drinks on the market, to the holistic picture, the protein content, the fiber, antioxidants, the electrolytes, the environmental footprint, the ease of consumption. I'm probably drinking too many a day, and I've watched people in our office, in my home. It is all of a product. And so I'm looking forward to it. But that was the type of feedback we reacted to it. And there's nothing wrong with that, right? Like even with the Beyond Ground Fava, which we just got an award that's under [indiscernible] right now for the innovation there, was that 4 ingredient, 27 grams protein product, we just like to iterate with our consumers. Like it's a new model, I think, in food that we're very, very fast in what we do and letting them weigh in and tell us what they like and don't like.

Great. And then just, Lubi, on the gross margin for 2026, is there anything you can provide or share with us at this point? And should it mirror '25, should be much better, lower? Anything on the cadence, that would be helpful.

Yes, Peter, unfortunately, like we're not providing guidance for gross margin for the year. And I think just to provide a little bit of context around that is one of the reasons why we continue to provide only near year-end guidance on revenue is the fact that our category right remains -- our core category, plant-based meat remains sort of very volatile and volumes remain soft. And obviously, with that being, obviously, at this stage, the vast majority of our business, right? The impact that softer volumes has on margins can be pretty significant, right? And so I mentioned in my prepared remarks that we -- that the lower fixed cost absorption continues to be a headwind on margin. And so I think it's just extremely difficult for us to sort of forecast gross margin to any degree of certainty when there's so much variability on the top line. So we -- obviously, we have initiatives in place that are aimed at expanding margins, right, including like the continuous line that I mentioned. But ultimately, we need to see some stabilization on the top line in order for us to have sort of greater confidence in terms of where margins will shake out.

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

Thanks, everyone, for the questions. Appreciate all the interest, and got to go look back over the last year, I do want to complement the team this transaction that Lubi and his group executed was just enormous undertaking. And so there's a lot of work that went into that. And I think he's particularly pleased to have that behind him. But as we look forward, we're excited to see what's going to happen as we pivot our brand into some areas that are maybe not as challenged in our core category. We're going to be talking with you guys pretty soon, and I think we'll have more information then as to how things are going. Thanks very much.

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

Thank you, everyone, and welcome to the Beyond Meat, Inc. 2025 Third Quarter Conference Call. [Operator Instructions]. Please note this call is being recorded, [Operator Instructions]. It is now my pleasure to turn today's conference over to Paul Sheppard, Vice President of FP&A and Investor Relations.

Thank you. Hello, everyone, and thank you for your participation in today's call. Joining me are Ethan Brown, Founder, President and Chief Executive Officer; and Lubi Kutua, Chief Financial Officer and Treasurer.

By now, everyone should have access to our third quarter 2025 earnings press release filed yesterday after market close. 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 yesterday's press release, our quarterly report on Form 10-Q for the quarter ended September 27, 2025, to be filed with the SEC and our annual report on Form 10-K for the fiscal year ended December 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 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. 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 yesterday'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. First and foremost, I would like to recognize all veterans on this important day of observance, including those veterans we are fortunate enough to have on our team at Beyond. You exemplify the values of putting others in country first. And we are deeply appreciative of your service, sacrifice, encourage. We are indebted to each of you, and that is top of mind today. I will now turn to the business and cover 3 main subject areas. First, I will seek to put our recent balance sheet activities in the appropriate context.

Second, I will briefly review the performance headlines from our third quarter of 2025, results that point to a business that remains in turnaround mode.

Third, I will outline the key operational and top line initiatives we are taking in pursuit of this turnaround and return to growth. Though a protracted process, our recently announced transaction with our bondholders was sweeping in its scope and together with the nearly $150 million in cash we raised through the completion of our existing ATM program represents a fundamental reset of our balance sheet.

Specifically, we reduced debt levels by approximately $900 million, nearly 75% of our total leverage and put in place a path to potentially convert another $209 million for a total reduction of over 90% and in total outstanding debt for consideration of any PIK interest. Further, the transaction not only significantly reduced leverage levels but extended the maturity of most of our overall debt profile.

We view this as an important resetting of our balance sheet and one that supports in many ways, a reset of our business as we target sustainable operations and renewed growth. Clearly, we were disappointed by this quarter's results, which I will now summarize before outlining with as much specificity as this forum permits our path forward.

Net revenue of $70.2 million came in within our guided range, but nevertheless, represents a 13% (sic) [13.3%] decline year-over-year as we faced ongoing category challenges. This quarterly net revenue declined coupled with a less favorable product mix and higher trade promotion spending versus the prior year put pressure on gross margin even as conversion costs fell on a year-over-year basis.

Lower volumes also reduced fixed cost absorption, and we continue to experience a transitory accounting drag in the form of $1.7 million in noncash charges related to the suspension of our China operational activities.

Accordingly, gross margin landed at 10.3% in the third quarter, down from 17.7% in the year ago period. Operating expenses, excluding a large noncash impairment charge relating to certain long-lived assets improved on both a year-over-year and sequential basis. I should note that operating expense in the third quarter included substantial nonroutine expenses, a future that makes our cost cutting appear more incremental than our underlying progress would suggest.

Highly conscious of the opportunity or substantial delevering and increased liquidity provides, we are intensely focused on the 5 following steps towards sustainable operations and return to growth.

One, we continue to address misinformation surrounding our plant-based needs. As many of you are aware, as industrial livestock and pharmaceutical interest rally around scare tactics and misinformation to confuse consumers, we are driving the health profile of our products to greater heights so as to reduce the disingenuous to be absurd.

The results of our multiyear efforts is a growing range of products, such as the Beyond Pork platform and Beyond Steak that deliver on taste with ingredient and nutritional profiles and have earned various accreditations and recognitions in the clean label project, American Diabetes Association and American Heart Association and enthusiastic support from an impressive assembly of leading medical nutrition experts.

More of this journey is shared in our short approximately 9-minute documentary on YouTube planting change and this defining commitment is made clear in product advertising that highlights impressive ratios of protein to saturated fat, cholesterol and calories together with great taste and clean, simple, limited ingredients.

It is also made clear in our innovation road map, where new products are designed to reinforce this message. Consider, for example, are Beyond chicken pieces, which although still gaining national retail distribution, has achieved considerable taste and nutrition accolades while delivering 21 grams of protein per serving with 0 cholesterol and less than 1 gram of saturated fat from heart healthy avocado oil, all in just 150 calories.

And we've recently opened Beyond Test Kitchen, where consumers get the early opportunity to buy our latest innovation before hits supermarket shelves. The first two innovations on this direct-to-consumer platform purposely exemplify our commitment delivering taste and strong macro nutrient ratios with clean, simple and limited ingredients.

One is Beyond Steak Filet, which provides 28 grams of protein with 0 cholesterol, and only 1 gram of saturated fat from heart-healthy avocado oil, all with only 230 calories per serving. The other is the Beyond Ground platform. Simply put, Beyond Ground is a center-of-the-plate protein that confidently stands on its own. It's not trying to mimic any species of animal, say a cow, chicken or pig and is consistent with our increasing emphasis on using Beyond versus Beyond Meat as our primary brand identifier.

It is made with only 4 ingredients: water, fava bean protein, potato protein and psyllium husk, and each serving delivers an impressive 27 grams of protein and 4 grams of fiber, all in just 140 calories with no cholesterol, 0 saturated fat and no edit oils. The original design is a blind cannabis to be seasoned as a consumer would like. And to our delight, we are watching early adopters to develop a host of recipes around it. For those who prefer a seasoned variety, -- we're also selling a Tuscan Tomato, a Korean barbecue and Chipotle Pineapple version. Two, we are building back distribution in U.S. retail and U.S. foodservice.

