Beyond Meat (NASDAQ:BYND) held its fourth-quarter earnings conference call on Tuesday. Below is the complete transcript from the call.
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Full Transcript
OPERATOR
Thank you everyone and welcome to the Beyond Me Inc. 2025 fourth quarter conference call. At this time, all participants are in listen only mode. Later, you’ll have the opportunity to ask questions during the question and answer session. Should you need assistance, please signal a conference specialist by pressing the Star key followed by zero. To ask a question, you may press Star then one on your touchtone phone. To withdraw your question, please press Star then two. Please note this event is being recorded. It is now my pleasure to turn today’s conference over to Rafael Gross, Partner of ICR Inc. Please go ahead.
Rafael Gross
Thank you. Hello everyone and thank you for participating in today’s call. Joining me are Ethan Brown, Founder, President and Chief Executive Officer and Luby Katua, Chief Financial Officer and Treasurer, Chief Financial Officer and Trustee, Treasurer. By now everyone should have Access to our fourth quarter and full year 2025 earnings press release filed today after market close. This document is available in the Investor Relations section of Beyond Meat’s website at www.BeyondMeet.com. before we begin, please note that during the course of this call management may make forward looking statements within the meaning of the federal securities laws. These statements are based on management’s current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially from those described in these forward looking statements. Forward looking statements in our earnings release along with the comments on this call are made only as of today and will not be updated as actual events unfold. We refer you to today’s press release, our quarterly report on Form 10Q for the quarter ended September 27, 2025 and our annual report on Form 10K for the fiscal year ended December 31, 2025 to be filed with the SEC along with other filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward looking statements today. Please note that on today’s call management may reference adjusted ebitda, adjusted loss from operations and adjusted Net loss which are non GAAP financial measures. While we believe these non GAAP financial measures provide useful information for investors, any reference to this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with gaap. Please refer to today’s press release for a reconciliation of these non GAAP financial measures to their most comparable GAAP measures. And with that, I’d now like to turn the call over to Ethan Brown.
Ethan Brown
Thank you Rafe and hello everyone. We entered a challenging year for our brand with an equally challenging quarter. We used this period however to accomplish a series of foundational building blocks for the company. First, we retired the majority of our 2027 convertible debt notes and second, we raised significant capital, two measures that fundamentally changed and strengthened our balance sheet. Third, we invested in an enterprise wide transformation initiative with a focus on rightsizing our operations and expanding our margins. Fourth, and as you will see reflected in our Q4 2025 numbers, we took another hard look at the assets, products and inventories we believe are not needed going forward and took action to disposition them. Fifth, we continue to lead the category in bringing clean plant based meats to the consumer while hammering away at persistent misinformation promulgated by the incumbent industry. Finally, we laid the groundwork for repositioning Beyond Meat to Beyond the Plant Protein Company so that we can bring the strength of our brand, technology and expertise to adjacent categories. Having touched on the significant actions we took to strengthen our balance sheet through the elimination of approximately $900 million in debt in the addition of approximately $149 million in cash on our previous earnings call, I will forego further detail here. Instead, I will focus my comments on a quick financial review of Q4 2025 before turning to our transformation work product narrative and our brand repositioning and entry into adjacent markets. What I hope will be clear from these comments, especially for the investor who desires to drill down a level deeper than headline numbers, is that we are highly focused on reducing baseline operating expense and cash use, increasing conversion efficiency in our production facilities and addressing category headwinds straight on even as we take significant steps to diversify beyond it. Financial results for the fourth quarter 2025 reflect persistent weak demand in the plant based meat category, resulting in lower volumes, the impact of which ripple throughout our P and L. This negative pressure was coupled with a number of significant nonroutine charges, many of which, though not all, stem from our transformation activities. Sales were 61.6 million, down 19.7% from the year ago period. Lower sales led to lower overhead absorption which together with higher trade negatively impacted gross margin. More significant, however, for large non routine or unusual items. These include such items as increased provision for inventory obsolescence, partly reflecting the strategic discontinuation of certain lower profit products and accelerated depreciation