Q2 2024 Beyond Meat Inc Earnings Call

August 7, 2024

Good afternoon and welcome to the Beyond Meat 2024 second quarter conference call. All participants will be in listen-only mode.

Operator: This is a second quarter conference call, and all participants will be in listen-only mode.

Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your question, please press star, then 2. Please note, this event is being recorded. I would now like to turn the conference over to Paul Shepherd, Vice President of FP&A and Investor Relations. Please go ahead.

Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

After today's presentation, there will be an opportunity to ask questions.

Speaker Change: To ask a question, you may press star, then 1 on your telephone keypad.

To withdraw your question, please press Star then 2.

Operator: All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your question, please press star then 2. Please note that this event is being recorded. I would now like to turn the conference over to Paul Shepard, Vice President, FP&A, and Investor Relations. Please go ahead.

Please note, this event is being recorded.

Paul Sheppard: I would now like to turn the conference over to Paul Sheppard, Vice President FP&A and Investor Relations. Please go ahead.

Paul Shepherd: 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 2024 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.

Paul Shepard: 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 2024 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.

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

Speaker Change: By now, everyone should have access to our second quarter 2024 earnings press release filed today after market close. This document is available in the Investor Relations section of Beyond Meat's website at www.beyondmeat.com.

Paul Shepherd: These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could cause actual results that 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 29, 2024, to be filed with the SEC, and our annual report on Form 10-K for the fiscal year ended December 31, 2023, 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.

Paul Shepard: These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could cause actual results that 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 29, 2024, to be filed with the SEC, and our annual report on Form 10-K for the fiscal year ended December 31, 2023, 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.

Paul Sheppard: 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.

Paul Sheppard: These statements are based on management's current expectations and beliefs, and involve risks and uncertainties that could cause actual results that differ materially from those described in these forward-looking statements.

Paul Sheppard: 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.

Paul Sheppard: We refer you to today's press release.

Paul Sheppard: Our quarterly report on Form 10-Q for the quarter ended June 29, 2024, to be filed with the SEC, and our annual report on Form 10-K for the fiscal year ended December 31,

Paul Sheppard: 2023, along with other filings with the SEC for a detailed discussion of the risk that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today.

Paul Shepherd: 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.

Paul Shepard: 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.

Paul Sheppard: Please also note that on today's call, management may reference adjusted EBITDA, adjusted loss from operations, and adjusted net loss, which are non-GAAP financial measures.

Paul Sheppard: 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.

Paul Sheppard: Please refer to today's press release for a reconciliation of these non-GAAP financial measures to their most comparable GAAP measures.

Paul Sheppard: And with that, I would now like to turn the call over to Ethan Brown.

Ethan Brown: Thank you, Paul, and good afternoon, everyone. I am pleased to report a strong quarter of progress against our 2024 plan, including exceeding our Q2 revenue objective, continued reduction in operating expenses and cash consumption, and our best quarterly gross margin since Q3 2021. Today, I'll provide more detail around this progress in the context of each of our five key objectives for 2024, including the launch of BEYOND4 as a defining pillar for Beyond Meat's center-of-the-plate role in the global health and wellness trend.

Ethan Brown: Thank you, Paul, and good afternoon, everyone.

Ethan Brown: i am pleasedto report a strong quarter of progress against our two thousand andtwenty four plan

Ethan Brown: including exceeding our Q2 revenue objective, continued reduction in operating expenses and cash consumption, and our best quarterly gross margin since Q3 2021.

Ethan Brown: Today I'll provide more detail around this progress in the context of each of our five key objectives for 2024.

Ethan Brown: including the launch of BEYOND4 as a defining pillar for Beyond Meat's center-of-the-plate role in the global health and wellness trend.

Ethan Brown: But first, a brief overview of our second quarter financial results. Net revenues of $93.2 million exceeded the top end of our $85 million to $90 million guidance range but still reflected an 8.8% decline from the year-ago period. As discussed on prior calls, during the second quarter of 2024, we scaled back on promotional trade discounts and, together with the initial appearance of price increases on certain products in the U.S., this resulted in a 6.1% increase in our net revenue per pound compared to the year-ago period, including a 20.5% increase in our U.S. retail channel net revenue per pound. Gross margin rose to 14.7%.

Ethan Brown: First, a brief overview of our second quarter financial results. Net revenues of $93.2 million exceeded the top end of our $85 million to $90 million guidance range but still reflected an 8.8% decline from the year-ago period. As discussed on prior calls, during the second quarter of 2024, we scaled back on promotional trade discounts and, together with the initial appearance of price increases on certain products in the U.S., this resulted in a 6.1% increase in our net revenue per pound compared to the year-ago period, including a 20.5% increase in our U.S. retail channel net revenue per pound. Gross Margin rose to 14.7%.

Paul Sheppard: But first, a brief overview of our second quarter financial results.

Ethan Brown: This is significantly higher than the 2.2% outcome in the same quarter last year and the 4.9% level achieved in the first quarter of this year. Importantly, we expect to see further gross margin progress across the balance of the year, reflecting the combined impact of more fully distributed pricing adjustments. Continued moderation of promotional spending and ongoing COGS improvements as we consolidate our network and continue on our lean management journey. Operating expenses in the second quarter fell to $47.6 million as we continued to pursue efficiencies throughout the organization, marking an $8.4 million reduction year-over-year and a $2 million reduction compared to the first quarter of this year after adjusting for the $7.5 million class action settlement we disclosed last quarter. Lastly, our cash consumption fell to $15.5 million in the second quarter.

Ethan Brown: net revenues of ninety three point two million exceed the top end of our eighty five million to ninety million guidance range but still reflected in eight point eight percent decline from the yearago period

Ethan Brown: As discussed on prior calls, during the second quarter of 2024.

Ethan Brown: We scaled back on promotional trade discounts, and, together with the initial appearance of price increases on certain products in the U.S., this resulted in a 6.1% increase in our net revenue per pound

Ethan Brown: compared to the year-ago period, including a 20.5% increase in our U.S. retail channel net revenue per pound.

Ethan Brown: This is significantly higher than the 2.2% outcome in the same quarter last year and the 4.9% level achieved in the first quarter of this year. Importantly, we expect to see further gross margin progress across the balance of the year, reflecting the combined impact of more fully distributed pricing adjustments. Continued moderation of promotional spending and ongoing COGS improvements as we consolidate our network and continue on our lean management journey. Operating expenses in the second quarter fell to $47.6 million, as we continue to pursue efficiencies throughout the organization, marking an $8.4 million reduction year-over-year and a $2 million reduction compared to the first quarter of this year after adjusting for the $7.5 million class action settlement we disclosed last quarter. Lastly, our cash consumption fell to $15.5 million in the second quarter.

Ethan Brown: gross margin rose to fourteen point seven percent substantially higher than a two point two percent outcome in the same quarter last year and the four point nine percent level achieved in the first quarter of this year

Paul Sheppard: Importantly, we expect to see further gross margin progress across the balance of the year reflecting the combined impact of more fully distributed pricing adjustments, continued moderation of promotional spending, and ongoing COGS improvements as we consolidate our network and continue on our lean management journey.

Paul Sheppard: operatingexpenses in the second quarter fell to forty seven point six million

Ethan Brown: as we continue to pursue efficiencies throughout the organization

Ethan Brown: marking a $8.4 million reduction year-over-year, a $2 million reduction compared to the first quarter of this year, after adjusting for the $7.5 million class action settlement we disclosed last quarter.

Ethan Brown: Lastly, our cash consumption fell to $15.5 million in the second quarter, a 67% and 52% reduction on a year-over-year, quarter-over-quarter basis, respectively.

Ethan Brown: A 67% and 52% reduction on a year-over-year and quarter-over-quarter basis, respectively. We continue to aggressively manage cash use across the business and remain highly focused on working toward cash flow positive and ultimately profitable operations. With that, let me delve into our five priorities for 2024, including our clear and enhanced positioning around health, on the back of the BEYOND4 launch. First, Getting Leaner.

Ethan Brown: we continue to aggressively manage cash ers across the business and remain highly focused on working toward cash flow positive and ultimately profitable operations

Speaker Change: With that, let me delve into our five priorities for 2024, including our clear and enhanced positioning around health, the back of the BEYOND 4 launch.

Ethan Brown: Q2 provides a very clear proof point that our operations are making progress toward getting leaner and more efficient. This quarter, compared with the year-ago period, we realized $11.4 million more in gross profit despite lower revenue and $8.4 million less in operating expenses. Furthermore, inventory and cash consumption were both down on a year-over-year and sequential basis.

Ethan Brown: First, Getting Leaner.

Ethan Brown: Q2 provides a very clear proof point that our operations are making progress toward getting leaner and more efficient.

Ethan Brown: This quarter, compared with the year ago period, we realized $11.4 million more in gross profit, despite lower revenue.

Ethan Brown: and $8.4 million less in operating expenses.

Ethan Brown: we furthermore inventory and cash consumption were' both down on a year-over-year and sequential basis

Ethan Brown: Throughout the first half of 2024, we realized a reduction in operating expenses of $22.6 million, excluding the $7.5 million class action settlement accrued in Q1 2024. As reflected in our updated guidance, we are targeting a reduction in operating expenses in the remainder of 2024 compared to the equivalent period in 2023. In support of lean management implementation, we continue to narrow our focus on specific products, markets, consumers, and messages. This brings us to our second priority, the BEYOND 4 rollout.

Ethan Brown: throughout the first half of two thousand and twenty four we realizede a reduction in operating expenses of twenty two point six million excluding the seven point five million classactionand settlement accrued in q one two thousand and twenty four

Ethan Brown: As reflected in our updated guidance, we are targeting a reduction in operating expenses in the remainder of 2024 compared to the equivalent period in 2023.

Ethan Brown: in support of lean management implementation continue to narrow our focus on speacific products markets consumers and messages

Speaker Change: this brings us to our second priority and beyond four rollup

Ethan Brown: We officially kicked off the launch and accompanying campaigns for BEYOND4 during the week leading up to Memorial Day. An exciting moment for the company, one that marks the culmination of a multi-year renovation of our core platforms of BEYOND Burger, BEYOND Beef, and BEYOND Dinner Sausage. Beyond 4 represents a clear manifestation of our company's product strategy. As I have often shared, despite compelling data on the health benefits of our products from peer-reviewed research at the Stanford School of Medicine's Swap Meat Study.

Ethan Brown: We officially kicked off the launch and accompanying campaigns for Beyond 4 during the week leading up to Memorial Day. An exciting moment for the company, one that marks the culmination of a multi-year renovation of our core platforms of Beyond Burger, Beyond Beef, and Beyond Dinner Sausage. Beyond 4 represents a clear manifestation of our company's product strategy. As I have often shared, despite compelling data on the health benefits of our products from peer-reviewed research at the Stanford School of Medicine's Swap Meat Study, a sustained misinformation campaign, championed by members of the incumbent animal protein industry as well as the pharmaceutical industry, collecting sizable antibiotic sales to the livestock sector, has substantially and negatively impacted consumer perception of our products and In response, we have intensified our Innovation Roadmap's emphasis on health.

Ethan Brown: we officially kicked off the launch and accompanying campaigns for beyond four during a week leading up to moral day an exciting moment for the company one it marks a culmination of multiyear innovation or core platforms of beyond burger beyond be and beyond dinner sausage

Ethan Brown: BEYOND4 represents a clear manifestation of our company's product strategy.

Ethan Brown: As I have often shared, despite compelling data on the health benefits of our products from peer-reviewed research at the Stanford School of Medicine's Swap Meat Study.

Ethan Brown: A sustained misinformation campaign, championed by members of the incumbent animal protein industry, as well as the pharmaceutical industry, collecting sizable antibiotic sales to the livestock sector, has substantially and negatively impacted consumer perception of our products and the plant-based meat industry as a whole. In response, we have intensified our innovation roadmaps emphasis on health.

Ethan Brown: In response, we have intensified our Innovation Roadmap's emphasis on health.

Ethan Brown: The team has made remarkable progress with regard to this objective, so much so that, over the longer run, I believe it will be arguable whether Beyond Meat is, at its core, a plant-based meat company that delivers health and wellness or a health and wellness company that makes plant-based meat. The BEYOND4 portfolio so successfully captures our health commitment that, as I previously noted, it's worth repeating, our fourth-generation BEYOND Burger, BEYOND Beef, and BEYOND Dinner Sausage are recipe-certified by the American Heart Association's Heart Check Program and are included in the American Diabetes Association's Better Choices for Life Program. Reflecting the widespread corrosiveness of the false and misleading attack, I do not expect consumer perception to shift quickly, and certainly not overnight.

Ethan Brown: The team has made remarkable progress with regard to this objective, so much so that, over the longer run, it will be arguable whether Beyond Meat is, at its core, a plant-based meat company that delivers health and wellness or a health and wellness company that makes plant-based meat. The BEYOND4 portfolio so successfully captures our health commitment that, as I previously noted, is worth repeating. Our fourth generation BEYOND Burger, BEYOND Beef, and BEYOND Dinner Sausage are recipe certified by the American Heart Association's Heart Check Program and are included in the American Diabetes Association's Better Choices for Life Program. Reflecting the widespread corrosiveness of the false and misleading attack, I do not expect consumer perception to shift quickly, and certainly not overnight.

Ethan Brown: The team has made remarkable progress with regard to this objective, so much so that over the longer run, I believe it will be arguable whether Beyond Meat is, at its core, a plant-based meat company that delivers health and wellness, or a health and wellness company that makes plant-based meat.

Ethan Brown: The BEYOND4 portfolio so successfully captures our health commitment that as I previously noted is worth repeating, our fourth generation BEYOND Burger, BEYOND Beef, and BEYOND Dinner Sausage are recipe certified by the American Heart Association's Heart Check Program.

Ethan Brown: and are included in the American Diabetes Association's Better Choices for Life program.

Ethan Brown: Reflecting the widespread corrosiveness of the false and misleading attack, I do not expect consumer perception to shift quickly and certainly not overnight.

Ethan Brown: However, I do believe this will change, and this change is being aided by the increasing number of highly credible doctors, registered dieticians, and nutritionists who are coming out in strong support of our Beyond 4 products. This support stems from the Beyond 4 Portfolio's Clean Ingredients and Nutritional Profile. For those who are newer to our story, these attributes are worth highlighting.

Ethan Brown: However, I do believe it will change, and this change is being aided by the increasing number of highly credible doctors, registered dietitians, and nutritionists who are coming out in strong support of our Beyond 4 products.

Ethan Brown: This support stems from the Beyond 4 Portfolio's Clean Ingredients and Nutritional Profile.

Ethan Brown: those who are neweratto our story these attributes are worth highlighting

Ethan Brown: The ON4 burger and beef products use protein sourced from yellow peas, brown rice, red lentils, and fava beans and fat from avocado oil to deliver 21 grams of clean protein with just 2 grams of saturated fat. By comparison, that's 75% less saturated fat than equivalently sized 80-20 beef burgers. Turning to Beyond 4 Dinner Sausage, we see a similar story with protein from yellow peas and brown rice and fat from avocado oil, delivering 75% less saturated fat than equivalently sized pork sausage. These strong nutritional gains are occurring within products that are also winning praise from consumers for improved taste. As I reflect on these outcomes, I'm immensely proud of and grateful for our team.

Ethan Brown: The ON4 burger and beef products use protein sourced from yellow peas, brown rice, red lentils, and fava beans and fat from avocado oil to deliver 21 grams of clean protein with just 2 grams of saturated fat. By comparison, that's 75% less saturated fat than an equivalently sized 80-20 beef bourbon. Turning to Beyond 4 Dinner Sausage, we see a similar story with protein from yellow peas and brown rice and fat from avocado oil, delivering 75% less saturated fat than equivalently sized pork sausage. These strong nutritional gains are occurring within products that are also winning praise from consumers for improved taste. As I reflect on these outcomes, I'm immensely proud of and grateful for our team.

Speaker Change: The ON4 burger and beef products use protein sourced from yellow peas, brown rice, red lentils and fava beans, and fat from avocado oil to deliver 21 grams of clean protein with just 2 grams of saturated fat.

Ethan Brown: By comparison, that's 75% less saturated fat than equivalently sized 80-20 beef burger.

Ethan Brown: Turning to Beyond 4 Dinner Sausage, we see a similar story, with protein from yellow peas and brown rice, fat from avocado oil, delivering 75% less saturated fat than equivalently sized pork sausage.

Ethan Brown: These strong nutritional gains are occurring within products that are also winning praise from consumers for improved taste.

Ethan Brown: As I reflect on these outcomes, I am immensely proud of and grateful for our team.

Ethan Brown: From our truly tireless innovators to our adaptive production crews who routinely rise to the engineering challenges of a fast-moving company. Before moving on from our product strategy, I will briefly touch on the recent launch of an entirely new line, Beyond Son Sausage. Beyond Sun Sauces is not intended to replicate beef, pork, or poultry but rather is intended to be its own delicious, satisfying protein option, delivered in the context of nutritious and clean ingredients.

Ethan Brown: From our truly tireless innovators to our adaptive production crews who routinely rise to the engineering challenges of a fast-moving company. Before moving on from our product strategy, I will briefly touch on the recent launch of an entirely new line, Beyond Son Sausage. Beyond Sun Sausage is not intended to replicate beef, pork, or poultry but rather is intended to be its own delicious, satisfying protein option, delivered in the context of nutritious and clean ingredients.

Ethan Brown: From our truly tireless innovators to our adaptive production crews who routinely rise to the engineering challenges of a fast-moving company.

Ethan Brown: Before moving on from our product strategy, I will briefly touch on the recent launch of an entirely new line, Beyond Son Sausage.

Ethan Brown: Beyond Sun Sauces is not intended to replicate beef, pork, or poultry, but rather is intended to be its own delicious, satisfying protein option, delivered in the context of nutritious and clean ingredients.

Ethan Brown: The concept, which is receiving high praise from consumers and registered dieticians for taste and nutrition, and bears the emblem of the American Heart Association's Heart Check Program and the American Diabetes Association's Better Choices for Life Program, is a confident step for Beyond Meat in the plant-based meat category outside of the confines of a particular animal species and instead, simply focusing on taste, mouthfeel, nutrition, and ingredients. The platform is built on the same protein blend of yellow peas, brown rice, red lentils, and fava beans.