In U.S. retail, we are successfully rebuilding distribution and seeking to consolidate our brand where possible into brand blocks. As you will recall, over the last 18 to 24 months, we've seen a substantial migration of our products from the refrigerated meat aisle to the frozen meat aisle and frozen meat alternative aisle.

Though we believe that ultimately plant and animal protein should be offered to consumers in equally prominent locations in the supermarket and ideally in the same section to facilitate convenience and choice, the unplanned and at times chaotic transition replete with long periods without product availability at all, followed by consumers' lack of awareness regarding new placement has been damaging to our business.

Accordingly, we are now encouraging the consolidation of our brand, where possible, within brand blocks in the frozen section of supermarkets to reduce what can seem like a game of Hide-and-Go-Seek for the consumer. As we rebuild our presence in U.S. retail, we are prioritizing consolidated offerings at high-impact chains to drive results. For example, in October, we announced plans with Walmart to increase availability of select products at over 2,000 stores nationwide, including our new Beyond Burger 6-Pack, which is designed to offer consumers value during a sustained period of economic stress.

In U.S. Foodservice, we are adjusting our go-to-market strategy to capture a higher percentage of operators whose consumer base assigns value to our award-winning non-GMO, plant-based meats made from simple and clean ingredients. Though we expect a renewal of interest in plant-based meats in the broader restaurant segment in the United States, particularly as the price of animal protein continues to rise and we start to achieve the necessary scale to consistently underprice it.

For the time being, we see room for growth within institutions, restaurant chains and other establishments that are more directly and explicitly focused on health and clean ingredients. Accordingly, we are increasing our investments against these specific targets. Three, through our transformation office and program, we are implementing further actions to reduce and reset our operating expenses.

We continue to seek to more fundamentally and more quickly reset our operating base. And as you recall, we have enlisted the restructuring support of AlixPartners, including our appointment of John Boken, as Chief Transformation Officer to accelerate the work of our transformation office. We are deep into this process and are committed to positioning the business for a more fundamental resizing of operating expense.

Further, this underlying series of actions relating to our base operating expense is joined, by what we believe will be a reduction in certain non-routine and non-recurring spend that burden our operating expense in 2025. Four, through our transformation office and program, we are taking additional action to expand margin in the currently constrained demand environment.

We have and will continue to take steps to exit certain unprofitable product lines while we configure and others are making targeted investments in our facilities, including a continuous production line for certain popular but currently lower margin products and are doing extensive RFP work to drive competition and lower pricing within our supply chain. As with operating expense, we expect this underlying margin progress to be accompanied by the retirement of certain drags previously mentioned, such as the charge for China-related depreciation and remain committed to the goal of laddering margins back to 30% plus.

Five, we are considering certain strategic initiatives that, if successful, could help accelerate our return to growth. The path articulated above addresses the core challenges our business faces. The need to counter misinformation and change product narrative around our products.

Reestablished distribution and improve product availability in the U.S. retail and foodservice markets and drive significant operating expense reduction and margin expansion through our transformation office and program. These, along with other similar efforts are designed to support the achievement of EBITDA positive operations as soon as possible. Even in an environment where demand remains subdued for the near term. We do, however, see the potential for growth outside of these actions, when we take a more comprehensive view of the Beyond brand technology across our U.S. and European markets, and we will be exploring this in quarters to come. It would be too early to provide further information today for a host of reasons. And as such, I'll leave the subject now for future updates.

In closing, as those of you who have followed us closely know well, over the last decade or so, we've lived at the forefront of the rise and precipitous destabilization of a nascent industry with a deeply disruptive potential. All too typical of the heavy turbulence experienced by a company so closely wedded to emerging innovation, we've, as they say, been through it. Along this journey, I have sought to characterize our response as harnessing adversity to grow stronger, better and more capable of achieving our long-term vision.

More than any time over the last 6-plus years of being a public company, we have the opportunity today to reset our business and service to sustainable growth on behalf of all shareholders and on behalf of our mission. We are [buoyed by] and I am personally moved by the tremendous support we have seen from retail investors from throughout the United States, all the way to Korea and have great enthusiasm for winning on their behalf.

We are acutely aware of having more challenges to overcome, more misinformation to counter, more cost to cut and more margin to expand. We've been in our turnaround phase for too long. And moving forward, you will not simply see more of the same from us. There is plenty of fight left and beyond an enormous enthusiasm to use this reset to hasten our future as a global protein company of tomorrow. With that, I will now turn the call over to Lubi.

Thank you, Ethan, and good afternoon, everyone. I'll begin by reviewing our financial results for the quarter before providing some brief remarks on our outlook for the fourth quarter. And finally, commenting on the significant balance sheet initiatives we completed subsequent to the end of our third quarter. Total net revenues decreased 13.3% to $70.2 million in the third quarter of 2025 and compared to $81 million in the year ago period. The decrease in net revenues was primarily driven by a 10.3% decrease in the volume of products sold and a 3.3% decrease in net revenue per pound. The year-over-year weakness in volume of products sold continues to reflect general softness in the plant-based meat category as well as select distribution losses and to a lesser extent, impacts from competitive activity.

While category dynamics in our key international markets remain more favorable than the U.S., two of our top 3 markets in the EU have also been experiencing year-over-year declines according to consumer takeaway data. This underscores the current reach of the soft macroeconomic environment in plant-based meat that we continue to navigate. With respect to pricing, the year-over-year decrease in net revenue per pound was primarily driven by higher trade discounts, reflecting in part reduced promotional efficiency as well as changes in product sales mix, partially offset by favorable changes in foreign currency exchange rates.

Taking a closer look by channel, U.S. retail net revenues decreased 18.4% to $28.5 million in the third quarter of 2025 compared to $35 million in the year ago period.

The decrease in net revenues was primarily driven by a 12.6% decrease in volume of products sold, mainly reflecting weak category demand and reduced points of distribution and a 6.6% decrease in net revenue per pound. Net revenue per pound was negatively impacted by higher trade discounts and price decreases of certain of our products, partially offset by favorable changes in product sales mix.

In our U.S. foodservice channel, net revenues decreased 27.3% to $10.5 million in the third quarter of 2025 compared to $14.5 million in the year ago period. The decrease in net revenues was primarily driven by a 27.1% decrease in volume of products sold. This decrease in volume was primarily driven by weak category demand and the lapping of a limited time offering of our chicken products at a QSR customer in the year ago period.

Turning to international. In international retail, net revenues decreased 4.6% to $15.8 million in the third quarter of 2025 compared to $16.6 million in the year ago period. The decrease in net revenues was primarily driven by a 12.5% decrease in volume of products sold, partially offset by a 9.1% increase in net revenue per pound.

The decrease in volume was primarily driven by reduced sales of our burger, dinner sausage and chicken products, mainly in Europe, where, as I mentioned earlier, two of our top 3 markets are also experiencing softer [Technical Difficulty]. The year-over-year increase in net revenue per pound in international retail was primarily driven by favorable changes in foreign currency exchange rates, price increases of certain of our products and changes in product sales mix partially offset by higher trade discounts.

Finally, International Foodservice net revenues increased 2.4% (sic) [2.3%] to $15.3 million in the third quarter of 2025 and compared to $15 million in the year ago period. The increase in net revenues was primarily driven by a 4.4% increase in volume of products sold, reflecting higher sales of chicken products to a QSR customer partially offset by reduced burger sales to certain QSR customers.

Net revenue per pound decreased 2% compared to the year ago period, primarily driven by changes in product sales mix, partially offset by favorable changes in foreign currency exchange rates and reduced trade discounts. Moving down the P&L. Gross profit in the third quarter was $7.2 million or gross margin of 10.3% compared to gross profit of $14.3 million. or gross margin of 17.7% in the year-ago period. Gross profit and gross margin in the third quarter of 2025 included $1.7 million in expenses related to the suspension and substantial cessation of our operational activities in China.

