BEYOND MEAT, INC. Q3 FY2024 earnings call

• Returned to growth with net revenues up 7.6% YoY. - Gross margin improved to 17.7% from negative 9.6% YoY, with COGS at lowest since 2021. - Operating expenses fell to $45.2 million, a $17.2M YoY reduction. - Five priorities for 2024: - Getting leaner and more efficient, implementing lean management practices. - Launching Beyond 4 platform (Beyond Burger, Beyond Beef, Beyond Dinner Sausage) with health benefits and certifications. - Supporting improved gross margin through U.S. trade and pricing programs. - Consolidating production network, reducing tolling fees and improving inventory management. - Maintaining investment focus in Europe, expanding retail reach in Germany and food service in France with McDonald's Veggie McCain nuggets. - Product innovations like Beyond Sun Sausage and Beyond Steak Filet, and expansion with Panda Express reintroducing Beyond The Original Orange Chicken.

Net revenues were $81 million for the third quarter of 2024, up 7.6% year-over-year. U.S. retail channel net revenues increased 14.6% to $35 million, driven by a 22.6% increase in net revenue per pound but offset by a 6.6% decrease in volume. U.S. food service channel net revenues rose 15.5% to $14.5 million, with a 7.9% increase in volume and 7% increase in net revenue per pound. National retail channel net revenue increased 17% to $16.6 million, with a 10.5% increase in net revenue per pound and 6% increase in volume. International food service channel net revenue decreased 17.2% to $15 million, due to a 22.1% decrease in volume but offset by a 6.2% increase in net revenue per pound. Gross profit was $14.3 million, or 17.7% gross margin, compared to a loss of $7.3 million and negative 9.6% gross margin in the year-ago period. Revenue contribution: U.S. retail channel contributed around 43.2% of total net revenue ($35M/$81M), U.S. food service around 17.9% ($14.5M/$81M), national retail around 20.5% ($16.6M/$81M), and international food service around 18.5% ($15M/$81M).

• Full year 2024 net revenues expected in the range of $320 million to $330 million. - Gross margin expected in the mid-teens range. - Operating expenses (excluding $7.5M consumer class action settlement) expected in the range of $180 million to $190 million. - Capital expenditures expected in the range of $10 million to $15 million. - Expect to add additional liquidity through ATM program by end of year and evaluate further balance sheet optimization in 2025.

• Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those described. - Risks include market competition, macroeconomic conditions, foreign currency exchange rate fluctuations, and supply chain issues that could impact financial performance.

Q: Peter Saleh asked about holding gross margin as sales stay and future projections.

A: Ethan Brown said progress in network consolidation, logistics, material costs, and overhead absorption would keep margin improving, with expectations to hold and improve in 2025.

Q: Peter Saleh followed up on capital raise.

A: Lubi Kutua said they intend to add liquidity via ATM by year end and are working on holistic balance sheet restructuring, with discussions carrying over to 2025.

Q: Ben Theurer asked about reconciling Nielsen data with reported U.S. retail results.

A: Ethan Brown explained differences between sell-in and consumption data, with expectation of true-up in Q4 and overall positive quarter performance in growth, margin, and expense reduction.

Q: Ben Theurer followed up on international food service volume impact.

A: Ethan Brown said it was due to a large QSR customer issue in an economy and inventory loading timing, with specific drivers for that customer.

Q: Michael Lavery asked about pricing dynamics and operational efficiency.

A: Ethan Brown discussed past pricing moves, current favorable elasticity with Beyond 4, and continued portfolio expansion toward health narrative, with ongoing product innovation and distribution expansion.

Q: Ken Goldman asked about pricing dynamics, TAM, and 2025 gross margin.

A: Ethan Brown said past pricing had noise, current pricing with Beyond 4 shows good trade-off, and it's too early to model 2025 sales growth but expects positive direction.

Q: John Baumgartner asked about operating expenses and brand investment.

A: Ethan Brown said operating expenses are focused on driving to profitability, with no immediate increase expected, and ongoing efforts to optimize.

Q: Connor Cerniglia asked about product innovation impact on sales.

A: Ethan Brown said Beyond 4 platform contributes to growth, with positive reception from consumers due to health benefits, taste, and certifications, driving velocity in certain retailers.