Ethan Brown: The concept, which is receiving high praise from consumers and registered dieticians for taste and nutrition, and bears the emblem of the American Heart Association's Heart Check Program and the American Diabetes Association's Better Choices for Life Program, is a confident step for Beyond Meat and the plant-based meat category outside of the confines of a particular animal species and instead, simply focusing on taste, mouthfeel, nutrition, and ingredients. The platform is built on the same protein blend of yellow peas, brown rice, red lentils, and fava beans.

Ethan Brown: The concept, which is receiving high praise from consumers and registered dieticians for taste and nutrition.

Ethan Brown: and bears the emblem of the American Heart Association's Heart Check Program and the American Diabetes Association's Better Choices for Life Program is a confident step for Beyond Meat in the plant-based meat category outside of the confines of a particular animal species.

Ethan Brown: Instead, simply focusing on taste, mouthfeel, nutrition, and ingredients.

Ethan Brown: The platform is built on the same protein blend from yellow peas, brown rice, red lentils, and fava beans.

Ethan Brown: It is mixed with avocado oil, delivering 12 grams of protein and only 1 gram of saturated fat, and is offered in three delicious bold flavors: Cajun, featuring diced red peppers and dried onions. Pineapple Jalapeno, featuring dried pineapple and diced jalapenos, and Pesto, featuring a blend of basil, oregano, and rosemary spices.

Ethan Brown: Mixed with avocado oil, delivering 12 grams of protein and only 1 gram of saturated fat, and is offered in three delicious, bold flavors. Cajun, featuring diced red peppers and dried onions.

Ethan Brown: Pineapple jalapeno featuring dried pineapple and diced jalapenos and pesto featuring a blend of basil, oregano, rosemary spices.

Ethan Brown: I've watched consumer and nutrition community feedback with great interest and was pleased to read what is my favorite comment in quite some time. Short and to the point, I believe this Consumer Post sums up our brand, people, and culture in seven words, writing, "You guys keep getting better and better." As we moved into summer grilling season with Memorial Day, we launched our Serve Love marketing campaign around our Beyond4 platform to heighten consumer awareness of the health benefits of Beyond4 products across a variety of media.

Speaker Change: I've watched consumer and nutrition community feedback with great interest, and was pleased to read what is my favorite comment in quite some time.

Speaker Change: Short and to the point, I believe this Consumer Post sums up our brand, people, and culture in seven words, writing,

Speaker Change: You guys keep getting better and better.

Ethan Brown: We centered on Serve Love as this message communicates what we genuinely believe to be true, that serving Beyond 4 products to family, friends, or yourself is an act of love due first and foremost to the product's strong health credentials, as well as attendant goodness for the world, whether that be climate, environment, or animal welfare. With our fourth generation Beyond Burger, Beyond Beef, and Beyond Dinner Sausage, including a collection of heart-healthy recipes certified by the American Heart Association's Heart Check Recipe Program and products relevant to cardiovascular health, the image for the campaign is two hands forming a heart shape around our burger.

Speaker Change: As we moved into summer grilling season with Memorial Day, we launched our Serve Love marketing campaign around our Beyond4 platform to heighten consumer awareness of the health benefits of Beyond4 products across a variety of media.

Ethan Brown: We centered on Serve Love as this messaging communicates what we genuinely believe to be true, that serving Beyond 4 products to family, friends, or yourself is an act of love due first and foremost to the product's strong health credentials, as well as attendant goodness for the world, whether that be climate, environment, or animal welfare. With our fourth generation Beyond Burger, Beyond Beef, and Beyond Dinner Sausage included in a collection of heart-healthy recipes certified by the American Heart Association's Heart Check Recipe Program and products relevant to cardiovascular health, the image for the campaign is two hands forming a heart shape around our burger.

Speaker Change: We centered on Serve Love as this message communicates what we genuinely believe to be true.

Speaker Change: That serving beyond four products to family, friends, or yourself is an act of love due first and foremost to the product's strong health credentials, as well as attendant goodness for the world, whether that be climate, environment, or animal welfare.

Speaker Change: With our fourth generation Beyond Burger, Beyond Beef, and Beyond Dinner Sausage, including a collection of heart-healthy recipes certified by the American Heart Association's Heart Check Recipe Program, and the products relevant to cardiovascular health, the image for the campaign is two hands forming a heart shape around our burger.

Ethan Brown: Furthermore, as part of the campaign, we unveiled our first ever cookbook, Serve Love, a collection of heart-healthy Beyond Meat recipes certified by the American Heart Association's Heart Check Program. The cookbook is available for free download via the Beyond Meat website and helps to make nutritious plant-based meals more accessible to all.

Speaker Change: Further, as part of the campaign, we unveiled our first-ever cookbook, Serve Love, a collection of heart-healthy Beyond Meat recipes certified by the American Heart Association's Heart Check Program.

Speaker Change: The cookbook is available for free download via the Beyond Meat website and helps to make nutritious, plant-based meals more accessible to all.

Ethan Brown: Now, turning to our third priority, making progress on our U.S. trade and pricing programs in support of improved gross margin. For Q2, net revenue per pound in the U.S. retail channel is up 20.5% as compared to the year-ago period and up 11.7% sequentially as compared to the first quarter of this year.

Speaker Change: Now, turning to our third priority, making progress to our U.S. trade and pricing programs in support of improved gross margin. For Q2, net revenue per pound in the U.S. retail channel is up.

Speaker Change: 20.5% as compared to the year-ago period and up 11.7% sequentially as compared to the first quarter of this year.

Ethan Brown: The impact of pricing changes on the U.S. Food Service Channel net revenue per pound was more muted as we saw some higher trade expenses relating to some of our larger customers in this channel. Nevertheless, we expect our U.S. pricing actions to provide a tailwind toward net revenues per pound in both channels through the balance of the year. Looking now at cost of goods sold and gross margin, we have substantially completed the consolidation of our production network, which is our fourth priority.

Ethan Brown: The impact of pricing changes on the U.S. Food Service Channel net revenue per pound was more muted as we saw some higher trade expenses relating to some of our larger customers in this channel. Nevertheless, we expect our U.S. pricing actions to provide a tailwind to our net revenues per pound in both channels through the balance of the year. Looking now at cost of goods sold and gross margin, we have substantially completed the consolidation of our production network, which is our fourth priority.

Speaker Change: The impact of pricing changes on the U.S. Food Service Channel net revenue per pound was more muted as we saw some higher trade expenses relating to some of our larger customers in this channel.

Speaker Change: nevertheless we expect our u s pricing actions provide tailwinds toour net revenues pound in both channels through the balance of the year

Speaker Change: looking now at cost of goods sold and gross margin we have substantially completed the consolidation of our production network which is our fourth priority

Ethan Brown: This consolidation is enabling us to benefit from better asset utilization and inventory management, which we expect to continue freeing up working capital, aiding overhead absorption, and generating production and logistics efficiencies, while also providing for better management of logistics and quality control. We believe these pricing, trade, and ultimately COGS initiatives represent meaningful steps toward restoring gross margins. Fifth, we are maintaining our investment focus in Europe by serving our strategic customers in this important plant-based meat market.

Speaker Change: This consolidation is enabling us to benefit from better asset utilization and inventory management, which we expect to continue freeing up working capital, aiding overhead absorption, and generating production and logistics efficiencies, while also providing for better management of logistics and quality control.

Speaker Change: We believe these pricing, trade, and ultimately COGS initiatives represent meaningful steps toward restoring gross margin.

Speaker Change: Fifth, we are maintaining our investment focus in Europe by serving our strategic customers in this important plant-based meat market. In May, McDonald's Germany kicked off its Famous Meals promotion with a campaign that featured two celebrity favorite meals built around the McPlant Burger and McPlant Nuggets.

Ethan Brown: In May, McDonald's Germany kicked off its Famous Meals promotion with a campaign that featured two celebrity favorite meals built around the McPlant Burger and McPlant Nuggets. Elsewhere in Europe, we launched Beyond Steak, Beyond Smash, and Beyond Burger Jalapeno for food service in the Netherlands, and Beyond Steak at retail in Belgium, while expanding availability of the Beyond Burger at co-op stores across the UK. We are also beginning our expansion into the Significant Plant-Based Meats Refrigerated category in Germany, having successfully reformulated our products to achieve refrigerated shelf life requirements in that and other European markets. Before wrapping up, I want to call attention to the return of a true fan favorite.

Ethan Brown: In May, McDonald's Germany kicked off its Famous Meals promotion with a campaign that featured two celebrity favorite meals built around the McPlant Burger and McPlant Nuggets. Elsewhere in Europe, we launched Beyond Steak, Beyond Smash, and Beyond Burger Jalapeno for food service in the Netherlands, and Beyond Steak at retail in Belgium, while expanding availability of the Beyond Burger at co-op stores across the UK. After successfully reformulated our products to achieve refrigerated shelf life requirements in that and other European markets, before wrapping up, I want to call attention to the return of a true fan favorite.

Speaker Change: Elsewhere in Europe , we launched Beyond Steak, Beyond Smash, and Beyond Burger Jalapeno for food service in the Netherlands, and Beyond Steak at retail in Belgium, while expanding availability of the Beyond Burger at co-op stores across the UK.

Speaker Change: we are also beginning our expansion into the significant plant-based needs wererefrigerated category in germany

Speaker Change: successfully reform that our products to achieve a for dridge shelplay requirements in that in other european markets

Speaker Change: Before wrapping up, I want to call attention to the return of a true fan favorite.

Ethan Brown: Beyond the Original Orange Chicken, which we've partnered with Panda Express to provide to consumers in a series of LTOs over the past few years, was the number one most requested dish on Panda Express's social channels, and became the subject of a petition signed by over 7,000 consumers. Listening to this demand from the consumer, beginning last month, Panda Express brought Back Beyond the Original Orange Chicken to hundreds of participating locations across the country for another limited time offer.

Ethan Brown: Beyond the Original Orange Chicken, which we partnered with Panda Express to provide to consumers in a series of LTOs over the past few years, was the number one most requested dish on Panda Express's social channels, and became the subject of a petition signed by over 7,000 consumers. Listening to this demand from the consumer, beginning last month, Panda Express brought Back Beyond the Original Orange Chicken to hundreds of participating locations across the country for another limited time offer.

Speaker Change: Beyond the original orange chicken, which we've partnered with Panda Express to provide to consumers in a series of LTOs over the past few years, was the number one most requested dish on Panda Express' social channels, became the subject of a petition signed by over 7,000 consumers.

Speaker Change: Listening to this demand from the consumer. Beginning last month, Panda Express brought back Beyond the Original Orange Chicken across hundreds of participating locations across the country for another LTO.

Ethan Brown: If you have the chance to stop by and try the dish, your taste buds will not be disappointed. As with each of our QSR customers, including McDonald's, Starbucks UK, Pizza Hut UK, and AU Canada, we are grateful for our partnership with Panda Express. With that, I'll close by saying we are encouraged by many of the results we see this quarter, results that demonstrate clear progress against our 2024 plan and our longer-term goal of a profitable operation. I look forward to taking your questions later, and will now turn the call over to Lubi to walk us through our Q2 financial results in greater detail, as well as update our outlook for 2021.

Speaker Change: If you have the chance to stop by and try the dish, your taste buds will not be disappointed.

Speaker Change: as with each of ourcqus orour customers including mdonald's starbucks uka pizza h uk and a u canada we're grateful for our partnership with hand express

Speaker Change: With that, I'll close by saying we are encouraged by many of the results we see this quarter, results that demonstrate clear progress against our 2024 plan and our longer-term goal of profitable operations.

Speaker Change: I look forward to taking your questions later. I will now turn the call over to Lubi to walk us through our Q2 financial results in greater detail, as well as update our outlook for 2024.

Lubi Kutua: Thank you, Ethan, and good afternoon, everyone. I'll begin by reviewing our second quarter financial results before providing an update on our 2024 outlook. Net revenues decreased 8.8% to $93.2 million in the second quarter of 2024, compared to $102.1 million in the year-ago period. We were, however, pleased to see net revenues come in above our guidance range for the quarter, and we note that the rate of decline was much lower than the 18% year-on-year decline we saw in the first quarter of 2024.

Lubi Kutua: Thank you, Ethan, and good afternoon, everyone. I'll begin by reviewing our second quarter financial results before providing an update on our 2024 outlook. Net revenues decreased 8.8% to $93.2 million in the second quarter of 2024 compared to $102.1 million in the year-ago period. We were, however, pleased to see net revenues come in above our guidance range for the quarter, and we note that the rate of decline was much lower than the 18% year-on-year decline we saw in the first quarter of 2024.

Lubi Kutua: Thank you, Ethan, and good afternoon, everyone. I'll begin by reviewing our second quarter financial results before providing an update on our 2024 outlook.

Lubi Kutua: This decrease in net revenues for the second quarter was primarily driven by a 14% decrease in volume of products sold, partially offset by a 6.1% increase in net revenue per pound. The increase in net revenue per pound was primarily driven by lower trade discounts, pricing changes, and changes in product sales mix, partially offset by unfavorable changes in foreign currency exchange rates. Breaking this down by channel, our U.S. retail channel net revenues decreased 7.5% to $44.9 million in the second quarter of 2024, compared to $48.5 million in the year-ago period.

Lubi Kutua: This decrease in net revenues for the second quarter was primarily driven by a 14% decrease in volume of products sold, partially offset by a 6.1% increase in net revenue per pound. The increase in net revenue per pound was primarily driven by lower trade discounts, pricing changes, and changes in product sales mix, partially offset by unfavorable changes in foreign currency exchange rates. Breaking this down by channel, our US retail channel net revenues decreased 7.5% to $44.9 million in the second quarter of 2024, compared to $48.5 million in the year-ago period.

Lubi Kutua: net revenues decreased eight point eight percent to ninety three point two million in the second quarter of two thousand and twenty four compared to one hundred and two point one million in the year ago period

Lubi Kutua: We were, however, pleased to see net revenues come in above our guidance range for the quarter, and we note that the rate of decline was much lower than the 18% year-on-year decline we saw in the first quarter of 2024.

Lubi Kutua: This decrease in net revenues for the second quarter was primarily driven by a 14% decrease in volume of products sold, partially offset by a 6.1% increase in net revenue per pound.

Lubi Kutua: The increase in net revenue per pound was primarily driven by lower trade discounts, pricing changes, and changes in product-sales mix, partially offset by unfavorable changes in foreign currency exchange rates.

Lubi Kutua: Breaking this down by channel, our U.S. retail channel net revenues decreased 7.5% to $44.9 million in the second quarter of 2024, compared to $48.5 million in the year-ago period.

Lubi Kutua: Volume of products sold decreased 23.2%, primarily reflecting ongoing demand softness in the plant-based meat category and the lapping of substantial promotional sales to a club channel customer in the year-ago period. However, we were pleased to see a 20.5% increase in net revenue per pound, primarily resulting from lower trade discounts, changes in product sales mix, and the early impact from recent pricing actions. Regarding the latter, although it is still early days, we are encouraged by the initial readings on consumer price elasticity, which appear to be generally in line with our expectations.

Lubi Kutua: Volume of products sold decreased 23.2%, primarily reflecting ongoing demand softness in the plant-based meat category and the lapping of substantial promotional sales to a club channel customer in the year-ago period. However, we were pleased to see a 20.5% increase in net revenue per pound, primarily resulting from lower trade discounts, changes in product-sales mix, and the early impact from recent pricing actions. Regarding the latter, although it is still early days, we are encouraged by the initial readings on consumer price elasticity, which appear to be generally in line with our expectations.

Lubi Kutua: However, we were pleased to see a 20.5% increase in net revenue per pound, primarily resulting from lower trade discounts, changes in product sales mix, and the early impact from recent pricing actions.

Speaker Change: regarding the latter although it is still early days we are encouraged by the initial reads on consumer price elastthicity which appear to be generally in line with i expectations

Lubi Kutua: U.S. Food Service Channel net revenues decreased 18.9% to $10.3 million in the second quarter of 2024, compared to $12.8 million in the year-ago period. Volume of products sold decreased 20%, primarily reflecting ongoing demand softness in the plant-based meat category, as well as the impact from certain distribution losses. Volume losses in U.S. food service were partially offset by a 1.4 percent increase in net revenue per pound, primarily resulting from pricing changes and changes in product sales mix, partially offset by higher trade discounts. In part, these higher trade discounts represented some trade reconciliations and true ups for larger customers in this channel.

Lubi Kutua: U.S. Food Service Channel net revenues decreased 18.9 percent to $10.3 million in the second quarter of 2024, compared to $12.8 million in the year-ago period.

Lubi Kutua: Volume of products sold decreased 20%, primarily reflecting ongoing demand softness in the plant-based meat category, as well as the impact from certain distribution losses.

Speaker Change: volume losses in u food service were partially offset by a one point four percent increase in that revenue for pound primarily resulting from pricing changes and changes in product sales mix partially offset by higher trade discounts

Lubi Kutua: In part, these higher trade discounts represented some trade reconciliations and true ups for larger customers in this channel.

Lubi Kutua: International retail channel net revenues decreased 12.1% to $17.6 million in the second quarter of 2024, compared to $20 million in the year-ago period, primarily due to a 6.9% decrease in net revenue per pound and a 5.5% decrease in volume of products sold. At a high level, the year-on-year decrease in international retail was largely driven by weakness in our EU chicken portfolio, which is lapping its year-ago market launch and channel sell-in, unfavorable changes in foreign currency, particularly with respect to the Canadian dollar, and softening category demand in some geographic regions.

Lubi Kutua: International retail channel net revenues decreased 12.1% to $17.6 million in the second quarter of 2024 compared to $20 million in the year-ago period, primarily due to a 6.9% decrease in net revenue per pound and a 5.5% decrease in volume of products sold. At a high level, the year-on-year decrease in international retail was largely driven by weakness in our EU chicken portfolio, which is lapping its year-ago market launch and channel sell-in, unfavorable changes in foreign currency, particularly with respect to the Canadian dollar, and softening category demand in some geographic regions.

Lubi Kutua: International retail channel net revenues decreased 12.1% to $17.6 million in the second quarter of 2024.

Lubi Kutua: compared to $20 million in the year-ago period.