More generally, our gross margin also continues to be weighed down by lower volume. Which is negatively impacting fixed cost absorption within our manufacturing facilities and more recently by higher trade discounts as a percentage of gross revenues. While our total cost of goods sold per pound increased on a year-over-year basis, primarily reflecting higher materials costs and inventory provision, we made positive progress on reducing our conversion and logistics costs.

In this regard and through various initiatives under our transformation office, we are pursuing additional investments, which we expect to further benefit our conversion costs beginning in the early part of next year, and we are optimizing our supply chain to bring additional savings out of our logistics costs in the U.S. Lastly, as Ethan mentioned, we have also begun extensive RFP work to pursue potential savings on our materials costs.

Now turning to operating expenses. OpEx for the third quarter of 2025 was $119.6 million, which included $77.4 million in non-cash impairment charges related to certain of our long-lived assets. With regard to the impairment in accordance with accounting guidance under ASC 360, when certain triggering events or combination of events have occurred we are required to review our long-lived assets for potential impairment.

Given our lower-than-expected performance through the first 3 quarters of 2025, a our view that the ongoing softness in the plant-based meat category is likely to persist longer than previously anticipated and the decrease in our stock price during the quarter we determined that triggering events had occurred and performed a quantitative assessment that concluded that an impairment existed as of September 27, 2025.

The total impairment amount of $77.4 million was recorded as a loss on our income statement and allocated to PP&E, operating lease ROU assets and prepaid lease costs on our balance sheet. In addition to the impairment charge, operating expenses in the third quarter of 2025 also included certain nonroutine items as summarized in our earnings press release, totaling approximately $2.1 million. Excluding these items and the impairment charge, operating expenses in the third quarter of 2025 decreased as compared to the year ago period primarily driven by reduced marketing expenses and reduced salaries and related expenses for non-production staff.

Below the line, total other income net was $1.6 million in the third quarter of 2025 compared to total other income net of $4.4 million in the year-ago period. Primarily due to a reduction in net realized and unrealized foreign currency transaction gains, and an increase in interest expense related to finance leases and our delayed draw term loan facility, partially offset by a benefit from the remeasurement of warrant liability as well as interest income.

Overall, net loss inclusive of the aforementioned impairment charge was $110.7 million in the third quarter of 2025 compared to $26.6 million in the year-ago period. Net loss per common share was $1.44 in the third quarter of 2025 compared to net loss per common share of $0.41 in the year ago period. Adjusted EBITDA was a loss of $21.6 million or -30.8% of net revenues in the third quarter of 2025 compared to an adjusted EBITDA loss of $19.8 million or -24.4% of net revenues in the year ago period. Turning to our balance sheet and cash flow highlights. Our cash and cash equivalents balance, including restricted cash, was $131.1 million, and total outstanding debt was approximately $1.2 billion as of September 27, 2025.

Net cash used in operating activities was $98.1 million in the 9 months ended September 27, 2025 compared to $69.9 million in the year ago period. While this increased rate of cash used from operating activities partly reflects the negative impact of reduced sales and gross profit, among other things, it is also worth noting that several nonroutine factors, including those related to our balance sheet initiatives and certain nonroutine legal expenses have also meaningfully added to cash use this year.

Capital expenditures totaled $9.3 million in the 9 months ended September 27, 2025 compared to $4.5 million in the year-ago period. Largely reflecting increased investments in manufacturing capabilities intended to improve our production efficiency and expand our gross margin.

Net cash provided by financing activities was $87.8 million in the 9 months ended September 27, 2025, compared to net cash used in financing activities of $1.3 million in the year-ago period. The year-over-year increase in net cash provided by financing activities primarily reflects draws in the aggregate amount of $100 million from our Delayed Draw Term Loan Facility, partially offset by related debt issuance costs.

I'll now touch briefly on our outlook for the balance of the year. As I indicated earlier in my remarks, we continue to navigate a soft and uncertain macroeconomic environment across several of our key geographies. Under these circumstances, it is difficult to forecast our operating results beyond the limited horizon, and we are, therefore, continuing to provide only limited guidance around our near-term revenue expectations.

Specifically, in the fourth quarter of 2025, we expect net revenues to be in the range of $60 million to $65 million reflecting, among other things, ongoing demand weakness in the plant-based meat category and the anticipated impact from distribution losses at certain QSR customers. Before closing, I'll take a moment to discuss some key events with respect to our balance sheet that occurred subsequent to the end of our third quarter. On October 29, we announced the final tender results of our previously communicated debt exchange offer. Successfully tendered notes in connection with the exchange offer represented just over 97% (sic) [97.44%] of the aggregate outstanding principal amount of our 2027 convertible notes.

Said differently, all but $29.5 million (sic) [$29.459 million] of the original $1.15 billion aggregate principal amount of the 2027 convertible notes were successfully tendered in the exchange offer. We believe this is a significant outcome that goes a long way in strengthening our company's balance sheet for the long term by substantially reducing our total debt outstanding and simultaneously extending the maturity of the vast majority of our remaining debt obligations.

Following the final settlement date on October 30 as part of the exchange offer, a total of approximately $209.7 (sic) [$209.721] million in aggregate principal amount of new second lien convertible notes and approximately 318 million new shares of common stock have been issued to previous holders of the 2027 convertible notes who participated in the exchange offer.

In addition, and separate from the exchange offer, subsequent to the end of the third quarter, we sold approximately [Technical Difficulty] of common stock under our ATM program, generating approximately $148.7 million in proceeds net of selling commissions. As with the exchange offer, we believe this incremental capital infusion goes a long way in strengthening our balance sheet for the coming quarters and further supports our efforts to execute our turnaround plan. Notwithstanding these developments, we intend to continue to pursue our near-term objectives with urgency and discipline as we target the achievement of sustainable operations as quickly as possible.

And with that, I'll turn the call over to the operator to open it up for your questions. Thank you.

[Operator Instructions]. Our first question comes from Ben Theurer with Barclays.

Thanks for the detailed prepared remarks and congrats on some of the refinancing stuff. Two quick ones I had for you. So number one, Ethan, you talked about your path to get back to a gross profit margin of 30% plus, which is clearly something you used to have in the past and many years ago, even with the sales level that's comparable to what we have right now, you were able to achieve that.

So just to help us maybe understand what's currently holding you back of being as profitable as you may have been back in 2019 when sales was just around that high $200 million, close to $300 million mark, but gross margin was actually in the low 30s. So that would be my first question, and then I have a quick one for Lubi on the financing piece.

Great. And good to hear from you, and thanks very much for the question. So I think if you look at our history on margin, first of all, I appreciate you recognizing that this is not something that is just only future oriented. We've had healthy margins in the past. And I think the main drag that you see throughout the P&L is the lower top line. We built a system that was for much higher revenue than we're currently facing. And so we've been going through the process of trying to scale that back and deal with things like lower overhead absorption and things of that nature.

But I think it's really almost a tale of two different trends. One is we have this lower top line, which is reverting throughout the P&L and there's some pressure on margin, as a result of mix.

Some of our more popular products recently have been lower-margin items. We have a little bit of higher material costs, and we had to kind of [knick-knacks], like the China depreciation charge I referenced among others. So those things are weighing down overall margin, and it's just a question of calibrating the production capacity to the current level of demand. And I think the biggest issue we have.

And then second, there's a lot of underlying progress that's going on around our operations. And you can see that now this quarter, for example, in conversion costs, they're lower on a year-over-year basis. But a lot of the progress is on a slightly longer time frame, and I expect it to start showing up in '26. And so I'm actually pretty confident that we can make a substantial step change in our margin over the next several quarters.

And so if you look at -- if you look at the implementation of the continuous production lines that we're putting in for some of those lower-margin products that are inhibiting the -- that are leading to some of the mix challenges we're having. Those should be going in shortly. So we expect to see improvements from there. We're looking at the RFP work that's going on now to pay dividends in '26.

And some of that's actually underway now. We've seen some good savings with some key ingredients. And of course, we'll continue to optimize our portfolio. So I think the conservative outcome of all of this is a healthy margin at much lower volume. But the optimistic outcome of all of this really is it growth resumes, and we put forward some really nice margins, right? And so if we can continue to drive this work, we'll at least get to healthy margins with a lower top line. But if we can get back to growth, all of this pays dividends that are, of course, much larger.

So I hope that was instructive.

Okay. And then Lubi one for you. Can you help us maybe reconcile at the end of October or whatever a few days ago, what your cash balance looks like? Because obviously, at the end of September, it was about call it, $120 million, excluding the restricted piece of it. So just to understand some of the ATM transactions plus some of that convert, has there been anything that's helped to get the cash balance up a little bit higher, just in light of the quarterly cash burn still somewhat relevant. So to understand a little bit like what's the level of cash right now?

Yes. So the only thing we can really comment on that happened subsequent to the end of the quarter is what I discussed in my prepared remarks related to the ATM. There were -- obviously, we've detailed in some of our other disclosures around the exchange offer that there is a certain amount of transaction fees that are associated with that. But we're not prepared at this point to quantify exactly how much that was. But I think if you look at the cash balance, where we ended the quarter, the third quarter and then you add in the incremental proceeds from the from the ATM, you would obviously have to make some assumptions about some transaction fees paid as well as just kind of the ongoing rate of cash consumption of the business to get to the number that you're looking for.

But we can't, at this point, provide that specific information.

Just on the quarterly cash consumption, it's obvious something we're very, very focused on. We brought it down to much lower levels in the past. And I think you'll -- you should expect us to return to that. I mean we're obviously extremely focused on this EBITDA positive goal. And a lot of the transformation work that's going on is designed to really minimize cash use and ultimately turn it into cash generation. But I think that this year has been characterized by a lot of non-recurring and non-routine expense. I mean we've had the transaction going on, we've had this arbitration, which we were successful and we won that, which was a nice outcome given that the facts there.

So a lot of that hopefully will be burning off and we can get to...

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

Thank you, and thanks, folks, for joining. I think given that we didn't have much Q&A, I might just spend a minute reinforcing some of the comments that I made during the prepared remarks. One of the main things that we need to keep doing to return to growth is to change the narrative around our products and around the brand in general. And you've heard me talk about this many times, there is a very significant set of misinformation out there that slowly, I think we are making progress toward and helping to erode.

But this is the key factor. We have spent so much time working on the health benefits of our products and the Beyond Pork platform and subsequent products that are just getting cleaner and cleaner and healthier and healthier.

And I think that's starting to pay some dividends with a certain set of consumers who are able to look through a lot of misinformation that's going on and make decisions for themselves. And so we're continuing to encourage folks to do that. The most recent products that we've launched around Beyond Ground and around Beyond Steak really speak to that with the Beyond Ground product being only for ingredients and to be on Steak, having a really terrific macronutrient profile 28 protein, less than 1 gram of saturated fat.

That's saturated fat coming from avocado oil. But the main point is that the more we can get consumers to see the very strong health benefits of our products, the more we can get back into growth mode.

I think price is extremely important, and you see us focused on that. In fact, in Europe, we are providing at the same price to its animal protein equivalent to a very large customer, one of our products. We are working very much on driving the price toward parity with animal protein, but here in the U.S., it's really around countering this misinformation campaign. That's why I continue to come back to the work we're doing with Stanford, I continue to point out the support of the American Heart Association, American Diabetes Associations and so on and so forth. So that's the work that we're doing on fixed narrative. You'll see us continue to reinforce that with marketing.

You'll see us continue to reinforce that with the new products that we put on the market. And you'll continue to see us put out information like planting change and other pieces that help the consumers see through some of the misinformation.

In terms of innovation, I mentioned towards the end of my prepared remarks that we're doing two things, I think, that should be of interest and hopefully point people in the direction that we're headed. One is the increasing emphasis on the word Beyond versus Beyond Meat as we go forward. And that's really around broadening the aperture of our business. We have tremendous innovation capabilities, and I want to make sure that those are being put to the best use for the consumer. And so that's the first.

And the second is the Beyond Test Kitchen. This allows us to really open the gates on innovation in an inexpensive way and get the products to the consumer as we broaden this aperture. And so any category that we go into, you should expect us to raise the bar in terms of health and nutrition, obviously, taste and things of that nature.

And I think we're capable of doing that because of the tremendous R&D capacity we built up over the last nearly 17 years. We understand plant protein and plant ingredients in a way that many, many other companies don't. And so as we look at other areas to tilt our arsenal of technology and R&D toward, I hope I'm not drinking the cool aid on this, but I think that our ability to go in there and do things that are disruptive is exciting.

And lastly, over many years, we've built up a lot of innovation. So we have quite a bit of dry powder in terms of what we can go ahead and get into the market. And so this is where my comments came from that don't expect more of the same from us.

We are looking to transform not only the operational base, the margin of our company but also the top line growth, and we're thinking about that creatively and aggressively. I've really enjoyed the support of the retail investors recently, been paying attention to their comments. We feel very much indebted to them for their support and for their continued commitment to Beyond, and we're looking forward to growing together with them in years to come. So with that, I'll wrap it up and talk to you guys next time. Thanks.

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

Thank you, everyone, and welcome to the Beyond Meat, Inc., 2025 Second Quarter Conference Call.

[Operator Instructions]

Please note today's call will be recorded. It is now my pleasure to turn today's conference over to Paul Sheppard, Vice President of FP&A and Investor Relations.

Thank you. Hello, everyone, and thank you for your participation in today's call. Joining me are Ethan Brown, Founder, President and Chief Executive Officer; and Lubi Kutua, Chief Financial Officer and Treasurer.

By now, everyone should have access to our second quarter 2025 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.

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 June 28, 2025, to be filed with the SEC and our annual report on Form 10-K for the fiscal year ended December 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 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. 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. We are disappointed with our second quarter results, which reflect ongoing softness in the plant-based meat category, particularly in the U.S. retail channel and certain international foodservice segments.

Before diving into details on the quarter, this level of disruption to a recovery requires broader commentary. Though we saw a return to top line growth in the back half of 2024, the first 2 quarters of this year indicate the need for a fundamental reset for our brand and category.

To stabilize our business and with a goal to achieve EBITDA positive operations within the second half of 2026 and to realize our much longer-term objective of reshaping global protein markets in support of a healthier and more sustainable future, we are taking significant and immediate actions.

Many of these, which I enumerate below, you will recognize as an acceleration of existing priorities.

One, we are welcoming John Boken of AlixPartners as interim Chief Transformation Officer to lead and support our enterprise-wide transformation activities with a focus on operating expense reduction, gross margin expansion and broader operational efficiency.

Two, we are intensifying expense reduction globally to fit our operating base into the existing near-term opportunity. These measures include a reduction in force that we performed today.

Before proceeding, I want to thank each of the impacted teammates and acknowledge their tremendous contributions to our company, mission and consumers.

It is truly with heavy heart that we made these reductions and my deep appreciation and respect for these teammates and friends extends far beyond any comments I can make today.

Three, we are deepening each of our gross margin expansion activities, including continuing to optimize our portfolio by exiting certain product lines and reconfiguring others, making additional investments in our facilities around core production lines and select others where we see opportunities to significantly reduce costs, working within our supply chain to reduce raw ingredient prices and logistics costs and further fitting our production operations to current demand levels so as to realize gross margin recovery even under lower volumes.