Lubi Kutua: primarily due to a 6.9% decrease in net revenue per pound and a 5.5% decrease in volume of products sold.

Lubi Kutua: At a high level, the year-on-year decrease in international retail was largely driven by weakness in our EU chicken portfolio, which is lapping its year-ago market launch and channel sell-in.

Lubi Kutua: Unfavorable changes in foreign currency, particularly with respect to the Canadian dollar, and softening category demand in some geographic regions.

Lubi Kutua: International food service channel net revenues decreased 2.5% to $20.4 million in the second quarter of 2024, compared to $20.9 million in the year-ago period, primarily due to a 1.4% decrease in volume of products sold and a 0.9% decrease in net revenue per pound. Overall, the year-over-year decrease was mainly driven by reduced sales to a large QSR customer, where we were lapping the launch of an LTO in the year Gross profit in the second quarter of 2024 was $13.7 million, or a gross margin of 14.7%, compared to $2.3 million, or a gross margin of 2.2%, in the year-ago period.

Lubi Kutua: a zero point nine percent decrease in that revenue pound

Speaker Change: Overall, the year-over-year decrease was mainly driven by reduced sales to a large QSR customer where we were lapping the launch of an LTO in the year-ago period.

Lubi Kutua: Gross profit in the second quarter of 2024 was $13.7 million, or a gross margin of 14.7%, compared to $2.3 million, or a gross margin of 2.2% in the year-ago period.

Lubi Kutua: This represented our best quarterly gross margin performance since the third quarter of 2021 and our lowest quarterly cost of goods sold per pound since the second quarter of 2021, suggesting that we are starting to see the financial benefits from some of the pricing, network consolidation, and other cost reduction initiatives we have been pursuing. This quarter, we saw some abatement of the transitional direct labor costs, which began to impact us in the first quarter as we brought more production volume in-house, and we are continuing to realize efficiency improvements as we accumulate internal production experience for our finished goods. Also, we are pursuing some rationalization of our U.S. warehousing network, and it has been encouraging to see the realization of year-over-year savings in our transportation and warehousing expenses.

Lubi Kutua: This represented our best quarterly gross margin performance since the third quarter of 2021 and our lowest quarterly cost of goods sold per pound since the second quarter of 2021, suggesting that we are starting to see the financial benefits from some of the pricing, network consolidation, and other cost reduction initiatives we have been pursuing. This quarter, we saw some abatement of the transitional direct labor costs, which began to impact us in the first quarter, as we brought more production volume in-house, and we are continuing to realize efficiency improvements as we accumulate internal production experience for our finished goods. Also, we are pursuing some rationalization of our U.S. warehousing network, and it has been encouraging to see the realization of year-over-year savings in our transportation and warehousing expenses.

Speaker Change: This represented our best quarterly gross margin performance since the third quarter of 2021 and our lowest quarterly cost of goods sold per pound since the second quarter of 2021, suggesting that we are starting to see the financial benefits from some of the pricing, network consolidation, and other cost reduction initiatives we have been pursuing.

Speaker Change: This quarter we saw some abatement of the transitional direct labor costs, which began to impact us in the first quarter, as we brought more production volume in-house, and we are continuing to realize efficiency improvements as we accumulate internal production experience of our finished goods.

Lubi Kutua: Also, we are pursuing some rationalization of our U.S. warehousing network, and it has been encouraging to see the realization of year-over-year savings in our transportation and warehousing expenses.

Lubi Kutua: At a high level, the decrease in cost of goods sold per pound primarily reflected lower inventory provision, lower manufacturing costs, including depreciation, and lower logistics costs per pound, partially offset by higher materials costs per pound. Operating expenses were $47.6 million in the second quarter of 2024 compared to $56 million in the year-ago period. The decrease in operating expenses was primarily due to reduced marketing expenses and lower non-production headcount expenses, partially offset by an increase in general and administrative expenses.

Lubi Kutua: At a high level, the decrease in cost of goods sold per pound primarily reflected lower inventory provision, lower manufacturing costs, including depreciation, and lower logistics costs per pound, partially offset by higher materials costs per pound. Operating expenses were $47.6 million in the second quarter of 2024, compared to $56 million in the year-ago period. The decrease in operating expenses was primarily due to reduced marketing expenses and lower non-production headcount expenses, partially offset by an increase in general and administrative expenses.

Speaker Change: At a high level, the decrease in cost of goods sold per pound primarily reflected lower inventory provision, lower manufacturing costs including depreciation, and lower logistics costs per pound, partially offset by higher materials costs per pound.

Speaker Change: operating extenses were forty seven point six million in the second quarter of twothousandand twenty four compared to fifty-six million in the year ago period

Speaker Change: The decrease in operating expenses was primarily due to reduced marketing expenses and lower non-production headcount expenses, partially offset by an increase in general and administrative expenses.

Lubi Kutua: The reduction of operating expenses combined with the aforementioned improvement in gross profit drove a $19.8 million year-on-year reduction in our operating loss, an achievement more notable when considering that net revenue was $9 million lower this quarter than in the year-ago period. Net loss was $34.5 million, or $0.53 per common share, in the second quarter of 2024, compared to $53.5 million, or $0.83 per common share, in the year-ago period Adjusted EBITDA was a loss of $23 million, or minus 24.7% of net revenues, in the second quarter of 2024, compared to an adjusted EBITDA loss of $40.8 million, or 40% of net revenues in the year-ago period.

Lubi Kutua: The reduction of operating expenses, combined with the aforementioned improvement in gross profit, drove a $19.8 million year-on-year reduction in our operating loss, an achievement more notable when considering that net revenue was $9 million lower this quarter than in the year-ago period. Net loss was $34.5 million, or $0.53 per common share, in the second quarter of 2024, compared to $53.5 million, or $0.83 per common share, in the year-a Adjusted EBITDA was a loss of $23 million, or minus 24.7% of net revenues, in the second quarter of 2024, compared to an adjusted EBITDA loss of $40.8 million, or 40% of net revenues in the year-ago period.

Speaker Change: The reduction of operating expenses, combined with the aforementioned improvement in gross profit, drove a $19.8 million year-on-year reduction in our operating loss, an achievement more notable when considering that net revenue was $9 million lower this quarter than in the year-ago period.

Speaker Change: Net loss was $34.5 million, or $0.53 per common share, in the second quarter of 2024, compared to $53.5 million, or $0.83 per common share in the year-ago period.

Lubi Kutua: Adjusted EBITDA was a loss of $23 million, or minus 24.7% of net revenues in the second quarter of 2024, compared to an adjusted EBITDA loss of $40.8 million, or 40% of net revenues in the year-ago period.

Lubi Kutua: Turning to our balance sheet and cash flow highlights, our cash and cash equivalents balance, including restricted cash, was $158 million, and total outstanding debt was $1.1 billion as of quarter end on June 29, 2024. Inventory fell to $119.5 million at the end of the second quarter, down by $3 million from Q1 of this year and by $87.6 million from Q2 of last year. Net cash used in operating activities was $47.8 million in the six months ended June 29, 2024, compared to $88.3 million in the year-ago period.

Speaker Change: Turning to our balance sheet and cash flow highlights, our cash and cash equivalents balance, including restricted cash, was $158 million, and total outstanding debt was $1.1 billion as of quarter end on June 29, 2024.

Speaker Change: Inventory fell to $119.5 million at the end of the second quarter, down by $3 million from Q1 of this year and by $87.6 million from Q2 of last year.

Speaker Change: The net cash used in operating activities was $47.8 million in the six months ended June 29, 2024, compared to $88.3 million in the year-ago period.

Lubi Kutua: Finally, I'll conclude by commenting on our 2024 full-year outlook, which we are updating as follows. Net revenues are now expected to be in the range of $320 to $340 million. Gross margin is now expected to be in the mid-teens range. Operating expenses, excluding the $7.5 million accrual related to the consumer class action settlement recognized in the first quarter of 2024, are expected to be in the range of $180 to $190 million, and capital expenditures are expected to be in the range of $15 to $20 million.

Lubi Kutua: Finally, I'll conclude by commenting on our 2024 full-year outlook, which we are updating as follows. Net revenues are now expected to be in the range of $320 to $340 million. Gross margin is now expected to be in the mid-teens range. Operating expenses, excluding the $7.5 million accrual related to the Consumer Class Action Settlement recognized in the first quarter of 2024, are expected to be in the range of $180 to $190 million, and capital expenditures are expected to be in the range of $15 to $20 million.

Speaker Change: Capital expenditures totaled $2.5 million in the six months ended June 29, 2024, compared to $7.1 million in the year-ago period.

Speaker Change: finally i'll conclude by commenting on our two thousand and twenty four full year outlook which we are updating as swallows

Speaker Change: net revenues are now expected to be in the range of three hundred and twenty to three hundred and forty million

Speaker Change: Gross margin is now expected to be in the mid-teens range.

Speaker Change: Operating expenses excluding the $7.5 million accrual related to the consumer class action settlement recognized in the first quarter of 2024 are expected to be in the range of $180 to $190 million.

Speaker Change: and capital expenditures i expected to be in the range of fifteen to twenty million and with that i'll turn the call over to the operator to open itroup to your questions thank you

Operator: And with that, I'll turn the call over to the operator to open it up for your questions. Thank you. We will now begin the question and answer session.

Operator: or Second Quarter Conference Call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Operator: To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. The first question is from Ben Theurer with Barclays; please go ahead.

Speaker Change: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded.

Speaker Change: If you are using a speakerphone, please pick up your handset before pressing the keys.

Speaker Change: To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster.

Paul Shepherd: I would now like to turn the conference over to Paul Sheppard, Vice President, FPNA and Invest Relations. Please go ahead. Thank you. Hello everyone and thank you for your participation on today's call. Joining me are Ethan Brown, founder, President and Chief Executive Officer, and Lubi Kutua, Chief Financial Officer and Treasurer. By now, everyone should have access to our second quarter, 2024 earnings press release, while today after market closed. This document is available in the Investor Relations section of Beyond Meat's website at www.beyondmeats.com.

Speaker Change: Go to Beadaholique.com for all of your beading supply needs!

Speaker Change: The first question is from Ben Theurer with Barclays. Please go ahead.

Benjamin Theurer: Good afternoon, Ethan, and Lubi. Thanks for taking my question. So, Ethan, to begin with, maybe as it comes out about the rollout of Beyond 4.0, the platform, and then obviously the associated price increases you've been putting through, and we're seeing that already, as you've highlighted on a per pound basis. Two things around this. One, can you update us on how much of your portfolio has seen this upgrade and the new pricing already and how much is still yet to come over the next couple of months and or quarters?

Ben Theurer: Good afternoon, Ethan, Lubi. Thanks for taking my question.

Benjamin Theurer: That would be kind of like my first general question, another quick one. Okay, great. So I'll go on.

Ben Theurer: So, Ethan, to begin with, maybe, as it comes out to the rollout of Beyond 4.0, the platform, and then, obviously, the...

Speaker Change: the associated price increases you've been putting through and we're seeing that already nicely as you've highlighted on a per pound basis.

Speaker Change: Two things around this. One, can you update us on how much of your portfolio has seen this upgrade and the new pricing already and how much is still yet to come over the next couple of months and or quarters? And then what has consumer perception maybe been just around

Paul Shepherd: Before we begin, please note that all the information presented today is unordered and that during the course of this call, management may make forward-looking statements within the meaning of the federal security's laws. These statements are based on management's current expectations and beliefs, and involve risks and uncertainties that could cause actual results that 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.

Benjamin Theurer: And then what has consumer perception maybe been just around the product, and how does the feel associated with the price point, which obviously is a higher one than prior? That would be kind of like my first general question, another quick one. Okay, great.

Speaker Change: the product and how is the feel associated with the price point which obviously is a higher one than prior. That would be like kind of like my first general question and I have a quick one for Lubi.

Ethan Brown: Okay, great. So I'll go ahead and answer the first point first on what percentage of the portfolio is undergoing the renovation upgrade. And if you look at what we've launched so far, you have the Beyond Burger, you have Beyond Beef, and then you have Beyond Dinner Sausage. All those now...

Speaker Change: Okay, great. So I'll go ahead and answer the first point first on what percentage of the portfolio has undergone that.

Speaker Change: A Renovation Upgrade. And if you look at what we've launched so far, you have the Beyond Burger, you have Beyond Beef, and then you have Beyond Dinner Sausage. All those now have

Paul Shepherd: We refer you to today's press release, our quarterly report on Form 10Q for the quarter ended June 29, 2024, to be filed with the SEC, and our annual report on Form 10K for the fiscal year ended December 31, 2023, along with other filings with the SEC for a detailed discussion of the risk that could cause actual results that differ materially from those expressed or implied in any forward-looking statements made today. Please also note that on today's call, management may reference adjusted editor, adjusted last-term operations, and adjusted net loss, which are non-gap financial measures.

Ethan Brown: The New Formula and the associated endorsements and things of that nature, and that new formula is the new proteins, the new fat systems, et cetera. And then the additional application there is the sun sausage, which has even lower saturated fat levels. We do expect to continue to migrate the portfolio in the direction of those types of things, but for now, those are the major changes we've made. On the price increase... We've generally been pleased.

Ethan Brown: The New Formula and the associated endorsements and things of that nature, and that new formula is the new proteins, the new fat systems, et cetera. And then the additional application there is the sun sausage, which has even lower saturated fat levels. We do expect to continue to migrate the portfolio in the direction of those types of things, but for now, those are the major changes we've made. The price increase... We've generally been pleased.

Speaker Change: The New Formula and the associated endorsements and things of that nature.

Speaker Change: And that new formula is the new proteins, the new fat systems, etc. And then the additional application there is the sun sausage, which has even lower saturated fat levels.

Speaker Change: We do expect to continue to migrate the portfolio in the direction of those types of things, but for now, those are the major changes we've made. On the price increase...

Ethan Brown: As Lubi mentioned, the elasticity has come in largely where we expected. But I think the other piece to note is the significant reduction in promotional trade. That has helped us a lot on margin, and we're very pleased to see the portfolio sustain that. If you look at consumer reception, which is your third question, we do have data that is encouraging. If you strip away the promotional activity, which tends to distort the year-over-year numbers and just look at the base, and then you look at some of our larger accounts, you do see velocity beyond four items, particularly beef and burgers, which is where we have the most data. You're seeing growth in certain accounts that are significant, national grocer accounts, and then seeing stabilization in others.

Ethan Brown: As Lubi mentioned, the elasticity has come in largely where we expected. But I think the other piece to note is the significant reduction in promotional trade. That has helped us a lot on margin, and we're very pleased to see the portfolio sustain that. If you look at the consumer reception, which is your third question, we do have data that is encouraging. If you strip away the promotional activity I talked about, which tends to distort the year-over-year numbers, and just look at the base, and then you look at some of our larger accounts, you do see velocity beyond four items, particularly beef and the burger, which is where we have the most data. You're seeing growth in certain accounts that are significant, national grocer accounts, and then seeing stabilization in others.

Speaker Change: We've generally been pleased. Lubi mentioned the elasticity has come in.

Paul Shepherd: While we believe these non-gap 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 GAP. Please refer to today's press release for a reconciliation of these non-gap financial measures for their most comparable gap measures.

Lubi Kutua: Largely where we expected.

Speaker Change: But I think the other piece to note is the significant reduction in promotional trade.

Lubi Kutua: That has helped us a lot on margin, and we're very pleased to see the portfolio sustain that.

Speaker Change: If you look at the consumer reception, which is for your third question,

Speaker Change: We do have data, which is encouraging. If you strip away the promotional activity I talked about, which kind of tends to distort the year-over-year numbers, and just look at the base, and then you look at some of our larger accounts,

Ethan Brown: And with that, I would now like to turn the call over to Ethan Brown. Thank you, Paul, and good afternoon, everyone. I am pleased to report a strong quarter of progress against our 2024 plan, including exceeding or Q2 revenue objectives, continued reduction in operating expenses and cash consumption, and our best quarterly gross margins since Q3 2021.

Speaker Change: You do see Velocity 4, with Beyond 4 items, particularly beef and beef.

Speaker Change: The burger, which is where we have the most data.

Ethan Brown: Today, I'll provide more detail around this progress in the context of each of our five key objectives for 2024, including a launch of Beyond Four as a defining pillar for Beyond Meat's Center for Plate Role in the global health and wellness trend. The first a brief overview of our second quarter financial results. Net revenues of 93.2 million exceeded the top end of our 85 million to 90 million guidance range but still reflected in 8.8 percent decline from the year ago period.

Speaker Change: You're seeing growth in certain accounts that are significant national grocer accounts.

Ethan Brown: We're quite pleased with that, given that we instituted a significant price increase and pulled back on trade. We think that is evidence that the product is doing well and the messaging is responding. Also, along those lines, if you look at the chatter about the product, both in the medical community and in the nutrition and registered dietician community, it is extremely positive, and it's not positive in the sense of, you know, this doesn't taste very good, but it's very healthy.

Ethan Brown: We're quite pleased with that, given that we instituted a significant price increase and pulled back on trade. We think that is evidence that the product is doing well and the messaging is responding. Also, along those lines, if you look at the chatter about the product, both in the medical community and in the nutrition and registered dietitian community, it is extremely positive. And it's not positive in the sense of, you know, this doesn't taste very good, but it's very healthy.

Speaker Change: And then seeing stabilization in others. So we're quite pleased with that given that, you know, we instituted a significant price increase

Speaker Change: pulled back on trade. And so we think that is evidence that the product is doing well and the messaging is resonating.

Ethan Brown: It's, it's really something that our research and development and operations team needs to be extremely proud of. They not only improved the nutritional profile of those products, which were already strong, as I mentioned, but they also, from an organoleptic perspective, improved the products.

Speaker Change: Also along those lines, if you look at the chatter about the product, both in the medical community and in the nutrition and registered dietitian community, it is extremely positive. And it's not positive in the sense of, you know, this doesn't taste very good, but it's very healthy.

Ethan Brown: As discussed on prior calls during the second quarter 2024 we scaled back on emotional trade discounts and together with the initial appearance of price increases on certain products in the U.S, this resulted in a 6.1 percent increase in our net revenue per pound compared to the year ago period including a 20.5 percent increase in our U.S, retail channel net revenue per pound. Gross margin rose to 14.7 percent substantially higher than the 2.2 percent outcome in the same quarter last year and the 4.9 percent level achieved in the first quarter of this year.

Ethan Brown: It's really something that our research and development and operations team needs to be extremely proud of. They not only improved the nutritional profile of those products, which were already strong, as I said, but they also, from an organoleptic perspective, improved the products.

Speaker Change: It's really, to me, something that our research and development and operations team needs to be extremely proud of. They not only improved the nutritional profile of those products, which were already strong, as I mentioned,

Speaker Change: But they also, from an organoleptic perspective, improved the products. And we're seeing that in their reaction, whether on social media, whether on media coverage.

Ethan Brown: And we're seeing that in their reaction, whether on social media, whether in media coverage. So overall, we're very pleased with that launch. It's going extremely well in these early days. We just announced it right before Memorial Day, and we continue to see some of it on the dinner sausage side flow through. So overall, I'll hand that over to Lubi to handle that.

Lubi Kutua: Ben, I think you have a second part of the question. Was it specific to the price increase?

Lubi Kutua: So overall, we're very pleased with how the launch is going. Extremely early days, we just announced it right before Memorial Day, and we continue to see some of it on the dinner sausage side flow through. So overall, we're quite pleased. On the price increase, I'll hand that over to Lubi to handle that.

Ethan Brown: Importantly we expect to see further gross margin progress across the balance of the year reflecting the combined impact of more fully distributed pricing adjustments. Continued moderation of promotional spending and ongoing cogs improvements as we consolidate our network and continue on our lean management journey. Operating expenses in the second quarter fell to 47.6 million as we continue to pursue efficiencies throughout the organization. Marking a 8.4 million dollar reduction year over year the 2 million dollar reduction compared to the first quarter of this year after adjusting for the 7.5 million class action settlement we disclosed last quarter.

Benjamin Theurer: Ben, I think you had a second part of the question. Was it specific to the price increase? No, no, no, no.

Lubi Kutua: Yeah.

Speaker Change: Ben, I think, did you have a second part of the question? Was it specific to the price increase?

Benjamin Theurer: No, no, no, no. The price that was actually covered by Ethan. What I was wondering is that you tend to always give a little bit more of a near-term outlook and not only for the full year. So anything you can maybe share on your initial thoughts as to the third quarter now that we start getting into easier comps from last year? Is it fair to assume that we're going to get into growth and continued margin expansion also on a sequential basis, or how should we think about the third quarter, maybe in context to the second, as that one came out better than you initially expected?

Lubi Kutua: The price that was actually covered by Ethan. What I was wondering is that you tend to always give a little bit more of a near-term outlook and not only for the full year. So anything you can maybe share on your initial thoughts as to the third quarter now as we start getting into easier comps from last year? Fair to assume that we're going to get into growth and continued margin expansion also on a sequential basis, or how should we think about the third quarter, maybe in context to the second, as that one came out better than you initially thought... Yeah, sure.

Speaker Change: no i don't know the price that was actually covered that you and what i what i was wondering

Speaker Change: you tend to always give a little bit of more of anear term and not only for the full year so anything you kid maybe share on what your initial thoughts as to the third quarter now as we start getting into into easier comes from last year fair assumethatwe're going to get into growth and then continued margin expensionals on us on the sequential basis or how should we think about the third quarter maybe in context to the second quarter

Ethan Brown: Lastly our cash consumption fell to 15.5 million in the second quarter a 67 percent and 52 percent reduction on a year over year quarter over quarter basis respectively. We continue to aggressively manage cash use across the business and remain highly focused on working toward cash flow positive and ultimately profitable operations.

Lubi Kutua: Yeah, sure. So, you know, I think as Ethan mentioned in his prepared remarks, we do expect to see sequential improvement in our gross margins in the second half of the year, and, you know, our guidance would imply that as well. You know, you're correct, you know, in recent quarters we have provided some directional color for the current quarter. We're not doing that for Q3 specifically, but, you know, what I'll say is, you know, if you think about just the seasonality of our business, right, typically we tend to generate most of our revenues or a bigger proportion of our revenues in the second and third quarters, and so as you're thinking about Q3 versus Q4, I would just keep that in mind, and then, you know, from an operating expense perspective, if you look at our guidance, right, what it would imply obviously for the back half of the year would be a lower rate of operating expense of expenses relative to the first half.

Speaker Change: Yes, that one came already better than what you initially expected.

Lubi Kutua: So, you know, as Ethan mentioned in his prepared remarks, we do expect to see sequential improvement in our gross margins in the second half of the year. And, you know, our guidance would imply that as well. You know, you're correct. In recent quarters, we have provided some directional color for the current quarter. But we're not doing that for Q3 specifically. But, you know, what I'll say is, you know, if you think about just the seasonality of our business, right, typically, we tend to generate most of our revenues or a bigger proportion of our revenues in the second and third quarters.

Speaker Change: Yeah, sure. So, you know, I think as Ethan mentioned in his prepared remarks, we do expect to see sequential improvement.

Ethan Brown: With that let me delve into our five priorities for 2024 including our clear and enhanced positioning around health the back of the beyond for launch. First getting leaner Q2 provides a very clear proof point that our operations are making progress toward getting leaner and more efficient. This quarter compared with the year ago period we realized 11.4 million more gross profit despite lower revenue and 8.4 million dollars less in operating expenses. Furthermore inventory and cash consumption were both down on a year over year and sequential basis.

Speaker Change: in our gross margins in the second half of the year and our guidance would imply that

Speaker Change: You know, you're correct, you know, in recent quarters we have provided some directional color for the current quarter. We're not doing that for Q3 specifically, but, you know, what I'll say is, you know, if you think about just the seasonality of our business, right, typically we tend to generate most of our revenues or a bigger proportion of our revenues in the second and third quarters. And so as you're thinking about Q3 versus Q4, I would just keep that in mind. And then, you know, from an operating expense perspective, if you look at our guidance,

Lubi Kutua: And so as you're thinking about Q3 versus Q4, I would just keep that in mind. And then, you know, from an operating expense perspective, if you look at our guidance, right, what it would imply, obviously, for the back half of the year would be a lower rate of operating expenses relative to the first half.

Ethan Brown: Throughout the first half of 2024 we realized the reduction in operating expenses of 22.6 million excluding the 7.5 million class action settlement accrued in Q1 2024. As reflected in our updated guidance we are targeting a reduction in operating expenses in the equivalent period in 2023. In support of lean management implementation continue to narrow our focus on specific products markets consumers and messages.

Speaker Change: For guidance on what it would imply, obviously, for the back half of the year, would be a lower rate of operating expenses relative to the first half.

Benjamin Theurer: Okay, perfect. Thank you very much. We'll pass it on.

Speaker Change: Okay, perfect. Thank you very much. We'll pass it on.

Operator: The next question is from Adam Samuelson with Goldman Sachs. Please go ahead.

Ethan Brown: This brings us to our second priority to the on four rollout. We officially kicked off the launch and accompanying campaigns for Beyond Four during the week leading up to Moral Day. An exciting moment for the company when it marks a culmination of multi-year renovation of our core platforms of Beyond Burger, Beyond Beef, and Beyond Dinner Sausage. Beyond Four represent a clear manifestation of our company's product strategy. As I've often shared, despite compelling data on the health benefits of our products from peer viewed research as a Stanford School of Medicine Swap Meat Study, a sustained, misinformation campaign championed by members of the incumbent animal protein industry, as well as the pharmaceutical industry, electing sizable antibiotic sales to the livestock sector, has substantially and negatively impacted consumer perception of our products and the plant-based meat industry as a whole.

Speaker Change: church

Speaker Change: The next question is from Adam Samuelson with Goldman Sachs. Please go ahead.

Adam Samuelson: Yes, thank you. Good afternoon, everyone.

Adam Samuelson: Yes, thank you. Good afternoon, everyone. See you, Adam.

Adam Samuelson: yes thank you i' got noite everyone

Adam Samuelson: Alright, so I guess maybe first just thinking about kind of that tension between kind of the price increases and the clear desire to drive gross margins, but also kind of thinking about the unit cost reductions and kind of the ability to drive that on a lower volume base. Can you help us think about the improvement in gross margins in the second half and how much we should be thinking really is incremental price increases or the flow through of effectuated price increases and mix versus actual reductions in unit costs from here? I appreciate you're trying to simplify the business, but the volume base is also shrinking, so I'm trying to just balance those two figures.

Adam Samuelson: Alright, so I guess maybe first just thinking about kind of that tension between kind of the price increases and the clear desire to drive gross margin, but also kind of thinking about the unit cost reductions and kind of the ability to drive that on a lower volume base. Can you help us think about the improvement in gross margins in the second half and how much we should be thinking really is incremental price increases or the flow-through of effectuated price increases and mix versus actual reductions in unit costs from here? I appreciate you're trying to simplify the business, but the volume base is also shrinking, so I'm trying to just balance those two figures.

Speaker Change: yeah

Adam Samuelson: so i guess maybe first just thinking about kind of that tension between kind of the price increases and the clear desire to drive to drive gross margins

Speaker Change: But also kind of thinking about the unit cost reductions and kind of the ability to drive that on a lower volume base. Can you help us think about...

Speaker Change: The improvement in gross margins in the second half.

Speaker Change: And how much we should be thinking really is incremental price increases or the flow through of effectuated price increases in mix versus actual reductions in unit costs.

Ethan Brown: In response, we have intensified our innovation roadmaps emphasis on health. The team has made remarkable progress with regards to subjective, so much so that over the longer run, I believe it will be arguable whether Beyond Meat is at its core, the plant-based meat company that delivers health and wellness, or a health and wellness company that makes plant-based meat. Beyond Four Portfolio, so successfully captures our health commitment that, as I previously noted, is worth repeating.

Speaker Change: from here. I appreciate you're trying to simplify the business, but the volume base is also shrinking, so I'm trying to just balance those two figures. Thank you.

Ethan Brown: Sure, do you want me? I can take that.

Speaker Change: pu

Speaker Change: Sure, do you want me? I can take that.

Ethan Brown: Sorry, sorry, Lubi. I'll grab it and hand it over to you.

Ethan Brown: Sorry, sorry, Lubia. I'll grab it and hand it over to you.

Speaker Change: Sorry, sorry, Lubi. I'll grab it and hand it over to you.

Ethan Brown: Our fourth generation Beyond Burger, Beyond Beef, and Beyond Inter-Sausage are recipe-certified by the American Heart Association's Heart Check Program, and are included in the American Diabetes Association's Better Choices for Life Program. Reflecting the widespread corrosiveness of the false and misleading attack, I do not expect consumer perception to shift quickly and certainly not overnight. However, I do believe it will change, and this change is being aided by the increasing number of highly credible doctors, registered dietitians, and nutritionists who are coming out in strong support of our Beyond Four products.

Ethan Brown: So, you know, I think if you look at the cadence of the price increase, we began it in certain retailers and certain products beginning in April, phased it in a little bit more in May. And so this, you know, the third and fourth quarter should be the sort of fuller distribution. And so we do expect some uplift from that. And then, of course, trade reduction will continue throughout the back half. So we'll also expect a good guy from that.

Speaker Change: So, you know, I think if you look at...

Adam Samuelson: The cadence of the price increase, you know, we began it

Adam Samuelson: in certain retailers and certain products beginning in April , phase it in a little bit more in May. And so this...

Adam Samuelson: The third and fourth quarter should be the fuller distribution, and so we do expect some uplift from that.

Adam Samuelson: And then, of course, trade reduction will continue throughout the back half, so we'll also expect a good guy from that. But I don't want to underestimate, and I think this is where your question is.

Ethan Brown: This supports stems from Beyond Four Portfolio's Clean Ingredients and Nutritional Profile. For those who are newer to our story, these attributes are worth highlighting. Beyond Four Burger and Beef products use protein source from yellow peas, brown rice, red lentils, and fava beans, and fat from avocado oil to deliver 21 grams of clean protein with just two grams of saturated fat. By comparison, that 75 percent less saturated fat than equivalently sized 80-20 beef burger.

Ethan Brown: But I don't want to underestimate, and this is where your question is, the significant progress that we're making on the cost of goods. And that is coming from several different areas. Probably first and foremost is the internalization of our network. You know, that decision was taken for a variety of reasons.

Adam Samuelson: the significant progress that we're making on cost of goods, and that is coming from several different areas. Probably first and foremost

Adam Samuelson: is the internalization of our network. That decision was taken for a variety of reasons, but one of the main benefits is that it's cut down on...

Ethan Brown: But one of the main benefits, right, is that it's cut down on tolling fees and underutilization fees that have been some of the drag on the business. It's also allowing for significant savings in logistics as we move forward, as well as much better overhead utilization and absorption. So we continue to think that those will drive a lower cost basis across the products for the balance of the year. Some other things that are kind of knick-knacks, the inventory reserves coming down, and then reduced depreciation on a smaller asset base given the write-up we did at the end of last year.

Ethan Brown: But one of the main benefits, right, is that it's cut down on tolling fees and underutilization fees that have been somewhat of a drag on the business. It's also allowing for significant savings in logistics as we move forward, as well as much better overhead utilization and absorption. So we continue to think that those will drive a lower cost basis across the products for the balance of the year. Some other things that are kind of knick-knacks, the inventory reserves coming down, and then reduced depreciation on a smaller asset base given the write-off we did at the end of last year.

Adam Samuelson: Tolling fees and underutilization fees that have been some of the drag on the business. It's also allowing for significant savings in logistics as we move forward as well as

Ethan Brown: Turning to Beyond Four Dinner Sausage, we see a similar story with protein from yellow peas and brown rice, fat from avocado oil, delivering 75 percent less saturated fat than equivalently sized pork sausage. These strong nutritional gains are occurring within products that are also winning praise from consumers for improved taste. As I reflect on these outcomes, I'm immensely proud of and grateful for our team, from our truly tireless innovators to adaptive production crews who routinely rise to the engineering challenges of a fast-moving company.

Adam Samuelson: Much better overhead utilization and absorption, overhead absorption, so we continue to think that those will drive a lower cost basis across

Adam Samuelson: The products for the balance of the year.

Adam Samuelson: There's some other things that are kind of knick-knacks, the inventory reserves coming down and then reduced depreciation on a smaller asset base given the write-up we did at the end of last year. So those things all combine to have, I think, a favorable view.

Ethan Brown: So those things all combine to have, I think, a favorable view on the top line and then some significant progress on www.beyondmeat.com, the lean management practice and principles. And so the establishment of value streams, looking at our business that way, and the horizontal flow of value across have allowed us to continue to get more efficient. And so I think we're realizing cost reduction and savings and focus, even on things like materials, through that transition to tooling. Thank you for watching. If you liked this video, please subscribe.

Ethan Brown: So those things all combine to have, I think, a favorable view on the top line and then some significant progress with Daniel Ringkos out of the system, and I think the last piece is more almost philosophical. We have bought into, as I've mentioned many times over the last sort of 18 months, the lean management practice and principles. And so the establishment of value streams, looking at our business that way, and the horizontal flow of value across has allowed us to continue to get more efficient. And so I think we're realizing cost reduction and savings and focus, even on things like materials through that transition to a Thank you for watching. This has been a presentation by the Library of Congress.

Ethan Brown: Before moving on from our product strategy, I will briefly touch on the recent launch of an entirely new line, Beyond Sun Sausage. Beyond Sun Sausage is not intended to replicate beef pork or poultry, but rather is intended to be its own delicious, satisfying protein option delivered in the context nutritious and clean ingredients. The concept, which is receiving high praise, consumers, and registered dietitians for taste and nutrition. In Bears, the emblem of the American Heart Association's Heart Check Program, and the American Diabetes Association's Better Choices for Life Program, is a confident step for Beyond Meat and the Plant-Based Meat Category, outside of the confines of a particular animal species.

Speaker Change: on it on the top line and then then some significant progress ' a ring cost at a system i think thatthe last pieces is more commercial alpable we are volought into as i've ent may time to the last thir eighteen months

Speaker Change: the lean management practice and principles and so the establishment of value streams, looking at our business that way and the horizontal flow of value across it has allowed us to continue to get more efficient.

Adam Samuelson: And so I think we're realizing cost reduction and savings and focus even on things like materials through that transition to a lean manufacturing structure. But Lubi, anything you want to add to that?

Ethan Brown: Instead, simply focusing on taste, mouthfeel, nutrition, and ingredients. The platform is built on the same protein blend from yellow peas, brown rice, red lentils, and thalabins, mixed with avocado oil, delivering 12 grams of protein and only one gram of saturated fat, and is offered in three delicious, bold flavors, Cajun, featuring diced red peppers and dried onions, pineapple jalapeno, featuring dried pineapple and diced jalapenos, and pesto featuring a blend of basil, oregano, rosemary spices.

Lubi Kutua: You know, I think you've covered it pretty well, Ethan. I think what I would just say is that if you look at the results for the second quarter, yes, we did begin to see some of the benefits from the recent price increases. But as Ethan mentioned, we should get, as that price increase starts to impact a greater portion of the overall business, we should have more of a benefit from that.

Lubi Kutua: No, I think you've covered it pretty well, Ethan. You know, I think what I would just say is that if you look at the results for the second quarter, yes, we did begin to see some of the benefits from the recent price increases, but as Ethan mentioned, we should get, as that price increase starts to impact a greater portion of the overall business, we should have more of a benefit from that.

Lubi Kutua: No, I think you covered it pretty well, Ethan. I think what I would just say is that if you look at

Lubi Kutua: The results for the second quarter. Yes, you know, we did begin to see some of the benefits from the from the recent price increases, but you know as Ethan mentioned, you know those we should get as you know that price increase starts to impact a Greater portion of the overall business. We should have more of a benefit from that. I mean, you know, if you look at our net revenue per pound

Lubi Kutua: I mean, if you look at our net revenue per pound this quarter in Q2 in our U.S. retail business, that was up 20.5%. I think one thing that's notable there is that most of that was not driven actually by strict list price increases. It was driven by a reduction in promotional spending relative to a year ago, and there were also some benefits from mix. And so, you know, the impact of pricing was not yet impacting that in a major way.