Four, we are actively pursuing expanded distribution of our core products and expect to bring on new U.S. retail distribution, including in the balance of this year.

Five, going forward, we intend to increasingly use Beyond as the primary brand and an empire. We have been formerly using a shortened market in certain instances for some time now and believe it provides for reduced emphasis on facsimile, a now complicated frame that overshadows the real high-quality protein offerings we provide to consumers and a widening of our aperture beyond animal protein replicates, so that we have the freedom to as and when appropriate to do so, meet broader consumer protein needs.

Our limited test offering of Beyond Ground on our social channels last week represents an early foray beyond beef, pork and poultry replication and has been met with considerable enthusiasm, albeit with a very narrow consumer set.

In the coming months, we will provide additional details on our increased use of the brand mark Beyond, which we implemented on a rolling basis.

Sixth, we are continuing to intently focus on strengthening our balance sheet to address our 2027 convertible note maturity.

With this high-level context and a clear and comprehensive action plan in place, including a specially appointed interim Chief Transformation Officer, deeper operating expense reduction, increased focus on gross margin expansion across our core product lines, the implementation of new U.S. retail distribution for core product lines, the kickoff of a rolling brand repositioning and continued heightened focus on strengthening our balance sheet, I'll now turn to select details from our second quarter of 2025.

Net revenue for the quarter came in at $75 million, well below our expectations and down 20% versus the year ago period, a far cry from the recovery and renewed year-over-year growth we experienced in the second half of last year.

The U.S. retail channel represented a large share of the shortfall relative to expectations. I believe at least several factors are afoot.

One, broadly, we remain a higher-priced product than the animal protein equivalent, a feature that is particularly detrimental in a prolonged environment of tepid consumer spending.

Two, it is clear that the negative narrative surrounding our category and brand is sufficiently ingrained to outlast initial efforts to dispel this information.

Three, animal meats are in the true cyclical fashion of consumer trends, having a moment that currently leaves less room for our products and brand.

With this macro context setting the stage, more specifically, we saw delays in anticipated new distribution and major promotions at certain large retailers throughout Q2 2025.

Further and related, we continue to experience the impact of dislocations arising from the move of our and other plant-based meat products at many retailers refrigerated to the frozen aisle, negatively affecting our U.S. retail performance this quarter.

Certain delays in new U.S. retail distribution meant that these aforementioned gaps played a larger role in our Q2 performance than anticipated. It is important to note that in stores where we have been able to maintain a consistent consolidated brand presence, we tend to see more encouraging velocity.

This point is an important one to consider as we contemplate broader stabilization across U.S. retail. Recall that this has been an enormously disruptive period for our category and brand across U.S. grocery with instability being the consistent theme for quite some time from multiple entrants flooding the market only to be delisted to a general shrinking of shelf space to a disruptive relocation of the category from refrigerated to frozen aisle in certain large retailers.

As we seek to rebuild our presence across this critically important channel, we are prioritizing consolidated offerings at high-impact chains so we might drive results that are similar to some of our higher-performing current retailers.

Turning now to international foodservice. We lapped significant promotional activity in the year ago period and saw some pauses and discontinuation of our burger products in certain markets.

These changes impact the level and mix of product volume, which in turn has implications for net revenue per pound and gross margin. We expect these and related impacts to continue to exert pressure in terms of year-over-year performance on our international foodservice channel for foreseeable quarters.

Moving down the income statement. As one would expect, a 20% reduction in top line revenue exerts negative pressure on gross margin given the reduced volumes flowing through our facilities and the impact it has on fixed cost absorption and COGS. This outcome was certainly the case in the second quarter of 2025 and was further exacerbated by aforementioned and broader unfavorable product mix as we saw a higher percentage of sales from certain lower-margin products.

These factors, coupled with higher trade spend compared to the same year ago period and an accelerated depreciation charge equal to approximately 2.2 percentage points resulting from the suspension and substantial cessation of our China operations in the quarter obscured what is otherwise solid improvement on apples-to-apple production costs, a reflection of the vigorous nature of our ongoing manufacturing cost reduction initiatives.

Overall, reflecting these factors, gross margin came in at 11.5% in the quarter, down from 14.7% a year ago.

Operating expenses were $47.4 million in the second quarter of 2025, compared to $47.6 million in the year-ago period. Though this registers as only a slight improvement, it's important to note that OpEx this quarter included approximately $7.5 million in expenses that we consider nonrecurring or nonroutine.

Excluding these expenses, one can see a meaningful reduction in operating expense, both on a year-over-year and sequential basis.

As the aforementioned reduction-in-force suggests and our recent entry into 2 separate agreements related to our campus headquarters building that reduce or offset a percentage of our future rent obligations, we are attacking this priority with vigor.

Over an appropriate period of time, operating expenses should be squarely viewed in the category of controlling the controllables, and we are confident in our ability to continue to drive down routine enterprise-wide expenses to better fit the current revenue opportunity.

This disappointing quarter is now thankfully in the rearview mirror. And as you might have gathered, we're using it to deepen and intensify our transformation efforts towards sustainable EBITDA positive operations within the second half of 2026.

Stepping back again to a broader view, I will close with commentary on where we're headed. First and foremost, as has been the theme throughout my comments today, our second quarter of 2025 requires a deeper and more fundamental reset for our company.

We are seeing the thoroughness of this reset across the action items I've emphasized, the appointment and empowerment of a transformation industry veteran for purposes of accelerating our enterprise-wide operating efficiency, including and specifically operating expense reduction and gross margin expansion through a strategic push to build back core product distribution at certain high-impact U.S. retailers and our increased use of Beyond as a primary mark so as to open the brand's aperture over time to protein opportunities that fall outside of the pork and poultry replication.

The necessity of this reset does not, however, reduce or diminish our conviction or enthusiasm for the future that awaits. I want to be exceptionally clear on this point.

We believe the factors that encumber our success today are transient. Just as we recognize that we are a higher-priced item in a period of economic uncertainty and stress, we know that on a material basis, our cost structure will change as we achieve scale.

We are, in fact, already in one limited but important instance, producing and supplying product at a cost and price that is roughly equal to the corresponding animal protein equivalent.

As we get to much higher volumes across our core products, the efficiency of our system will prevail. And all other things being equal, we should be able to underprice animal protein in many offerings.

And just as we acknowledge that our products are on the wrong side of a cultural moment, we know that the extreme nature of the current renaissance around animal protein will as consumer trends do moderate. This moderation may occur solely with time, new information or new trends or may be spurred on by a set of related factors, including pricing pressure, droughts and genetic disease outbreaks.

Similarly, even as we continue to do what we can to counter misinformation around our products, including in the short 9-minute film planting change available on YouTube, we believe that over time, facts do have a way of overcoming fiction.

Consumers do, in fact, bristle at being misled at the expense of their own health, and our products will have the opportunity to be more fairly evaluated for what they are. Looking immediately forward, we will continue to celebrate our brand and our products for the great tasting, healthful and sustainable addition they can make to the diet of consumers throughout our markets.

As the recently released and award-winning Beyond Chicken Pieces indicate with 21 grams of protein, no cholesterol and less than 1 gram of saturated fat sourced from avocado oil, along with only 150 calories, we provide the consumer with strong macronutrients and ratios using simple and clean ingredients, and we keep getting better at doing so.

For example, our recently released Beyond Steak Filet product available only at select restaurants and steakhouses provides 28 grams of protein, no cholesterol and only 1 gram of saturated fat also from avocado oil, all with only 230 calories.

And finally, our recently teased Beyond Ground original, which does not seek to replicate beef, pork or poultry, is made with only 4 ingredients: water, faba bean protein, potato protein and psyllium husk and provides 27 grams of protein with no cholesterol, no saturated fat, no added oil and only 140 calories is, in my view, just the beginning.