Lubi Kutua: If you look at our net revenue per pound this quarter in Q2 in our U.S. retail business, that was up 20.5%. I think, you know, one thing that's notable there is that most of that was not driven actually by, you know, simple price increases. It was driven by a reduction in promotional spending relative to a year ago, and there were also some benefits from mix.

Ethan Brown: I've watched consumer and nutrition community feed back with great interest, and was pleased to read what is my favorite comment in quite some time. Short and to the point, I believe this consumer post sums up our brand, people, and culture, seven words, writing, you guys keep getting better and better. As we moved into summer grilling season with Memorial Day, we launched our serve-love marketing campaign around our Beyond Four platform to heighten consumer awareness of the health benefits of Beyond Four products across a variety of media.

Speaker Change: This quarter, Q2, in our U.S. retail business, that was up 20.5%, I think.

Speaker Change: You know, one thing that's notable there is that most of that was not driven actually by, you know, simple, by pricing, you know, strict list price increases. It was driven by a reduction in the

Adam Samuelson: of promotional spending relative to a year ago, and there was also some benefits from mix. And so, you know, the impact of pricing was not yet, you know, impacting that in a, you know,

Lubi Kutua: And so, you know, the impact of pricing was not yet impacting that in a major way. And so we'll benefit from more of that as we go through the year. And then, as Ethan mentioned, there's other things within the cost of goods sold as well, where we should, where other areas where we should see some efficiencies. As Ethan mentioned, there were some temporarily high labor costs and things like that as we were bringing production volume in-house. And so, you know, the back half improvement that we expect in gross margins being driven both by the top line better pricing as well as improvement in COGS.

Ethan Brown: We centered on serve-love as this messaging communicates what we genuinely believe to be true. That serving Beyond Four products to family, friends, or yourself is an act of love due first and foremost to product strong health credentials, as well as attendant goodness for the world, whether that be climate, environment, or animal welfare. With our fourth generation Beyond Burger, Beyond Beef, and Beyond Dinner Sausage, including a collection of heart-healthy recipes certified by the American Heart Association's Heart Check recipe program and the product's relevance to cardiovascular health.

Adam Samuelson: And so we'll benefit from more of that as we go through the year. And then, as Ethan mentioned, there's

Lubi Kutua: And so, we'll benefit from more of that as we go through the year. And then, as Ethan mentioned, there are other things within the cost of goods sold as well, other areas where we should see some efficiencies. You know, as Ethan mentioned, there were some temporarily high labor costs and things like that as we were bringing production volume in-house. And so, you know, the back half improvement that we expect in gross margins will be driven both by the top line better pricing as well as improvement in cost.

Ethan Brown: Other things within cost of goods sold as well, other areas where we should see some efficiencies. As Ethan mentioned, there were some temporarily high labor costs and things like that as we were bringing production volume in-house. And so the back half improvement that we expect in gross margins being driven both by the top-line better pricing as well as improvement in COGS.

Ethan Brown: The image for the campaign is two hands forming a heart shape around our burger. Further, as part of the campaign, we unveiled our first-ever cookbook, Serve Love, collection of heart-healthy Beyond Meat recipes certified by the American Heart Association's Heart Check program. The cookbook is available for free download via the Beyond Meat website and helps to make nutritious, plant-based meals more accessible to all.

Adam Samuelson: Okay, that's helpful. If I could follow up on the second half, I think, take the revenue, the gross profit, the OPEX, and the CapEx guidance and I roll it all together, I mean, it would still imply kind of a negative free cash flow, maybe slightly smaller cash usage than you saw in the first half of the year, depending on exactly which direction working capital trends. But that includes kind of some of the pricing and the gross margin actions that you're kind of alluding to.

Speaker Change: Okay, that's helpful. And if I could follow up on the second half, I think take the revenue, the gross profit, the op-ex, and the cash-back guidance, and I roll it all together, I mean, it would still imply kind of negative free cash flow, maybe

Ethan Brown: Now, turning to our third priority, making progress to our U.S, trade and pricing programs in support of improved gross margin. For Q2, that revenue per pound in the U.S, retail channel is up 20.5 percent as compared to the year ago period and up 11.7 percent sequentially as compared to the first quarter of this year. The impact of pricing changes on the U.S, food service channel net revenue per pound was more muted as we saw some higher-trade expenses related to some of our larger customers in this channel. Nevertheless, we expect our U.S, pricing actions to provide a tailwind toward net revenues per pound in both channels through the balance of the year.

Speaker Change: Slightly smaller cash use than you saw in the first half of the year, depending on exactly which direction working capital trends. I guess...

Speaker Change: But that includes kind of some of the pricing and the gross margin actions that you're kind of alluding to.

Adam Samuelson: So from where we are in the second half of the year, what do we think about the process of the pathway to actually getting to a free cash flow, a positive outcome? And kind of when do you think it's possible that that could be achieved?

Speaker Change: From where we are in the second half of the year, what is the, how do we think about the pathway to actually getting to a free cash flow, a positive outcome, and kind of when do you think it's possible that that could be achieved?

Lubi Kutua: I can take that. Um, I mean, we have not, so I think it's absolutely true that our top priority as an organization, as a management team, is trying to drive this business to cash flow positive operations as quickly as possible. We have not said that this will occur this year, and as you know, we typically don't provide guidance in terms of expected cash consumption during the year. But look, as we've said on previous calls, right, that we are working, we continue to work on bolstering our balance sheet, that's a top priority for us, but we're going to continue to do the things that you're starting to see the results of in this quarter, which is continue to reduce operating expenses, and continue to drive gross margin higher.

Speaker Change: I can take that. I mean, we have not so...

Ethan Brown: Looking now at cost of goods sold and gross margin, we have substantially completed the consolidation of our production network, which is our fourth priority. This consolidation is enabling us to benefit from better asset utilization and inventory management, which we expect to continue freeing up working capital, fading overhead absorption, and generating production and logistics efficiencies, while also providing for better management of logistics and quality control. In May, McDonald's Germany kicked off its famous meals promotion with a campaign that featured two celebrity-favorite meals built around the McPlanet Burger and McPlanet Nuggets. We are also beginning our expansion into the significant plant-based meat-refrigerated category in Germany, having successfully reformed our products to achieve refrigerated shelf life requirements in that and other European markets.

Speaker Change: I think it's absolutely true that, you know, our top priority as an organization, as a management team, is, you know, we are trying to drive this business to cash flow positive operations as quickly as possible. We have not said that that will occur this year. And, you know, as you know, we typically – we don't provide guidance in terms of, you know, expected cash consumption, you know, during the year.

Adam Samuelson: Look, as we've said on previous calls, right, that we are working, we continue to work on, you know, bolstering our balance sheet, that's a top priority for us.

Lubi Kutua: That's a top priority for us, but we're going to continue to do the things that you're starting to see the results of in this quarter, which is continue to reduce operating expenses and continue to drive gross margin higher. I think the team has done a really good job in terms of our working capital efficiency. You can see our CapEx spending has been pretty low as well. So all of those things will benefit us, but we're certainly not calling for getting to cash flow positive in the back half of this year.

Adam Samuelson: but we're going to continue to do the things that you're starting to see the results of in this quarter which is

Adam Samuelson: You know, continue to reduce operating expenses, continue to drive gross margin higher. I think the team has done a really good job in terms of our working capital efficiency. You can see, you know, our CapEx spending has been pretty low as well. So all of those things, you know, will benefit us. But, you know, we're certainly not calling for getting to, you know, cash flow positive in the back half of this year.

Lubi Kutua: I think the team has done a really good job in terms of our working capital efficiency. You can see our CapEx spending has been pretty low as well. So all of those things will benefit us, but we're certainly not calling for getting to cash flow positive in the back half of this year.

Adam Samuelson: I appreciate the call. I'll pass it on. Thanks.

Adam Samuelson: I appreciate that, Kyle. I'll pass it on. Thanks.

Ethan Brown: Before wrapping up, I want to call attention to the return of a true fan favorite. Beyond the original orange chicken, which we partner with Panda Express to provide to consumers in a series of LTOs over the past few years, with the number one most requested dish on Panda Express's social channels became the subject of a petition signed by over 7,000 consumers. Listening to this demand from the consumer, beginning last month Panda Express brought back beyond the original orange chicken across hundreds participating locations across the country for another LTO.

Speaker Change: I appreciate the call. I'll pass it on. Thanks.

Operator: The next question is from Robert Moskow with T.D. Cowan. Please go ahead.

Adam Samuelson: The next question is from Robert Moskow with T.D. Cowan. Please go ahead.

Robert Moskow: Hi, thanks. I had a question about how retailers in the U.S. are viewing the plant-based category. You said yourself that the category still remains weak, but I was wondering, like, how are retailers responding to that? Are they reducing shelf space for the category in reaction? Or is it leading to a shakeout of the smaller players? And could you actually benefit from that as a result?

Robert Moskow: Hi, thanks. I had a question about how retailers in the U.S. are viewing the plant-based category. I mean, you said yourself that the category still remains weak.

Ethan Brown: Thanks.

Robert Moskow: Thanks.

Ethan Brown: Thanks, Rob. I appreciate it.

Robert Moskow: But I was wondering, like, how are retailers responding to that? Are they reducing shelf space for the category and reaction?

Speaker Change: Or is it leading to a shakeout of the smaller players?

Speaker Change: And could you actually benefit from that as a result? Thanks. Thanks, Rob. Appreciate it. So I think the answer is a little bit of both.

Ethan Brown: So I think the answer is a little bit of both, you know, just a broader context. As I've said many times, you know, we view this, although we thought initially we would escape it, we view this as just part of the process of disruption. There's going to be pushback, there's going to be a lull, there's going to be a shakeout, and that is obviously happening. But our job is to strengthen our business through that and emerge stronger as a result, and I think we're doing that.

Ethan Brown: Thanks, Rob. I appreciate it.

Ethan Brown: With that, I'll close by saying we are encouraged by many of the results we see this quarter, results that demonstrate clear progress against our 2024 plan and our longer-term goal of profitable operations.

Speaker Change: You know, just a broader context, as I've said many times, you know, we view this, although we thought initially we would escape it, we view this as

Lubi Kutua: I look forward to taking your questions later, and will now turn the call over to Luby to walk us through our Q2 financial results in greater detail, as well as update our outlook for 2024. Thank you Ethan, and good afternoon everyone. I'll begin by reviewing our second quarter financial results before providing an update on our 2024 outlook. This decrease in net revenues for the second quarter was primarily driven by a 14% decrease in volume of product sold, partially offset by a 6.1% increase in net revenue per pound.

Adam Samuelson: Just part of the process of disruption, there's going to be...

Adam Samuelson: Pushback, there's going to be a lull, there's going to be a shakeout, and that is obviously happening. Our job is to strengthen our business throughout that and emerge stronger as a result, and I think we're doing that. The retailers are responding to this in a number of different ways.

Ethan Brown: The retailers are responding to this in a number of different ways. Some are just staying the course. Some are shifting product placement between fresh and frozen, and others are putting pressure on some of the lower-performing players. So in that sense, I think we do benefit as Beyond and Impossible emerge as the two main players. So I think it's all of the above, but I also just want to caution you, I continue to view this over a much longer lens.

Adam Samuelson: Just staying the course some are shifting

Adam Samuelson: product placement between fresh and frozen.

Adam Samuelson: and others are exuding pressure on some of the lower-performing players. So in that sense, I think we do benefit as Beyond and Impossible emerge as the two main players.

Adam Samuelson: So I think it's all of the above, but I also just want to caution, you know, I continue to view this over a much longer lens. I think what you're seeing with the BEYOND4 portfolio is that the main thing that destabilized this category

Ethan Brown: I think what you're seeing with the Beyond 4 portfolio is the main thing that destabilized this category has been the misperception around health. Obviously, there's been some pricing issues and things of that nature, which in a recessionary or difficult economic environment, make more challenging, but we are hammering away at the single most important issue, in our view, that is required to get to get the entire category going again. The early results we're seeing from BEYOND4 suggest that we're on to the right strategy, and I have no doubt that as more and more consumers become educated, you know, not only from us, but from nutritionists who are backing it, practitioners, doctors, national health organizations, etc., that it'll become, I wouldn't say it's a stubborn few, but it'll become fewer and fewer people that are misled around the tremendous benefits they can bring to themselves and to their families by changing out the protein that's on the plate and using BEYOND to improve their health.

Lubi Kutua: The increase in net revenue per pound was primarily driven by lower trade discounts, pricing changes, and changes in product sales mix, partially offset by unfavorable changes in foreign currency exchange rates. Breaking this down by channel, our US retail channel net revenues decreased 7.5% to 44.9 million in the second quarter of 2024, compared to 48.5 million in the year-go period. Volume of product sold decreased 23.2%, primarily reflecting ongoing demand softness in the plant-based meat category, and the laughing of substantial promotional sales to a club channel customer in the year-go period. However, we were pleased to see a 20.5% increase in net revenue per pound, primarily resulting from lower trade discounts, changes in product sales mix, and the early impact from recent pricing acts.

Adam Samuelson: It has been the misperception around health, obviously there have been some pricing issues and things of that nature, which in a recessionary or difficult economic environment are always

Adam Samuelson: more challenging.

Adam Samuelson: But we are hammering away at the single most important issue in our view that is required to get

Adam Samuelson: To get the entire category going again, the early results we're seeing from BEYOND4 suggest that we're on to the right strategy. And I have no doubt that as more and more consumers become educated, you know, not only from us, but from nutritionists who are backing it, pediatricians, doctors, national health organizations, etc.

Speaker Change: that it will become i wouldn't take to stubn few but it will become fewer and fewer people that are misled around tremendous benefits they can bring to themselves into their families by changing out

Lubi Kutua: Thank you for your attention. Regarding the latter, although it is still early days, we are encouraged by the initial reads on consumer price elasticity, which appear to be generally in line with our expectations. US Food Service channel, that revenues decreased 18.9% to 10.3 million in the second quarter of 2024, compared to 12.8 million in the year of the global period. Volume of products sold decreased 20%, primarily reflecting ongoing demand softness in the plant-based meat category, as well as the impact from certain distribution losses.

Ethan Brown: So the ability of our team to create products that not only deliver on taste but really deliver on this health message, I think, can't be overstated. Over time, we'll continue to address price, and, you know, in some respects, if you look at certain products with certain customers in certain regions, we have already achieved an element of price parity, but that right now is not the most important factor to consider. It really is around cleaning the well a bit and making sure that consumers understand the power of these products to impact the health of their lives and their

Speaker Change: the protein that's found in the plate and using beyond to to improve their health and that so

Speaker Change: The ability of our team to create products that not only deliver on taste, but really deliver on this health message.

Speaker Change: I think can't be overstated. Over time, we'll continue to address price and, you know, in some regards, if you look at certain products with certain customers in certain regions.

Adam Samuelson: We have already achieved an element of price parity, but that right now is not the most important factor to consider. It really is around...

Lubi Kutua: Volume losses in US Food Service were partially offset by a 1.4% increase in that revenue per pound, primarily resulting from pricing changes, and changes in product sales mix, partially offset by higher trade discounts. In part, these higher trade discounts represent some trade reconciliation and true ups for larger customers in this channel. International retail channel, that revenues decreased 12.1% to 17.6 million in the second quarter of 2024, compared to 20 million in the year go period, primarily due to a 6.9% decrease in net revenue per pound, and a 5.5% decrease in volume of products sold.

Adam Samuelson: Cleaning the well a bit.

Speaker Change: and making sure that consumers understand the power of these products to impact the health of their lives and their loved ones.

Robert Moskow: Okay, just a quick follow-up. Maybe I missed it, but how much was the price increase that you took that you mentioned in April, not including the trade spend variations, and how did it influence 2Q?

Robert Moskow: Okay, just a quick follow-up. Maybe I missed it, but how much was the price increase that you took, that you mentioned in April, not including the trade spend variations, and how did it influence 2Q?

Speaker Change: Okay, just a quick follow-up. Maybe I missed it, but how much was the price increase that you took, that you mentioned in April , you know, not including the trade spend variations, and you know, how did it influence 2Q?

Ethan Brown: I don't think we give the exact blended amounts, but if you want to add, you know, kind of what some of the results have been, I don't think we ever share the full blenders.

Robert Moskow: I don't think we give the exact blended amounts, but if you want to add, you know, kind of what some of the results have been, I don't know if you've ever shared the full blended amounts.

Speaker Change: but only we give the exact blended amounts but to move if you want to add kind of what some of the resultsof been that i'd al ever shared the full butudget amount

Lubi Kutua: At a high level, the year-on-year decrease in international retail was largely driven by weakness in our EU chicken portfolio, which is lapping its year-go market launch and channel selling. Un favorable changes in foreign currency, particularly with respect to the Canadian dollar and softening category demanded some geographic regions. International Food Service channel, that revenues decreased 2.5% to 20.4 million in the second quarter of 2024, compared to 20.9 million in the year-go period, primarily due to a 1.4% decrease in volume of product sold, and a 0.9% decrease in net revenue per pound.

Lubi Kutua: Yeah, no, that's right, Rob. So we, you didn't miss it. We didn't say exactly how much the price increase was, but I think you could, you'd probably get a sense if you looked at consumer takeaway data. But again, if you look at the change in revenue per pound in our U.S. retail channel, like I said, pricing was actually not the most significant driver of that. It was, you know, the vast majority of that was related to the reduction in trade spend, and then there was, you know, some benefit from mix, which was also a bigger driver than just pricing alone.

Lubi Kutua: Yeah, no, that's right, Rob. So we, you didn't miss it. We didn't say exactly how much the price increase was, but I think you could, you'd probably get a sense if you looked at consumer takeaway data. But again, like if you look at the change in revenue per pound in our US retail channel, like I said, pricing was actually not the most significant driver of that. It was, you know, the vast majority of that was related to the reduction in trade spend, and then there was some benefit from mix, which was also a bigger driver than just pricing alone.

Adam Samuelson: Yeah, no, that's right, Rob. So we, we, we, you didn't miss it. We didn't, we didn't say exactly how much the price increase was, but

Speaker Change: You know, I think you can, you know, you probably get a sense if you look at

Adam Samuelson: atconsumer takeaway data but again like if you look at the change in that revenue perpound in our u s retail channel you know like i said pricing was actually not the most significant driver of that it was you know the vast majority of that was related to

Adam Samuelson: to the reduction in trade spend, and then there was some benefit from mix, which was also a bigger driver than just pricing alone.

Lubi Kutua: Overall, the year-to-year decrease was mainly driven by reduced sales to a large QSR customer, where we were lapping the launch of an LTO in the year-go period. Gross profit in the second quarter of 2024 was 13.7 million, or gross margin of 14.7%, compared to 2.3 million, or gross margin of 2.2% in the year-go period. This represented our best quarterly gross margin performance since the third quarter of 2021, and our lowest quarterly cost of goods sold per pound since the second quarter of 2021, suggesting that we are starting to see the financial benefits from some of the pricing, network consolidation, and other cost reduction initiatives we have been pursuing.

Robert Moskow: But, But there was a price increase. So is it is it showing up more in the third quarter because you're in more retailers with the price increase in the third? I'm just a little unclear, like, you know, how to dimensionalize it.

Speaker Change: but but there was a price increase so is it is it showing up more in third quarter because you're in more retailers with the price increase in third I'm just a little little unclear like you know how to dimensionalize it

Lubi Kutua: Yeah, that would be our expectation, Rob, is that it would show up more in the third and fourth quarters because, as Ethan mentioned, right, the price increase was implemented in waves. The first wave really, you know, began to happen in early April, and the second wave in May. And so, you know, when we look at the third and fourth quarters, we should benefit from, you know, a full quarter of more widely distributed price increases. Okay.

Adam Samuelson: Yeah, that would be our expectation, Rob, is that it would show up more in the third and fourth quarter because, as Ethan mentioned, right, there was

Robert Moskow: Okay, thank you very much.

Robert Moskow: Okay, thank you very much. Short.

Speaker Change: the price increase was implemented in waves the first wave for really began to happen in early april and the second wave in may and so when you look at the third and fourth quarter

Lubi Kutua: This quarter, we saw some of the treatment of the transitional direct labor costs, which began to impact us in the first quarter, as we brought more production volume in-house, and we are continuing to realize efficiency improvements as we accumulate internal production experience of our finished goods. Also, we are pursuing some rationalization of our US warehousing network, and has been encouraging to see the realization of year-to-year savings in our transportation and warehousing expenses.

Speaker Change: We should benefit from, you know, a full quarter of more widely distributed price increases.

Speaker Change: Okay, thank you very much.

Operator: The next question is from Alexia Howard with Bernstein. Please go ahead.

Speaker Change: short

Speaker Change: The next question is from Alexia Howard with Bernstein. Please go ahead.

Operator: The next question is from Alexia Howard with Bernstein. Please go ahead.

Alexia Howard: Good evening, everyone.

Alexia Howard: So... Can I ask about your market share trends in Europe? We obviously don't have visibility into that.

Alexia Howard: Good evening, everyone, so can I ask about your market share trends in Europe? We obviously don't have visibility into that.

Speaker Change: again.

Speaker Change: Um, so...

Speaker Change: Can I ask about your market share trends in Europe ? We obviously don't have visibility into that.

Alexia Howard: As I think about the US market versus the European market, it seems as though the US has been troubled as a category because of the misinformation campaign, but category strength is actually quite reasonably robust in Europe. However, in terms of the competitive dynamics, it seems as though the European market is more fragmented, perhaps more competitive. So I'm just wondering if you could speak a little bit about what you're seeing in terms of market share trends in the retail channel and, potentially, in food service and how you see things trending from here.

Lubi Kutua: At a high level, the decrease in cost of goods sold per pound primarily reflected lower inventory provision, lower manufacturing costs including depreciation, and lower logistics costs per pound, partially offset by higher materials cost per pound. The operating expenses were 47.6 million in the second quarter of 2024 compared to 56 million in the year-go period. The decrease in operating expenses was primarily due to reduced marketing expenses and lower non-production head-town expenses partially offset by an increase in general and administrative expenses.

Speaker Change: As I think about the U.S. market versus the European market, it seems as though the U.S. has been troubled as a category because of the misinformation campaign, but the category strength is actually quite reasonably robust in Europe .

Speaker Change: However, in terms of the competitive dynamics, it seems as though the European market is more fragmented, perhaps more competitive. So I'm just wondering if you could speak a little bit to what you're seeing in terms of market share trends.

Speaker Change: in the retail channel and potentially in food service and how you see things trending from here.

Ethan Brown: Yeah, so I can, I can take that initially and then hand it over to Lubi. Yes, not only in Europe, I think if you look at Canada, we do like what we're seeing, for example, in Canada, with respect to The Trends for Beyond Meat in Retail, where we're seeing growth and seeing some encouraging signs of broader consumer acceptance for our brand there. If you go over to Europe, it is, as you've said, highly fragmented. So it's hard to draw any kind of definitive conclusions about the entire geography.

Ethan Brown: Yeah, so I can, I can take that initially and then hand it over to Lubi. It's not only Europe; I think if you look at Canada, we do like what we're seeing, for example, in Canada, with respect to The Trends for Beyond Meat in Retail, where we're seeing growth and seeing some encouraging signs of broader consumer acceptance for our brand there. If you go over to Europe, it is, as you've said, highly fragmented. So it's hard to draw any kind of definitive conclusions about the entire geography.

Lubi Kutua: The reduction of operating expenses combined with the aforementioned improvement in gross profit drove a 19.8 million dollar year-on-year reduction in our operating loss and achievement more notable when considering that net revenue was 9 million lower this quarter than in the year-go period. Net loss was 34.5 million or 53 cents per common share in the second quarter of 2024 compared to 53.5 million or 83 cents per common share in the year-go period.

Speaker Change: Yes, not only Europe , but I think if you look at Canada, we do like what we're seeing, for example, in Canada with respect to

Speaker Change: The trends for Beyond Meat in retail, where we're seeing, we're seeing growth and seeing some

Adam Samuelson: Some encouraging signs of broader consumer acceptance for our brand there.

Speaker Change: If you go over to Europe , it is, as you've said, it's highly fragmented, so it's hard to draw.

Lubi Kutua: Adjusted EBITDA was a loss of 23 million or minus 24.7% of net revenues in the second quarter of 2024 compared to an adjusted EBITDA loss of 40.8 million or 40 percent of net revenues in the year-go period. Turning to our balance sheeting cash flow highlight, our cash and cash equivalence balance including restricted cash was 158 million and total outstanding debt was 1.1 billion as of quarter end on June 29, 2024. Inventory fell to 119.5 million at the end of the second quarter down by 3 million from Q1 of this year and by 87.6 million from Q2 of last year.

Ethan Brown: But I will say that if you look, for example, at one of our largest strategics, you know, we continue to do a really nice book of business with them. And, and you know, I think they're, they're, pleased with some of the launches we've had. I think you'll see some continued activity there. And so on the strategic side, we like what we're seeing. Retail, there are so many different economies; there's just different factors to consider in terms of getting into the refrigerated section and things of that nature.

Speaker Change: And a definitive conclusions about the entire geography, but I will say that if you look, for example, at one of our largest strategics, you know, we continue to do a really nice book of business with them. And I think they're, they're, they're pleased with.

Ethan Brown: But I will say that if you look, for example, at one of our largest strategics, you know, we continue to do a really nice book of business with them, and I think they're they're pleased with some of the launches we've had.

Ethan Brown: I think you'll see some continued activity there. And so on the strategic side, we like what we're seeing. In retail, there are so many different economies; there are just different factors to consider in terms of getting into the refrigerated section and things of that nature.

Speaker Change: Some of the launches we've had.

Speaker Change: I think you'll see some continued activity there, and so on the strategic side, we like what we're seeing. Retail, there's so many different economies, there's just different factors to consider in terms of getting into the refrigerated section and things of that nature.

Ethan Brown: I'm very bullish on Germany. I think it's a terrific plant-based market. It's, as I've mentioned before, one of the biggest and John Lavery. Thank you. Thank you. Thank you.

Ethan Brown: I'm very bullish on Germany. I think it's a terrific plant-based market. It's, as I've mentioned before, one of the top in the world, and so I think you'll see us be aggressive there, but drawing a conclusion around overall market share for the entire geography you referenced is difficult, given the fragmentation. Lubi, I don't know if you have any further detail.

Adam Samuelson: I'm very bullish on Germany. I think it's a terrific plant-based market. It's, as I've mentioned before, one of the

Lubi Kutua: Net cash used in operating activities was 47.8 million in the six months and the June 29, 2024 compared to 88.3 million in the year-go period. Capital expenditures total 2.5 million in the six months and the June 29, 2024 compared to 7.1 million in the year-go period. Finally, I'll conclude by commenting on our 2024 full-year outlook which we are updating as follows. Net revenues are now expected to be in the range of 320 to 340 million. Gross margin is now expected to be in the mid-teens range.

Lubi Kutua: top in the world, and so I think you'll see us be aggressive there, but drawing a conclusion around overall market share for the entire geography is difficult given the fragmentation, but Lubi, I don't know if you have any further details.

Lubi Kutua: Yeah, I would just say, as it relates to the retail channel in the EU, the way we think about growth in that particular channel and region is much less about market share gains and much more about distribution expansion. So, you know, we're starting from a very small base in the EU.

Lubi Kutua: Yeah, I would just say, you know, as it relates to the retail channel in the EU,

Lubi Kutua: You know, the way we think about growth in that particular channel and region is much less about market share gains and much more about distribution expansion.

Lubi Kutua: I mean, generally speaking, if you look at our market shares across our key European markets, they're, you know, I'm calling them low single-digit percentages because we just, you know, don't have that large of a presence out in Europe at the moment. So, you know, it's really about expanding our distribution, which is why we were so focused on this initiative to make sure that our shelf life for our fresh products was where it needed to be. And so we are, you know, we expect we'll start to see some of the benefits from this in the back half of this year and start seeing more distribution expansion within the EU.

Operator: Operating expenses, excluding the 7.5 million accrual related to the consumer class action settlement recognized in the first quarter of 2024 are expected to be in the range of 180 to 190 million and capital expenditures are expected to be in the range of 15 to 20 million and with that I'll turn the call over to the operator to open it up for your question. Thank you. We will now begin the question and answer session.

Lubi Kutua: You know, we're starting from a very small base in the EU. I mean, generally speaking, if you look at our market shares across our key European markets there, you know, and call it in the low single-digit percentages, because we just, you know, don't have...

Lubi Kutua: I mean, generally speaking, if you look at our market shares across our key European markets, they're, you know, I'm calling them low single-digit percentages because we just, you know, don't have that large of a presence out in Europe at the moment. So, you know, it's really about expanding our distribution, and which is why we were so focused on this initiative to make sure that our shelf life for our fresh products was where it needed to be. And so we are, you know, we expect we'll start to see some of the benefits from this in the back half of this year and start seeing more distribution expansion within the EU.

Lubi Kutua: that large of a presence out in Europe at the moment.

Speaker Change: So, you know, it's really about expanding our distribution, which is why we were so focused on, you know, this initiative to make sure that our shelf life for our fresh products

Operator: To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster.

Speaker Change: was where it needed to be. And so we are, you know, we expect, we'll start to see some of the benefits.

Ethan Brown: from this in the back half of this year to start seeing more distribution expansion within the EU. And, you know, in particular, as Ethan mentioned, the German market is one that we are very excited about. You know, the vast majority of that entire market, I think it's over 95 percent of the category is in the refrigerated portion, you know, of the overall category. Up until, you know, just recently, we essentially had no access.

Lubi Kutua: And, you know, in particular, as Ethan mentioned, the German market is one that we are very excited about. You know, the vast majority of that entire market, I think it's over 95% of the category, is in the refrigerated portion of the overall category. And, you know, up until, you know, just recently, we essentially had no access to the refrigerated aisle.

Benjamin Theurer: The first question is from Ben Thurer with Barclays. Please go ahead. Good afternoon, Ethan Louby. Thanks for taking my question. So Ethan, to begin with maybe as it comes out to the rollout of Beyond 4.0, the platform and then obviously the associated pricing increases you've been putting through and we're seeing that already nicely as you've highlighted on a profound basis. Two things around this, one, can you update us on how much of your portfolio has seen this upgrade and the new pricing already and how much it's still yet to come over next couple of months and or quarters.

Ethan Brown: And so it's much more about that, I would say, you know, just sort of generally speaking, when we look at the European market, our sort of core products, the burger and mince products over there continue to perform well. I mean, I think we've struggled a little bit more with the chicken portfolio in the EU. That's where, you know, we do see it as a very highly fragmented market over there.

Lubi Kutua: And so it's much more about that. I would say, you know, just sort of generally speaking, when we look at the European market, our sort of core products, the burger and mince products over there continue to perform well. You know, I think we've struggled a little bit more in the chicken portfolio. In the EU, that's where we do see a very highly fragmented market over there.

Speaker Change: to the refrigerated aisle. And so, it's much more about that, I would say, you know, just sort of generally speaking when we look at the European market, you know, our...

Speaker Change: So the core products, the, you know, the, um,

Ethan Brown: Burger and and and mince products

Speaker Change: I'm over there continue to perform. Well, I mean, I think we've we've we've struggled a little bit more in the chicken portfolio In the EU, that's where you know, we do see it as a very highly fragmented Market over there. There's a large private label presence in the EU as you know And so, you know I think the trend certainly in the the chicken portion of our portfolio in the EU have been softer than we would have anticipated But but we're still we remain pleased with what we're seeing on the on the core side and and like I said, it really comes down to expanding distribution

Benjamin Theurer: And then what has a consumer perception maybe being just around the product and how is the the field associated with the price point which obviously is a higher one than prior that would be like kind of like my first general question and not a quick one for do be.

Lubi Kutua: There's a large private label presence in the EU, as you know. And so, you know, I think the trend certainly in the chicken portion of our portfolio in the EU has been softer than we would have anticipated. But we're still, we remain pleased with what we're seeing on the core side. And like I said, it really comes down to expanding distribution.

Ethan Brown: There is a large private label presence in the EU, as you know. And so, you know, I think the trend certainly in the chicken portion of our portfolio in the EU has been softer than we would have anticipated. But we're still, we remain pleased with what we're seeing on the core side. And like I said, it really comes down to expanding distribution.

Ethan Brown: So I'll go ahead and answer the first point first on what percentage of the portfolio is undergoing the renovation upgrade. And if you look at what we launched so far, you have the beyond murder, you have beyond beef and then you have beyond dinner sausage all those now have the new formula and you have associated endorsements and things of that nature. And then the additional application there is some sausage which has even more saturated fat levels.

Alexia Howard: Great, thank you very much. I'll pass it on.

Speaker Change: Great, thank you very much. I'll pass it on.

Operator: Again, if you have a question, please press star then 1. The next question is from Peter Saleh with BTIG. Please go ahead.

Operator: Again, if you have a question, please press star then 1. The next question is from Peter Saleh with BTIG; please go ahead.

Speaker Change: Again, if you have a question, please press star then 1.

Speaker Change: The next question is from Peter Saleh with BTIG. Please go ahead.

Peter Saleh: Great, thanks for taking the question. Ethan, I was hoping you could talk a little bit about the competition, particularly in the U.S. Well, how do you see the health of the competitors right now? And what exactly do you see them doing as you guys are reducing discounts and raising prices? Are they doing the same thing, or are they doing something different? Just try to understand the dynamics right now that you're seeing with your competitors.

Peter Saleh: Great, thanks. Thanks for taking the question. Ethan, I was hoping you could talk a little bit about the competition, particularly in the U.S.

Ethan Brown: We do expect to continue to migrate the portfolio in the direction of those types of things but for now that's those are the major change that we've made on the price increase. You know, we've generally been pleased the we mentioned the last disease come in largely where we expected but I think the other piece to note is the significant reduction in promotional trade. That has helped us a lot on margin and we're very pleased to see the portfolio sustain that if you look at the consumer receptionist for your third question, we do have data which is encouraging.

Peter Saleh: How do you see the health of the competitors right now and what exactly do you see them doing as you guys are reducing discounts and raising prices? Are they doing the same or are they doing something different? Just try to understand the dynamics right now that you're seeing with your competitors.

Ethan Brown: Thanks for the question. Yeah, I don't see... Yeah, a counter move yet on the competitive side. I think we're all trying to do the same thing, which is move from one phase of this disruption to another, which is sustainable and profitable operations. So I don't anticipate any significant progressive moves in reaction to us or

Speaker Change: Thanks for the question. Yeah, I don't see...

Speaker Change: A counter move yet on the competitive side. I think we're all trying to do the same thing, which is move

Speaker Change: So from one phase of this disruption to another, which is sustainable and profitable operations. So I don't anticipate any significant progressive moves in reaction to us reducing prices, no.

Ethan Brown: If you strip away the emotional activity that's often not which kind of tends to distort the year-over-year numbers and just look at the base and then you look at some of our larger accounts, you do see velocity or the beyond four items, particularly beef and the burger, which is where we have the most data. You're seeing growth in certain accounts that are significant national grocery accounts and then seeing stabilization in others.

Peter Saleh: understood and then just curious what else can you guys do in this environment to really encourage trial or drive trial because that seems like to be another big obstacle at this point in time.

Speaker Change: Understood. And then just, just curious, what else can you guys do in this environment to really encourage trial or drive trial? Because that seems like to be another, a big obstacle at this point in time.

Ethan Brown: So the good news is, I think, when there's a debate and the public fears about pros and cons or something, and at some point... One side of the debate goes way too far, you tend to get people to come in and work on your behalf, just because it's the right thing to do.

Ethan Brown: So the good news is, I think, when there's a debate and the public fears about pros and cons or something. And at some point... one side of the debate goes way too far. You tend to get people to come in and work on your behalf just because it's the right thing to do. And we're seeing that now, where registered dietitians and nutritionist doctors are saying, cut this stuff out. Like, these products can really help you achieve some of your goals from a cardiovascular perspective, whatever the goal that may fit the portfolio that we have.

Speaker Change: So the good news is, I think, when there's a...

Ethan Brown: So we're quite pleased with that given that you know the institute a significant price increase hold back on trade until we think that is evidence that the product is doing well and the messaging is resonating. Also along those lines, if you look at the chatter about the product both in the medical community and then the nutrition and registered dietition community, it is extremely positive and it's not positive in the sense of, you know, this doesn't taste very good but it's very healthy.