Our brand, our company, our expertise, our capability and our ethos are hardwired to deliver clean, great tasting, healthful protein made with simple, clean, limited ingredients, all within highly compelling macronutrient ratios.

We took it on the chin in the second quarter of 2025, but remain undeterred and truly excited about our future, the future of protein.

And with that, I'll now turn the call over to Lubi.

Thank you, Ethan, and good afternoon, everyone. I'll begin by reviewing our financial results for the quarter in greater detail before providing some brief comments on our outlook.

Overall, net revenues decreased 19.6% to $75 million in the second quarter of 2025, compared to $93.2 million in the year-ago period. The year-over-year decline in net revenues was primarily driven by an 18.9% decrease in volume of products sold and a 0.9% decrease in net revenue per pound. Volume of products sold continued to be negatively impacted by weak category demand and was further affected by reduced points of distribution in the U.S. retail channel as well as lower sales of burger products to certain quick service restaurant customers in the international foodservice channel.

The slight decrease in net revenue per pound was primarily driven by higher trade discounts and changes in product sales mix, partially offset by favorable changes in foreign currency exchange rates and the benefit from pricing actions initiated in the year ago period.

Breaking this down by channel, U.S. retail channel net revenues decreased 26.7% to $32.9 million in the second quarter of 2025, compared to $44.9 million in the year-ago period. The year-over-year decrease was primarily driven by a 24.2% decrease in volume of products sold and a 3.2% decrease in net revenue per pound.

Weak category demand, particularly in the refrigerated segment, continued to weigh on our U.S. retail volumes, which were further impacted by reduced points of distribution compared to the year-ago period.

Although we expect to regain some of this lost distribution in the balance of the year, we anticipate that operating conditions in our U.S. retail business will nonetheless remain challenging in the near term.

The year-over-year decrease in U.S. retail net revenue per pound was primarily driven by higher trade discounts, partially offset by changes in product sales mix and the benefit from pricing actions implemented in 2024.

U.S. retail channel net revenues also included approximately $100,000 of ingredient sales in the quarter, compared to approximately $800,000 in the year-ago period.

Moving on to U.S. foodservice. Net revenues increased 6.8% to $11.1 million in the second quarter of 2025, compared to $10.4 million in the year-ago period. The year-over-year increase in net revenues was primarily driven by a 4.4% increase in net revenue per pound and a 2.3% increase in volume of products sold, mainly reflecting higher sales of our ground beef and dinner sausage products broadly.

Net revenue per pound primarily benefited from last year's pricing actions and changes in product sales mix, partially offset by higher trade discounts.

Now turning to international. International retail channel net revenues decreased 9.8% to $15.9 million in the second quarter of 2025, compared to $17.6 million in the year-ago period. The decrease in net revenues was primarily driven by a 13.1% decrease in volume of products sold, partially offset by a 3.9% increase in net revenue per pound.

The decrease in volume of products sold was primarily driven by reduced sales of our burger, dinner sausage and ground beef products in Canada as well as lower sales of our burger products in the EU.

Net revenue per pound in international retail primarily benefited from favorable changes in FX and changes in product sales mix.

In international foodservice, net revenues in the second quarter of 2025 decreased 25.8% to $15.1 million compared to $20.4 million in the year-ago period. The decrease in net revenues was driven by a 21.6% decrease in volume of products sold, mainly attributable to lower sales of burger products to certain QSR customers and a 5.3% decrease in net revenue per pound, primarily driven by changes in product sales mix and partially offset by lower trade discounts and favorable changes in FX.

Moving further down the P&L. Gross profit in the second quarter of 2025 was $8.6 million or gross margin of 11.5%, compared to gross profit of $13.7 million or gross margin of 14.7% in the year-ago period.

Gross profit and gross margin in the second quarter of 2025 were negatively impacted by the effect of reduced fixed cost absorption given the year-over-year decline in volume and to a lesser extent, a slight reduction in overall net revenue per pound.

Additionally, gross profit and gross margin in Q2 included $1.7 million in expenses related to the suspension of our operational activities in China, which have substantially ceased at this point.

After taking into account certain transitory factors and the impact of softer volumes, we are encouraged by the direction of travel of our underlying manufacturing costs even as we recognize that there's still significant work to be done to achieve our longer-term objectives.

Total operating expenses, including R&D, came in at $47.4 million in the second quarter of 2025, compared to $47.6 million in the year-ago period.

This slight year-over-year improvement was achieved even as we incurred certain large nonroutine expenses in Q2, including $4.5 million in expenses related to retention initiatives, $2.5 million in incremental legal expenses associated with arbitration proceedings arising from a contractual dispute with a former co-manufacturer and approximately $500,000 in expenses related to the partial lease termination of a portion of our headquarters building in California.

Excluding these items, the year-over-year decrease in operating expenses was primarily driven by reduced marketing and selling expenses.

Below the line, total other income net was $5.7 million in the second quarter of 2025, compared to total other expense net of $0.6 million in the year-ago period.

The year-over-year increase in total other income net was primarily attributable to net realized and unrealized foreign currency transaction gains.

All in, net loss for the second quarter of 2025 was $33.2 million or a loss of $0.43 per common share, compared to net loss of $34.5 million or net loss per common share of $0.53 in the year-ago period.

Adjusted EBITDA was a loss of $26 million or minus 34.7% of net revenues in the second quarter of 2025, compared to adjusted EBITDA loss of $23 million or minus 24.7% of net revenues in the year-ago period.

With respect to balance sheet and cash flow highlights, our cash and cash equivalents balance, including restricted cash, was $117.3 million and total outstanding debt was approximately $1.2 billion as of June 28, 2025.

Net cash used in operating activities was $59.4 million in the 6 months ended June 28, 2025, compared to $47.8 million in the year-ago period, while CapEx totaled $6.4 million in the 6 months ended June 28, 2025, compared to $2.5 million in the year-ago period.

Net cash provided by financing activities was $33.6 million in the 6 months ended June 28, 2025, compared to net cash used of $1 million in the year-ago period.

Net cash provided by financing activities in the 6 months ended June 28, 2025, included an initial draw in the amount of $40 million from the Delayed Draw Term Loan facility with Unprocessed Foods, LLC, partially offset by related debt issuance costs.

With regard to cash usage during the quarter, it is worth noting that our total cash used in Q2 was negatively affected by certain nonroutine payments, including an amount related to the previously disclosed consumer class action settlement, legal and financial adviser costs as we seek to strengthen our balance sheet and nonroutine retention costs to incentivize continuity across key functional areas.

Net of these special items, our underlying cash consumption for the quarter was encouragingly lower than in recent quarters, but still a figure we are aggressively working to lower. Although we continue to have no near-term debt maturities in line with our strategic priorities for the year, we continue to focus on strengthening our balance sheet, including evaluating potential transactions to address our existing convertible notes prior to maturity in 2027.

I'll now touch briefly on our outlook. We continue to experience an elevated level of volatility and uncertainty in our operating environment, making it extremely difficult to forecast beyond the very short time horizon.

As such, we are continuing to provide only limited guidance around our near-term net revenue expectations. Specifically, in the third quarter of 2025, we expect net revenues to be in the range of $68 million to $73 million, reflecting, among other things, persistent softness of demand within the plant-based meat category and the anticipated impact from recent distribution losses at certain QSR customers.

And with that, I'll turn the call over to the operator to open it up for your questions. Thank you.

[Operator Instructions]

We'll take our first question from Ben Theurer with Barclays.

Just 2 questions I have for you, gentlemen. So number one, you talked about getting somewhat adjusted EBITDA positive in the back half of next year, if I understood this correctly.