Speaker Change: dedate and

Speaker Change: the

Speaker Change: public fear about pros and cons or something, right?

Speaker Change: And at some point...

Speaker Change: One side of the debate goes way too far. You tend to get people to come in and work on your behalf just because it's the right thing to do.

Ethan Brown: And we're seeing that now where registered dietitians, nutritionists, doctors are saying, hey, cut this stuff out. Like, these products can really help you achieve some of your goals from a cardiovascular perspective, whatever the goal that may fit the portfolio that we have. We're starting to see people come out of the woodwork and talk with their patients about it, talk with their followers about it. And that, I think, could earn media attention and engagement, consumers, while it's potentially less. [inaudible] Splashy, and some of the earlier stuff we did.

Speaker Change: And we're seeing that now, where registered dietitians, nutritionist doctors are saying, cut this stuff out. Like, these products can really help you achieve some of your goals, from a, whether it's cardiovascular perspective, whatever the goal.

Ethan Brown: It's it's really a to me something that our research and development and operations seem needs to be extremely proud of. They not only improved the nutritional profile of those products, which were already strong, as I mentioned, but they also from an elliptic perspective, improved the products. And so and we're seeing that in the reaction, whether in social media, whether on media coverage. So overall, we're very pleased that launch is going extremely early days. We just announced it right before the moral day that we continue to see some of it on the dinner sausage side flow through. So overall, quite pleased on the price increase.

Ethan Brown: We're starting to see people come out of the woodwork and talk with their patients about it, talk with their followers about it. And that, I think, could've earned media attention and engagement, so consistent with that slope of enlightenment that they talk about in the Gardner Life Cycle, right?

Speaker Change: That may fit the portfolio that we have. We're starting to see people come out of the woodwork.

Speaker Change: and talk with their patients about it talk with their followers about it and that i think that to own media and engagement

Speaker Change: with consumers. While it's potentially less splashy than some of the earlier stuff we did, it's very meaningful because it is

Ethan Brown: Very meaningful because it is so consistent with that slope of enlightenment that they talk about in the Gardner-Hyde Cycle. It's where people are now finally beginning to understand, okay, wait a minute, I mean, the folks on the call, this can make a practical and real difference in your health. You can ignore it, you can, you know, get involved in the politics of it, or you can just try it, right? And we're hearing more and more people say, you know what? Beyond 4. I really like it. Sun Sausage.

Speaker Change: are so consistent with that slope of enlightenment that they talk about in the Gardner-Hyde cycle, right? It's where people are now finally beginning to understand, okay, wait a minute, I mean, the folks on the call, like, this can make a practical and real difference in your health.

Ethan Brown: It's where people are now finally beginning to understand, okay, wait a minute. I mean, the folks on the call, this can make a practical and real difference to your health. You can ignore it, you can, you know, get involved in the politics of it, or you can just try it, right? And we're hearing more and more people say, you know what? Beyond 4. I really like it. Sun Sausage.

Lubi Kutua: I'll hand it over to the two Dan, of that. Yeah, Ben, I think you have a second part of the question. Was it specific to the pricing creep? No, no, no, the price that was actually covered by Ethan, what I was wondering, you tend to always give a little bit of more of a near-term outlook and not only for the full year. So anything you can maybe share on your initial thoughts as to the third quarter, now as we start getting into easier comps from last year, fair to assume that we're going to get into growth and continued marginally expansion also on the sequential basis or how should we think about the third quarter, maybe in context to the second quarter.

Speaker Change: You can ignore it, you can, you know, get involved in the politics of it, or you can just try it. And we're hearing more and more people say, you know what?

Ethan Brown: What a neat concept. Really healthy. I understand it. I'm benefiting from your products in X, Y, and Z. And that word of mouth is really important. And it's not all spontaneous, right?

Ethan Brown: What a neat concept. Really healthy. I understand it. I'm benefiting from your products, X, Y, and Z. And that word of mouth is really important. And it's not all spontaneous, right?

Speaker Change: Beyond Four. I really like it. Sun Sausage. What a neat concept. Really healthy. I understand it.

Speaker Change: I'm benefiting from your products in X, Y, and Z, and that's a word of mouth that's really important.

Ethan Brown: We are working within the health community to help get this message out, and you can see that with the various accreditations we have. You can see it with our broad and deep engagements in the nutrition and registered dietician community. But it's not necessarily flashy. It's just

Speaker Change: And it's not all spontaneous, right? We are working within the health community to help get this message out. And you can see that.

Speaker Change: with the various accreditations we have. You can see it with our broad and deep engagements in the nutrition and registered dietitian community. But it's not necessarily splashy. It's just effective.

Lubi Kutua: As that one came already better than what you initially expected. Yeah, sure. So, you know, I think as Ethan mentioned in his prepared remarks, we do expect to see sequential improvement in our growth margins in the second half of the year. And our guidance would imply that as well. You know, you're correct. In recent quarters, we have provided some directional color for the current quarter. We're not doing that for Q3 specifically, but what I'll say is, if you think about just the seasonality of our business, right, typically we tend to generate most of our revenues or a bigger portion of our revenues in the second and third quarters.

Speaker Change: Thank you very much.

Operator: The next question is from Ken Goldman with J.P. Morgan. Please go ahead.

Speaker Change: The next question is from Ken Goldman with J.P. Morgan. Please go ahead.

Kenneth Goldman: Hi, thank you. Ethan, there's a lot of helpful conversation on this call about nutrition and the continued battle against misinformation, and I do appreciate that. I wanted to ask you a little bit about how confident you are that the product's taste and texture, whichever product you want to talk about, the burger, the sausage, whatever, is where you want it to be. Because when I talk to investors and I talk to friends and family about the product, and obviously, it's a small sample size, I don't want to, you know, extrapolate too much.

Kenneth Goldman: Hi, thank you. Ethan, there's a lot of helpful conversation on this call about nutrition and the continued battle against misinformation, and I do appreciate that. I wanted to ask you a little bit about how confident you are that the products' taste and texture, whichever product you want to talk about, the burger, the sausage, whatever, is where you want it to be. Because when I talk to investors and I talk to friends and family about the product, and obviously, it's a small sample size, I don't want to, you know, extrapolate too much, it's still about the taste The taste isn't quite there, and the texture isn't quite there, where they say, I really want to eat this. And food is still about what people want to eat more than what they have to.

Ken Goldman: Hi, thank you.

Ken Goldman: Ethan, there's a lot of...

Speaker Change: You know helpful conversation on this call about nutrition and

Ken Goldman: You know, the continued battle against misinformation, and I do appreciate that.

Ken Goldman: I wanted to ask a little bit about how confident you are that the product's taste and texture, whichever product you want to talk about, the burger, the sausage, whatever, is where you want it to be.

Lubi Kutua: And so as you're thinking about Q3 versus Q4, I would just keep that in mind. And then, you know, from an operating expense perspective, if you look at our guidance, right, what it would imply obviously for the back half of the year would be a lower rate of operating expenses relative to the first half.

Ken Goldman: When I talk to investors and I talk to friends and family about the product, and obviously it's a small sample size.

Kenneth Goldman: It's still about the taste, where people say, Look, I know a hamburger isn't good for me, but I like eating it more than a Beyond Burger, more than your competitors' burgers. The taste isn't quite there, and the texture isn't quite there, where they say, I really want to eat this. And food is still about what people want to eat more than what they have to.

Lubi Kutua: Okay, perfect. Thank you very much, Possible.

Speaker Change: you know extrapolate too much it's still about the taste where people say look I know a hamburger isn't good for me but I like eating it more than a Beyond Burger more than your competitors burgers but the taste isn't quite there and the texture isn't quite there where there's they say I'm I really want want to eat this

Kenneth Goldman: And I've asked this question before on the call, I know. So I just wanted to get a sense of an update on kind of where you are in that, in the stage of the product. Thank you. Yeah, no, thanks.

Kenneth Goldman: And I've asked this question before on the call, I know, so I just wanted to get a sense of an update of kind of where you are in that, in the stage of the product. Thank you. Yeah, no, thanks.

Speaker Change: And food is still about what people want to eat more than what they have to. And I've asked this question before on the call, I know, so I just wanted to get a sense of an update of kind of where you are in that, in the stage of the product. Thank you. Yeah, no, thanks, Ken. Good question.

Adam Samuelson: The next question is from Adam Samuelson with Goldman Sachs. Please go ahead. Yes, thank you. I got to meet everyone. Adam. All right.

Ethan Brown: Yeah, no, thanks, Ken. Good question, you know; we wouldn't launch something that we sell if it did not represent an increase in the organoleptic or sensory experience of the product, right? That's not something we'd want to do. And so, in particular, the shift to this protein blend dealt with some of the off flavors; the use of avocado oil really helped with some of the flavor notes, as well as the health benefits. A bunch of other changes we made. And so we are seeing that simultaneous to tumor reaction that this, there's obviously gonna be some when you change the formula, and so we like the old formula. So you're gonna get some criticism from that.

Ethan Brown: Yeah, no, thanks, Ken. Good question, you know; we wouldn't launch something that we sell if it did not represent an increase in the organoleptic or sensory experience of the product, right? That's not something we'd want to do. And so, in particular, the shift to this protein blend... dealt with some of the off flavors. The use of avocado oil really helped with some of the flavor notes as well as the health and a bunch of other changes we made. And so we are seeing that simultaneous to tumor reaction that this, there's obviously gonna be some when you change the formula, and so we like the old formula. So you're gonna get some criticism from that.

Speaker Change: We wouldn't launch something that...

Ethan Brown: So I guess maybe first just thinking about kind of that tension between kind of the price increases and the clear desire to drive to drive gross margins, but also kind of thinking about the unit cost reductions and kind of the ability to drive that on a lower volume. Based, can you help us think about the improvement in gross margins in the second half? And how much we should be thinking really is incremental price increases or the flow through of affected price increases and mix versus actual reductions in unit costs from here. Appreciate you're trying to simplify the business, but the volume base is also shrinking. So I'm trying to just balance those two figures. Thank you.

Speaker Change: We felt

Speaker Change: did not represent an increase in the organoleptic or sensory experience of the product, right? That's not something we'd want to do.

Speaker Change: And so, in particular, the shift to this protein blend.

Speaker Change: dealt with some of the off flavors. The use of avocado really helped with some of the flavor notes, as well as the health, and a bunch of other changes we made. And so we are seeing that simultaneous

Speaker Change: consumer reaction that this, you know, there's obviously going to be some when you change the formula. And so we like the old formula. So you're going to get some criticism from that. But overall, the reaction has been strong in the tests we ran prior to launching.

Ethan Brown: But overall, the reaction has been strong, and the tests that we ran prior to launching indicated that this was an improvement in taste. And so, you know, we don't need everybody to like the product; we need enough people to like it. And there is a very large addressable market.

Speaker Change: indicated that this was an improvement on taste. And so, you know, we don't need everybody to like

Lubi Kutua: Sure. Do you want me? I can take that. Sorry, sorry, Olivia. I'll grab it in the end of the two. So I think if you look at. The cadence of the price increase, you know, we began it in certain retailers and certain products beginning in April phase it in a little bit more in May. And so this, you know, the third and fourth quarter should be the sort of full distribution. And so we do expect some uplift from that, and then of course trade reduction will continue throughout the back half.

Speaker Change: The product we need enough people to like it and there are a very large addressable market

Ethan Brown: As I've talked about before, not everyone does what they should do, I get that, but enough have a concern about it, or at least a desire to be healthy, that they enjoy the taste of this, and they enjoy the health benefits, and so they're going for it. And I think it's really, if you had to say, Ethan, here's the X amount of dollars, and all you can spend it on is either taste or health, I'd absolutely go after health because that's the misperception. There are enough people who really like the taste of the Beyond Burger, and I've been trying it. What? For 15 years,

Ethan Brown: And as I've talked about before, not everyone does what they should do. I get that. But enough have a concern about it, or at least a desire to be healthy, that they enjoy the taste of this, and they enjoy the health benefits, and so they're going for it. And I think it's really, if you had to say, Ethan, here's the X amount of dollars, and all you can spend it on is either taste or health, I'd absolutely go after health because that's the misperception. Not people who really like the taste of the Beyond Burger, and I've been doing this. What? 15 years?

Speaker Change: You know, as I've talked about before, not everyone does what they should do, I get that. But enough, I have a concern that, or at least a desire to be healthy.

Speaker Change: that they enjoy the taste of this and they enjoy the health benefits and so they're going for it and I think it's really, if you had to say, you know, the X amount of dollars and all you can spend it on is either taste or health, I'd absolutely go for health because that's the misperception. There's enough people who really like the taste of the Beyond Burger.

Ethan Brown: I know when they don't, I know when they do, and enough people that really like the taste, particularly this latest portfolio, that it's getting clear with folks about the really transformative impact this can have on their health. Look, I mean, we know this, that the standard, you know, American diet, it'll give you potentially a statin, give you a stent, you know, give you some other things. And there's a way through that, which is diet and exercise, and putting beyond the center of the plate is a major way of Enabling Healthier Diets.

Ethan Brown: I know when they don't, and I know when they do. And enough people that really like the taste, particularly this latest portfolio, that getting clear with folks about the really transformative impacts can have on their health. Look, I mean, we know this: the standard American diet will give you potentially a statin, it'll give you a stent, you know, it'll give you some other things. And there's a way through that, which is diet and, you know, putting beyond the center of the plate is a major way to Enable Healthier Diets.

Speaker Change: and I've been doing this, you know.

Speaker Change: What, 15 years? I know when they don't, and I know when they do. And enough people that really like the taste, particularly this latest portfolio, that that getting clear with folks about the really transformative impacts it can have on their health. Look, I mean, we know this, that the standard, you know, American diet

Kenneth Goldman: Thank you for that. That's very helpful.

Lubi Kutua: So we'll also expect a good guy from that. But I don't want to underestimate and I think this is where your question is, the significant progress that we're making on cost of goods. And that is coming from several different areas. As probably first and foremost, is the internalization of our network. You know, that decision was taken for a variety of reasons, but one of the main benefits right is that it's it's it's cut down on.

Speaker Change: It'll give you potentially a statin, it'll give you a stent, it'll give you some other things. And there's a way through that, which is diet. And putting Beyond at the center of the plate is a major enabler of a healthier diet. So that's the message we've got to get across.

Kenneth Goldman: Thank you for that. That's helpful. And then I wanted to ask a follow-up question about pricing. Is the reason that you're not taking prices internationally, and I believe that's the case, please correct me if I'm wrong, that you don't have that scale, that you don't necessarily, you're not in a place necessarily where you have the distribution yet? And to get distribution, you kind of want to maintain a price level that is maybe a little more appealing than it would be in a larger state.

Kenneth Goldman: And then I wanted to ask a follow-up question about pricing. Is the reason that you're not taking price internationally, I believe that's the case, please correct me if I'm wrong, that you don't have that scale, that you don't necessarily, you're not in a place necessarily where you have the distribution yet, and that to get distribution, you kind of want to maintain a price level that is maybe a little more appealing than it would be in a larger steady state environment, or Yeah, okay.

Lubi Kutua: Tolling fees and under the utilization fees that had been some of the drag on the business, it's also allowing for significant savings in logistics as we move forward, as well as much better overhead utilization and overhead of the orchard. So we continue to think that those will drive a lower cost basis across the products for the amount of the year. And some other things that have kind of make actually inventory reserves coming down.

Speaker Change: is the reason that you're not taking price internationally, and I believe that's the case, please correct me if I'm wrong, that you don't have that scale, that you don't necessarily, you're not in a place necessarily where you have the distribution yet, and that to get distribution, you kind of want to maintain a price level that is.

Speaker Change: You know, maybe a little more peeling than it would be in a...

Speaker Change: in a larger steady-state environment, or are there other factors to consider as we think about this?

Ethan Brown: That's right. I mean, if you look at some of the stuff we're doing in Europe, for example, with large strategic partners, that does have much more of a pricing element to it, right? And so that's where you see us continuing to be aggressive on some of those things, but Yeah, primarily the folks in New York.

Lubi Kutua: And then redistribution on a smaller asset base, given the right up we did at the end of last year. So those things all combined to have I think a favorable view on it on the top line. And then and then some some significant progress. As with the ring costs out of the system, I think that the last piece is more commercial south of the we are. Body into as I mentioned many times or the last sort of 18 months, the lean management practice and principles.

Speaker Change: Yeah, okay. That's right. I mean, if you look at some of the stuff we're doing in Europe , for example, with large sheet of partners, that does have much more of a pricing element to it, right? And so that's where...

Speaker Change: You see us continuing to be aggressive on some of those things, but yeah, they're primarily focused in the U.S.

Lubi Kutua: Hey, Ken, maybe what I would add to that is

Lubi Kutua: Hey, Ken, maybe what I would add to that as well is, you know, I believe it was two years ago at this point that we took a very close look at our pricing relative to the competitive set, you know, particularly in the EU. And we felt that the price gap, you know, our products were at a premium, they remain at a premium today, but we felt that the price gap was a little bit too, too large.

Ken Goldman: Hey, Ken, maybe what I would add to that as well is, I believe it was two years ago at this point, we did take a very

Lubi Kutua: And so the establishment of value streams, looking at our business that way and horizontal flow of value across of as loud as to continue to be getting more efficient. And so I think we're realizing cost reduction and savings and focus, even on things like materials after that transition to to a lean management structure, but living anything whatever.

Ken Goldman: Close look at our pricing relative to the competitive set.

Ken Goldman: particularly in the EU. And we felt that the price gap, our products were at a premium, they remain at a premium today, but we felt that the price gap was a little bit too large. So we did kind of reset our pricing level relative to the competitive set out there. And so I certainly think what you mentioned is certainly one element, right? But I think we did a pretty deep dive a couple of years ago to make sure that we're sort of priced in a place that we believe makes sense for that market.

Lubi Kutua: So we did kind of, you know, reset our pricing level relative to the competitive set out there. And so, you know, I certainly think what you mentioned is certainly one element, right. But I think we, you know, we did a pretty deep dive a couple of years ago to make sure that, you know, we're sort of priced in a place that we think that we believe makes sense for that market.

Lubi Kutua: No, I think you've covered it pretty well. You know, I think what I would just say is that if you look at the results for the second quarter. Yes, you know, we did begin to see some of the benefits from the from the recent price increases, but you know, as Ethan mentioned, you know, those we should get as you know that price increase starts to impact a greater portion of the overall business.