So if I just look at somewhat the run rate operating expense that you're having right now, a little over, call it, $40-ish million, I just assume you get this down to a run rate more like in the low 30s, so that would still be an annualized somewhere in like the 120s. So that's like kind of like your gross profit starting point a little less on D&A adjusted.

But in order to get there, it really feels like we need higher top line, right? And I mean, you've given obviously outlook for the third quarter to be somewhat slightly down sequentially versus the second quarter if we just assume low 70s versus the $75 million.

So the question really is, aside from trying to get the gross margin back up to the 20s, close to 30s, you also need the revenues to be maybe closer to like $350, $400 on an annualized basis, which just with, call it, $70-ish million each quarter doesn't work out.

So what can you do to really scale up the top line while at the same time, taking all this hit and trying to serve a cut on the SG&A side. So the balance of here, that's what I would like to understand. What are the measures you're going to take to get one up and the other one down?

Great. I can take that, and thanks for the question. Let me focus on U.S. retail just because I think that's where a lot of the issues that we are facing as well as a lot of the opportunity we have to react and make strong changes is available to us.

And I made a lot of comments around this in my prepared remarks, but if you look at kind of the reasons that we're experiencing that, it's overall category softness. But at the same time, you're seeing that our products provide something that the consumer is increasingly expressing high, high levels of interest, and that's very high levels of protein. And then protein that has the right ratio to things like saturated fat, things like cholesterol and things like calories.

So we fill that need in spades, right? We do it extremely well, right? But if you go on to the next thing is, does it taste good, right? And then you look at things like Beyond Chicken or Beyond Steak and the reviews you see online, I don't need to kind of selectively feed this to you people go look and they get really strong taste reviews, right?

So there's something going on. We're bidding a consumer trend around high levels of protein against low levels of calories and saturated fat and things of that nature. The products by third-party objective standards are being reviewed as tasting really good. So what's going on, right?

And I think what you have are some of the broader issues that I mentioned. One is this misinformation around the products, right? That is sticky. It's out there, it's been ingrained, and for anyone who's interested in the kind of the actual health of our products, I think watching this Planting Change video we did, which is about 9 minutes on YouTube really helps.

But then the second piece outside of the misinformation is really around the pricing structure of our products, right? We are just a higher-priced product, and it continues to be an issue in an environment where the consumer is cash trapped.

If you look at, for example, our ground beef at, let's say, $9.99 a pound in an average retailer, versus even as ground beef rises on the animal side, still, let's say, $7.99 a pound, that $2 matters, right?

And so you got the headwind of the misinformation. You've got the headwind of pricing. But over time, those things will start to change. You're starting to see more and more people come out, doctors, universities, national health organization and say, wait, this stuff is really good for you, make sure you're including in your diet.

And then on pricing, as we continue to get our own house in order in terms of getting the production footprint where it needs to be scaling down to the current size that's required for current demand levels, I do hope that we can start to do something around pricing to maintain our margins, increase our margins, but be able to do so with more competitive pricing. And you're seeing us do that in certain value offerings like classic. We've got 6-count coming out in the burger side that should be able to do that as well.

So we can sort of chip away at these issues. But there's something more fundamental we can be doing at the street level that really matters, and I think we'll start to show some dividends on the growth side.

If you think about what's happened in U.S. retail, we went from a beautiful selection of plant-based meat in the fresh section of the supermarket refrigerant section a few years ago.

Massive amounts of entrants came in, they came out, the misinformation, the pricing, all these things hurts the category as the category starts to become unsettled, then it starts to really devolve, right, into just a smattering of offerings in the refrigerated section, then you see us getting pulled out of the refrigerated section and into the frozen section. That's happening in a really uncoordinated way.

So we're finally now starting to get our bearings in the frozen section, where we can build brand blocks. And where we have those brand blocks, you're starting to see much better velocities than you see where we don't have that.

And so what our retail team is doing right now is they're going out and they're building these brand blocks in some of the key retailers.

And we'll be announcing some distribution later this year that reflects that, but making it easier for the consumer to find our products is just basic blocking and tackling that we're doing.

And anyone who's a loyal consumer of our brand knows it's hard to find our products, right? And so building back that distribution, building back those brand blocks in key retailers is something we're very focused on around our core items, and that will start working to deliver some top line, we believe, at least stabilization.

So if you look at the macro stuff, we're going to chip away at that. If you look at the sort of on the street stuff, we're working very hard to fix that.

And those things should offer some stabilization. Over time, we're starting to extend -- one more thing. Over time, we're starting to extend the brand beyond necessarily just animal protein replicates and into things that just deliver these nutritional gains that consumers want.

And the most recent product we teased out around that was the Beyond Ground product. And that has 27 grams of protein, I mentioned it in my prepared remarks, I won't repeat it here. But just the initial tease we did online around that shows that we can capture this consumer in just around really good macros, levels of protein, fiber, low levels of calories, low levels of saturated fat, zero cholesterol.

And so you're going to start seeing us do that in a much more surmountable way. And we think that also should lead to some significant top line growth.

And then my second question really, you've kind of like managed, to kind of like sustain the cash balance compared to March. So I was just wondering, I mean, obviously, we're still seeing negative cash, and there was a little bit of like offsetting things on the financing side.

So just, Lubi, maybe you can help us bridge a little bit from the level where we're at right now, give or take, a little over $100 million, of course a little bit maybe in restricted cash.

How should we think about the cash and the working capital needs and everything that you're going to have to outlay for some of these like measures you're taking into the second half? And how comfortable are you with the cash that you have also in light of the maturity in 2 years' time, give or take?

Yes. So very quickly before Lubi jumps in. One of the things that I think is really important to note on the cash consumption this quarter is roughly half of it, probably about $19 million, is kind of cleaning up certain issues, whether it was the class action settlement or dealing with some of the structural issues we're trying to address on the balance sheet, right?

So you have a lot of exogenous expense going on that's not related to the core business. So while it feels like a big number, the actual number we're trying to chop away at is much, much lower, and Lubi can talk about that.

Okay. Well, Ethan kind of stole my thought. I think what Ethan said is absolutely correct that -- look, if you look at the, obviously, in the second quarter of this year, we did do our initial draw on the Delayed Term Loan facility, and that was in the amount of $40 million.

So if you exclude that, on the face of it, the level of cash consumption looks like it's ticked up on a sequential basis. But as Ethan mentioned, there are some things that were included in Q2, a pretty significant amount related to things like this was the Q -- was the quarter where we paid the class action settlement that we had accrued for in 2024.

I mentioned in my prepared remarks, some things we did around retention. We have right now financial and legal adviser fees related to some of our balance sheet strengthening work streams that we're pursuing and other items, and it was a significant amount.

But I think like the -- to get to really the heart of your question, right, we are super focused on slowing the rate of cash burn.

You asked the question before about -- in your comments about getting to EBITDA positive and how that requires top line. I think that's absolutely right. So we need to not only stabilize the top line and eventually get that growing. But at the same time, right, some of the investments that we're making right now in our manufacturing facilities are really geared towards increasing the gross margin profile of the entire portfolio and taking much more aggressive measures to lower operating expenses, right?

And so we announced today the partnership with AlixPartners and bringing on John Boken. And that's really, I think, a symbol of the level of urgency and seriousness that we're placing on ensuring that we are able to drive out cost from the business as quickly as we can.

We'll take our next question from Alexia Howard with Bernstein.

Just a couple of questions from me. First of all, the international foodservice channels and the decline in the QSR chains, it seems as though that was an area of strength up until recently. Can you describe what's changed there and how that could be turned around once again?

Sure, sure. So I think it continues to be obviously a very important part of our business. We were lapping some promotional activity in the year ago period. So I think it's somewhat exaggerated because of that, but yes, there is a softening going on.