Lubi Kutua: We should have more of a benefit from that. I mean, you know, if you look at our net revenue per pound, this quarter in Q2 in our US retail business, that was up 20.5%. And I think, you know, one thing that's notable there is that most of that was not driven actually by, you know, simple by pricing, you know, strict list price increases. It was driven by reduction in the of promotional spending relative to a year ago.

Lubi Kutua: Great. Thank you so much. Sure. This concludes our question and answer session. Now, I would like to

Lubi Kutua: Great. Thank you so much. Sure. This concludes our question and answer session. Now, if you would like,

Speaker Change: Great. Thank you so much.

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

Speaker Change: sho

Ethan Brown: Thanks, guys. I'll be very brief.

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

Speaker Change: Go to Beadaholique.com for all of your beading supplies needs!

Speaker Change: Ethan, I think you're on mute.

Ethan Brown: Thanks, guys. I'll be very brief.

Ethan Brown: I think, you know, just wanted to emphasize that net revenue came in quite a bit higher than we were expecting, and margins are the best they've been since 2021. Cash usage is way down. You know, operating expenses are also down. Consolidation of the network continues to go really well, continuing to keep net lean and drive costs out of the business. We're doing this while we're addressing what I think is the main issue around the categories, restoring the health halo, doing that not only through our own marketing but also in association with a lot of very influential organizations and leaders in the health and wellness community.

Ethan Brown: Thanks, guys. I'll be very brief. I think, you know, just wanted to emphasize, looking at net revenue, it came in quite a bit higher than we were expecting. Margin's the best it's been since 2021. Cash use is way down.

Speaker Change: Operating expenses are also down, consolidation of the network continues to go really well.

Ethan Brown: I think, you know, just wanted to emphasize that net revenue came in quite a bit higher than we were expecting, and margins are the best they've been since 2021. Cash usage is way down. You know, operating expenses are also down. Consolidation of the network continues to go really well. We're continuing to implement lean and drive costs out of the business. We're doing this while we're addressing what I think is the main issue around the categories, restoring the health halo, doing that not only through our own marketing but also in association with a lot of very influential organizations and leaders in the health and wellness community.

Lubi Kutua: And there was also some benefits from mix. And so, you know, the impact of pricing was not yet, you know, but impacting that in a, you know, major way. And so we'll benefit from more of that as we go through the year. And then as Ethan mentioned, you know, there's other things within cost of goods sold as well, you know, where we should wear other areas where we should see some efficiencies, you know, as Ethan mentioned, you know, some there were some temporarily high labor costs and things like that as we were bringing production volume in house. And so, you know, the back half improvement that we expect in gross margins being driven both by the, you know, the top line better pricing as well as improvement in cost.

Speaker Change: continuing to implement Lean and drive costs out of the business. We're doing this while we're addressing what I think is the main issue around the categories, restoring the health halo, doing that not only on our own marketing, but also in association with a lot of very influential

Ethan Brown: So a lot of really positive stuff going on in a pivotal year for us. I look forward to reporting the balance of the year and sharing with you guys how this strategy, Food. But I appreciate the interest, and we'll be back soon.

Speaker Change: organizations and leaders in the health and wellness community. So a lot of really positive stuff going on in a pivotal year for us.

Ethan Brown: So a lot of really positive stuff going on in a pivotal year for us. I look forward to reporting the balance of the year and sharing with you guys how this strategy is going. Forward. But appreciate the interest, and we'll be back soon.

Speaker Change: I look forward to reporting the balance of the year and sharing with you guys how this strategy continues to unfold, but I appreciate the interest and we'll be back soon.

Operator: The conference is now concluded. Thank you for attending today's presentation.

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

Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Lubi Kutua: Okay, so that's helpful. I think the follow-up of the second half, I think take the revenue of the gross profit, the op-ex, and the cat-backed guidance, and I rolled all together. I mean, it would still imply kind of negative free cash flow, maybe slightly smaller cash use since then you saw it in the first half of the year, depending on exactly which direction working capital trends. I guess, but that includes kind of some of the pricing and the gross margin actions that you're kind of alluding to.

Lubi Kutua: So, from where we are in the second half of the year, what is the, how do we think about the pathways actually getting to a free cash flow, a positive outcome, and kind of when do you think it's plausible that that could be achieved? I can take that. I mean, we have not, so I think it's absolutely true that our top priority as an organization, as an management team, is we are trying to drive this business to cash flow positive operations as quickly as possible.

Lubi Kutua: We have not said that that will occur this year, and we don't provide guidance in terms of expected cash consumption during the year. But as we've said on previous calls, that we are working, we continue to work on bolstering our balance sheet. That's a top priority for us, but we're going to continue to do the things that, you know, you're starting to see the results of in this quarter, which is, you know, continue to reduce operating expenses, continue to drive gross margin higher.

Lubi Kutua: I think the team has done a really good job in terms of our working capital efficiency. You can see, you know, our cap expending has been pretty low as well. So all of those things, you know, will benefit us, but, you know, we're certainly not calling for getting to, you know, cash flow positive in the back half of this year. I appreciate you. Should I call pass you on?

Operator: Thanks.

Robert Moskow: The next question is from Robert Moscow with TD Cohen. Please go ahead. Hi, thanks. I had a question about how retailers in the US are viewing the plant-based category. I mean, you said yourself that, you know, that the category still remains weak, but I was wondering, like, how are retailers responding to that? Are they reducing shelf space for the category in reaction? Or is it leading to a shakeout of the smaller players, and could you actually benefit from that as a result? Thanks. Yeah. Thanks, Rob. Appreciate it.

Ethan Brown: So I think the answer is a little bit of both. You know, just in broader context, as I've said many times, you know, we view this, although we thought initially we would escape it. We view this as just part of the process of disruption. There's going to be pushback. There's going to be a lull. There's going to be a shakeout, and that is obviously happening right now, just to strengthen our business throughout that and emerge stronger as a result.

Ethan Brown: And I think we're doing that. The retailers are responding to this in a number of different ways. Some are just staying, of course, some are shifting products placement between fresh and frozen, and others are exceeding pressure on some of the lower performing players. So in that sense, I think we do benefit as, you know, beyond an impossible emerge as the two main players. So I think it's all of the above, but I also just want to caution.

Ethan Brown: I continue to view this over a much longer lens. I think what you're seeing with the Beyond 4 portfolio is the main thing that destabilized this category has been the misperception around health. Obviously, there's been some pricing issues and things of that nature, which in a recessionary or a difficult, egonotic bond. Goldman are always more challenging, but we are hammering away at the single most important issue in our view that is required to get the entire category growing again.

Ethan Brown: And the early results we're seeing from Beyond Four suggest that we're on to the right strategy. And I have no doubt that as more and more consumers are going to be educated, not only from us, but the nutritionists who are backing up, the nutritionists, doctors, natural health organizations, et cetera, that it will become, I wouldn't say to stubborn few, but it will become fewer and fewer people that are misled around the tremendous benefits they can bring to themselves and to their families by changing out the protein that's kind of played a music beyond to improve their health.

Ethan Brown: So the ability of our team to create products that not only deliver on taste, but really deliver on this health message, I think can't be overstated. Over time, we'll continue to address price, and in some regards, we look at certain products with certain customers in certain regions. We have already achieved an element of price parity, but that right now is not the most important factor to consider it really is around cleaning the well a bit and making sure that consumers understand the power of these products to impact the health of their lives and their weapons.

Ethan Brown: Okay, just a quick follow-up, maybe I missed it, but how much was the price increase that you took, that you mentioned in April, not including the trade spend variations, and how did it influence QQ? I don't think we give the exact blended amounts, but if you want to add kind of what some of the results have been, I don't think I've ever shared the full-blended amount. Yeah, no, that's right, Rob, so you didn't miss it, we didn't say exactly how much the price increase was, but I think you can probably get a sense if you look at consumer takeaway data, but again, if you look at the change in revenue per pound in our U.S, retail channel, like I said, pricing was actually not the most significant driver of that, it was the vast majority of that was related to the reduction in trade spend, and then there was some benefit from mix, which was also a bigger driver than just pricing alone.

Ethan Brown: But there was a price increase, so is it showing up more in third quarter? Because you're in more retailers with the price increase in third, I'm just a little little unclear like, you know, how to dimensionalize it. Yeah, that would be our expectation, Rob, is that it would show up more in the third and fourth quarter, because as Ethan mentioned, there was the price increase was implemented in waves, the first wave really began to happen in early April, in the second wave in May, and so when you look at the third and fourth quarter, we should benefit from a full quarter of more widely distributed price increase. News.

Operator: Okay, thank you very much. Sure.

Alexia Howard: The next question is from Alexia Howard with Bernstein. Please go ahead. Good evening, everyone. Again. Can I ask about your market share trends in Europe? We obviously don't have visibility into that. As I think about the US market versus the European market, it seems as though the US has been troubled as a category because of the misinformation campaign, but the category strength is actually quite reasonably robust in Europe. However, in terms of the competitive dynamics, it seems as though the European market is more fragmented, perhaps more competitive.

Alexia Howard: So I'm just wondering if you could speak a little bit to what you're seeing in terms of market share trends in the retail channel and potentially in food service and how you see things trending from here. Yeah, so I can take that initially and then hand it over to you. It's not only Europe, I think if you look at Canada, we do like what we're seeing, for example, in Canada with respect to the trends for beyond meets in retail.

Alexia Howard: We're seeing growth and seeing some encouraging signs of broader consumer acceptance from around there. If you go over to Europe, it is, as you've said, it's highly fragmented, so it's hard to draw and are definitive conclusions about the entire geography, but I will say that if you look, for example, at one of our largest strategics, we continue to do a really nice book of business with them, and I think they're pleased with some of the launches we've had, and I think you'll see some continued activity there.

Alexia Howard: On the strategic side, we like what we're seeing retail, there's so many different economies, there's just different factors to consider in terms of getting into the refrigerator section and things of that nature. I'm very bullish on Germany. I think it's a terrific plant-based market. As I mentioned before, one of the top in the world, and so I think you'll see us be aggressive there, but drawing is included in around overall market share for the entire geography of your office.

Alexia Howard: It's difficult to give you the fragmentation, but maybe I don't know if you have any further details. Yeah, I would just say, as it relates to the retail channel in the EU, the way we think about growth in that particular channel and region is much less about market share gains and much more about distribution expansion. We're starting from a very small base in the EU. Generally speaking, if you look at our market shares across our key European markets, they're in the low single digit percentages because we just don't have that large of a presence out in Europe at the moment.

Alexia Howard: It's really about expanding our distribution, which is why we were so focused on this initiative to make sure that our shelf life for our fresh products was where it needed to be. We expect, we'll start to see some of the benefits from this in the back half of this year to start seeing more distribution expansion within the EU. In particular, as Ethan mentioned, the German market is one that we are very excited about.

Alexia Howard: The vast majority of that entire market, I think it's over 95 percent of the category is in the refrigerated portion of the overall category and up until just recently, we essentially had no access to the refrigerated out. It's much more about that, I would say, just generally speaking, when we look at the European market, our core products, the burger, and mince products over there continue to perform well. I think we've struggled a little bit more in the chicken portfolio.

Alexia Howard: In the EU, that's where we do see a very highly fragmented market over there. There's a large private label presence in the EU, as you know. I think the trends certainly in the chicken portion of our portfolio in the EU have been softer than we would have anticipated, but we're still, we remain pleased with what we're seeing on the core side. Like I said, it really comes down to expanding distribution. Again, if you have a question, please press star then one.

Ethan Brown: The next question is from Peter Saleh with BTIG. Please go ahead. Great. Thanks for taking the question. Ethan, I was hoping you could talk a little bit about the competition particularly in the US. How do you see the health of the competitors right now and what exactly do you see them doing as you guys are reducing discounts and raising price? Are they doing the same or are they doing something different? Just try to understand the dynamics right now that you're seeing with your competitors.

Ethan Brown: Thanks for the question. Yeah, I don't see a counter move yet on the competitive side. I think we're all trying to do the same thing which is move from one stage of this disruption to another which is sustainable and profitable operations. So I don't anticipate any significant aggressive moves and reaction to us or some prices.

Ethan Brown: I understood and then just curious, what else can you guys do in this environment to really encourage trial or drive trial because that seems like to be another big obstacle at this point in time. So the good news is I think when there's a debate in the public sphere about pros and cons or something right and at some point one side of the debate goes way too far. You tend to get people to come in and work on your behalf just because it's the right thing to do.

Ethan Brown: And we're seeing that now where registered dietitians, nutritionist doctors are saying they cut this stuff out. Like these products can really help you achieve some of your goals from a whether it's cardiovascular perspective, whatever the goal that may fit the portfolio that we have. We're starting to see people come out of the woodwork and talk with their patients about it, talk with their followers about it, and that I think that could learn VVA and engagement with consumers while it's potentially less splashy than some of the earlier stuff we did.

Ethan Brown: It's very meaningful because it is so consistent with that slope of the light that they talk about in the gardener cycle. Right. It's where people are now finally beginning to understand, okay, wait a minute, I mean the folks on the call, but this can make a practical and real difference in your health. You can ignore it, you can get involved in the politics of it, or you can just try it. Right.

Ethan Brown: And we're hearing more and more people say, you know what, beyond four, we really like it, some sausage, what are neat concepts, really healthy, I understand it, I'm benefiting from your product and x, y and z, and that's a word of mouth is really important. And it's not all spontaneous, right. We are working within the health community to help get this message out. And you can see that with the various accreditations we have, you can see it with our broad and deep engagements in the nutrition and reticent competition community, but it's not necessarily splashy. It's just...

Operator: Thank you very much.

Ken Goldman: The next question is from Ken Goldman, which AP Morgan, please go ahead. Hi, thank you. Ethan, there's a lot of helpful conversation on this call about nutrition and the continued battle against misinformation. I do appreciate that. I wanted to ask a little bit about how confident you are that the products taste and texture, whichever product you want to talk about, the burger, the sausage, whatever is where you want it to be.

Ken Goldman: Because when I talk to investors and I talk to friends and family about the product, and obviously it's a small sample size. I don't want to extrapolate too much. It's still about the taste where people say, look, I know a hamburger isn't good for me, but I like eating it more than a Beyond burger, more than your competitors burgers. The taste isn't quite there and the texture isn't quite there where they say, I really want to eat this.

Ken Goldman: And food is still about what people want to eat more than what they have. I've asked this question before in the call. I know. So I just wanted to get a sense of an update of kind of where you are in that in the stage of the product. Thank you. Yeah, no, thanks, Ken. Good question.

Ethan Brown: So we wouldn't launch something that we felt did not represent an increase in the organoleptic or or century experience of the product, right? That's not something we want to do. And so in particular, the fifth to this protein blend dealt with some of the off flavors, the use of avocado, really helped with some of the flavor notes as well as the health. And a bunch of other changes we made. And so we are seeing that simultaneous to the reaction that this, you know, there's obviously going to be some when we change the formula, and so we like the old formula.

Ethan Brown: So you're going to get some criticism of that. But overall, the reaction has been strong and the Tesla ran prior to launching, indicated that this was an improvement on on taste. And so, you know, we don't need everybody to like the product. We need enough people to like it. And there are a very large, adjustable market. You know, as I've talked about before and not everyone does what they should do. I get that.

Ethan Brown: But enough. I have a concern that or at least it's desire to be healthy. That they enjoy the taste of this and they enjoy the health benefits. And so they're going for it. And I think it's really. If you had to say, you know, the X amount of dollars and all you've been on is either taste or health, absolutely, or healthy. That's the misperception. I mean, not people who really like the taste of the hamburger and I'm doing us, you know, about 15 years.

Ethan Brown: I know they don't, I don't know what they do. And enough people that really like the taste, particularly this latest portfolio, could that getting clear with folks about the really transformative impacts can have on their health. I mean, we know this, but these standard, you know, American diet. You know, it'll give you potentially a, you know, statin, give you stints, you know, give some other things. And they're the way through that, which is diet and, you know, putting beyond the plate as a major, of the Healthier Diet, and so that's the mess we're going to get across. Thank you for that, it's helpful.

Ethan Brown: And then one of the ask a follow up about pricing is the reason that you're not taking price internationally, and I believe that's the case, please correct me if I'm wrong, that you don't have that scale that you don't necessarily, you're not in a place necessarily where you have the distribution yet, and that to get distribution you kind of want to maintain a price level, but it would be a little more appealing than it would be in a larger steady state environment, or are there other factors to consider that we think about? Yeah, okay.

Ethan Brown: That's right, I mean, if you look at some of this up to doing in Europe, for example, with large sheet of partners, I mean, that does have much more of a pricing element to it, right? And so that's where ECS continue to be aggressive on some of those things, but primarily the focus in the US. What I would add to that as well is, I believe it was two years ago at this point, we did take a very close look at our pricing relative to the competitive set, particularly in the EU, and we felt that the price gap, our products were at a premium, they remain at a premium today, but we felt that the price gap was a little bit too large, so we did reset our pricing level relative to the competitive set out there.

Ethan Brown: And so I certainly think what you mentioned is certainly one element, but I think we did a pretty deep dive a couple of years ago to make sure that we're priced in a place that we thought that we believe makes sense for that market. Great, thank you so much. Sure.

Operator: This concludes our question and answer session.

Ethan Brown: I would like to turn the conference back over to Ethan Brown for any closing remarks. Ethan, I think you're on mute. Thanks guys. I'll be very brief. I think you know, just wanted to emphasize. Look at net revenue came in quite a bit higher than than we were expecting margins of best expense since 2021. Cash is way down. You know, operating expenses are also down. The salary of the network needs to go really well.

Ethan Brown: Can you implement lean and drive costs out of the business? They're doing this while we're addressing what I think is the main issue around the categories of storing the health halo. Doing that not only on our own, but also in association with a lot of very influential organizations and leaders in the health and wellness community.

Ethan Brown: So a lot of really positive stuff going on in a pivotal year for us. I look forward to reporting the balance of the year and sharing with you guys who have this strategy continues to unfold. But I appreciate the interest of the vaccine.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. Theurer, Robert Moskow, Paul Shepherd

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