And I think we look at it by market, and some markets are experiencing some macroeconomic conditions that are just making it difficult for our customers and the customers by being in the restaurants we're serving in those regions.

Others, there's shifting -- animal protein prices are dropping in certain areas, so they're putting things on the menu that allow them to have higher margin.

So it's not one particular issue. But we continue to believe in those partnerships and continue to be active in our relationships with them. But this particular quarter, and I think for the next few quarters, I think you will see some softness in that area.

And then just as a follow-up, I guess the question that I'm wrestling with in terms of turning the top line around is how do you get a second bite at the cherry from people that have lapsed? Because obviously, there was a time a few years ago where many people were trying the product and they tried it again and again and again.

And eventually, they just dropped off and these are the flexitarian meat eaters. And now I think you mentioned in your prepared remarks, it's a much smaller group of consumers. Is there an issue? Or how can you go about getting those folks back?

Yes. Look, it's a great question. And I want to just maybe also refer back to the previous question in that, we're obviously doing everything we can to grow the top line. I think we will, I'm not overly exercised about that.

But I look at this in a very long -- over a long period of time, what does the next decade look like, right? And so the #1 job we have right now is really just to fit the operating base of the business into the current demand levels, right? So we need to stabilize the current revenue and then make sure that the operating base fits within that.

Once we've done that, then what we can do is sort of get through this period. I mean it is -- as I said, it's not the moment for plant-based meat right now, right? You've got these cultural moments that occur, and we happen to be on the other side of the particular moment, right?

And that won't always be the case but what we shouldn't do is sort of use a lot of dry powder trying to force growth right now. What we should be doing is stabilizing the business, getting the operating expense to where it needs to be, fixing the margins so that as we can reach the audience that we need to reach, we're around to be able to do that. And that's really the key focus.

Now having said that, I do believe that there are things we can be doing that are not kind of bet the farm activities on growing the top line, and that's some of the things I mentioned. We just continue to lean into the truth about our products. The fact that we do actually fit a very strong consumer trend, which is around protein and fiber.

And it's particularly around how those two macronutrients are presented. And that's in the relation to lower calories, lower saturated fat and things of that nature.

We do that in spades, so we should be getting rewarded for that. And the reason we're not is some of these things we talked about, the misinformation, the higher pricing, so on and so forth.

So when the opportunity to address that, we will. And we'll not only address it through kind of earned and social, we do a little bit paid on it as well. And as I mentioned before, trying to offer value packs to the consumer, things of that nature to get through on the pricing side.

But how can we use our brand and our technology to serve that need for the consumer in a variety of applications. And so the Beyond Ground that we teased out, which is getting really fascinating response online and a lot of interest from media, is an effort to emphasize those characteristics and attributes of our products versus emphasizing how much or how similar they are to animal protein.

And so if you look at the Beyond Ground with the 27 grams protein, 140 calories, the fiber, et cetera, that's what the consumer is responding to today, and that's where you're going to see Beyond Meat leaning. And I think that will help us with some of the top line issues we're having.

[Operator Instructions]

We'll take our next question from Robert Moskow with TD Cowen.

This is from the 10-K. So it's kind of old. It's already been out there for a few months. But I was just looking at the employee count, and it says 754 employees, that's down from 2 years ago, but up a lot from 2023 when you had your first restructuring announcement.

And I was wondering if the -- did the net reduction that you were looking for in the November 2023 workforce reduction, did that materialize the way you expected? And is there -- was there an increase in employees in '24 after that?

And the reason I'm asking is that everyone's hoping that you can shrink your cost base. It may sound kind of heartless, but in order to remain a going concern, so I wanted to ask that question.

Look, it's a good question, and you might look at that and say, it's been creep. These guys are making these cuts, but they're just adding back. That's not what's happening. What's happening is one is the change in composition of our workforce. So a lot of that is production related. And as you recall, we went from 13 co-packers down to 1. And so we have expanded kind of the activities we're doing in our facilities. So that's what that looks like. It's not that our headquarters are chock-full of people, that's not the case.

Yes. The other thing that I -- the one other thing I would just add to that, Rob, is just over the last couple of years, we had invested right, in our international businesses as well, right? And so the EU was expanding. We had a China business as well, right, which we're shutting down our operational activities there, but that's some of what you're seeing in the time period that you're referring to.

International expanded in '24? Is that what you're saying?

No, I don't think -- I don't -- we will look at the exact numbers. I think he's referencing from '23 to today. But I think the primary issue that you're identifying is this in-house.

Contract manufacturing, yes.

Basically if you think about all that activity has been brought in-house.

Okay. My follow-up, John Boken, can you give a little more detail about what he is going to focus on right out of the gate in order to improve efficiency? And it's a temporary position. So what are his goals coming in? And how long does he have to execute it?

Sure. So we've really enjoyed working with AlixPartners and working with John specifically. And this is kind of the next phase in our relationship. And the reason that I wanted him to come on as an Interim Manager of the business is to really drive 2 major outcomes that we're looking for.

One is to get the operational footprint into the current revenue environment. So that's the first. And so looking at how to do that thoughtfully in a way that doesn't break things, but gets us to where we need to be. And he has a ton of experience doing that, right?

And then the second is really around margin is let's accelerate the margin work. We've had issues where we're making good progress on the cost of goods produced, but you're not seeing that show up in margin as much as you should for a number of reasons.

But one of the ones that's the most kind of frustrating, right, is that with lower volumes running through the facilities, you're having poor overhead absorption.

And so that's obscuring the good progress we're making so we just have to take a more holistic look at how we're driving margin expansion. And so those two main initiatives are ones that are going to be a major focus for them, but also just the operational efficiency of the business.

What I have to do now, and this relates to [indiscernible] and some of the earlier comments, how do we make sure that the terrific products that we're developing, the amazing brand we have, again, just take a moment to think about this.

We've been through all this turmoil. But if you look at some major publications in the United States, 2024, I'm not talking about 2021, 2020, 2019. 2024, you're seeing us identified as world's leading brand and so on and so forth. So we have a great brand. We have very good products. There is a disconnect going on.

My job as CEO right now is to go out and work on that fundamental connection between our products and the consumer and make sure that, that's happening.

And so I wanted someone like John to take a kind of more global look at the business, come in and help us meet some of these, frankly, restructuring goals to make sure that we can become EBITDA positive within the second half of next year. So it's a pretty broadly scope position.

I can't comment on how much time he has. We're really enjoying him being here. So hopefully, we'll get some good work done together.

I got one more thing for you. You and I always talk about the taste appeal of our products. There's a Yahoo piece that just ran today on our whole-muscle steak, 28 grams of protein, 1 gram saturated fat, all these things made from psyllium, faba beans. It's a beautiful product. In it is a mediator that is talking about -- or I guess his wife is talking about his reaction to this product. That's when I need you to try. You're going to like that one.

[Operator Instructions]

And there are no further questions on the line at this time. I'll turn the program back to Ethan Brown for any closing remarks.

Thank you. Look, it was a tough quarter. As I said, we took it on the chin. It wasn't what we wanted but I think the reaction is what matters. And if you look at the kind of transformation program work that I outlined, we're busy doing that.

We've obviously known about these results and have been fast after it. And I think between the intensified cost reduction, the gross margin expansion initiatives, really focusing on expanding our core distribution, particularly in U.S. retail and then this opportunity to potentially live outside some of the confines we've been in recently around looking at things like Beyond Ground and the use of the Beyond Brand and protein occasions for consumers.

I'm very optimistic where we're headed. And we've got to get this balance sheet stuff worked out. We're working on that. So making some fundamental changes and kind of a reset for where we are as a category leader, I think it's going to be hopefully a productive several years here.

This does conclude the Beyond Meat, Inc. 2025 Second Quarter Conference Call. Thank you again for your participation, and you may now disconnect.