related to the cessation of our operational activities in China. The net result was a reported gross margin of 2.3%. Similarly, despite progress in reducing the baseline cost of operating our business, significant non routine items including large non cash charges increased our reporting operating expenses to 134.2 million versus $47.8 million in the year ago period. These included $48.1 million in non cash charges related to the write down to fair value of certain of the company’s long lived assets, a $38.9 million litigation related accrual and higher non cash stock compensation expense of approximately $13.3 million related to our convertible debt exchange transaction. Stripping out these non routine items and the impact of the transaction related change in non cash stock compensation, one can see that the run rate operating expense of our business is down considerably year over year. Finally, also reflecting the aforementioned transaction net income was $409.9 million in the fourth quarter of 2025 compared to a loss of $44.9 million in the year ago period, reflecting a $548.7 million gain on debt restructuring. To summarize, our fourth quarter 2025 results reflect both continuing challenges in the category as well as substantial noise in our reported numbers due to, among other factors, several of our transformation initiatives. I will now turn to this transformation activity where we are encouraged by the progress of our Transformation Office led by our Interim Chief Transformation Officer John Boken. As I noted, we’ve seen further reduction in underlying operating expenses excluding the nonroutine items and transaction related stock compensation increase for both the fourth quarter and full year 2025 on a year over year basis and we are pursuing other cost reduction measures going forward. Also setting aside certain non routine charges. We believe we are making progress against our goal to sustainably return to healthy gross margins. As previously shared, we’ve largely completed the consolidation of our production network and continue to improve asset utilization at our manufacturing facilities. Further, we’re now in the process of optimizing our new continuous production line at our facility in Columbia, Missouri and are investing in automation. These and other measures are already showing up in a year over year improvement in conversion costs across our network, a key component of our cogs reduction initiatives. Further, through our Transformation Office, we are seeking to reduce material costs through RFP actions, the cultivation of secondary sources and formulation improvements. We are further consolidating our warehouse network and reducing logistics expenses. We are exiting less profitable product lines and we are making substantial progress on driving down inventory. Finally, we remain very focused on cash management and significantly reduced our baseline cash use in the fourth quarter compared to prior periods excluding extraordinary items. I’ll now turn briefly to our ongoing efforts to dispel the persistent cloud of misinformation regarding our products. As I have noted countless times in these calls, the incumbent industry did a masterful job of seeding doubt in the mind of the consumer for the time being. We operate in an upside down world where protein from peas, lentils, fava beans and brown rice mixed with avocado oil and a limited number of other clean ingredients is disingenuously, though broadly cast as less than healthy. I believe this confusion will ultimately clear in the interim. We remain focused on innovating around taste and health and helping to communicate the latter via various accreditations and certifications, including our now 20 plus certifications from the Clean Label Project for our latest center of the plate innovations such as Beyond Steak Filet or Beyond Ground Fava. Consumers can now order directly from Beyond Test Kitchen, our direct to consumer platform. These products, their great taste, simple and clean ingredients and the impressive macronutrient content are winning accolades from consumers even before they reach retail stores. Beyond Steak Filet boasts 28 grams of protein, baba beans, wheat, gluten and mycelium and only 1 gram of saturated fat from avocado oil while boasting zero cholesterol and only 230 calories. Beyond Ground Fava delivers 27 grams of protein from fava beans and potato, 4 grams of fiber from psyllium husk, has no saturated fat or cholesterol and is only 140 calories. Moreover, Beyond Ground fava is made from only four ingredients, water, fava protein, potato protein and psyllium husk, and performs extremely well in dishes such as tacos, bolognese and protein bowls. Finally, I’ll now turn to a key and central communication. Notwithstanding the many changes occurring through our Transformation Office that I’ve discussed above, when I noted late last year that going forward you should not expect more of the same, I was most of all referring to the broadening of the aperture that you see as we move from beyond meat to beyond the plant protein company. I believe that no company has innovated with plants under more scrutiny than Beyond Ever. We’re now bringing the resulting hard fought expertise and capabilities, our commitment to health and clean ingredients, and our brand to adjacent categories where we believe we can be disruptive and win. Our first foray in this broader delivery of the power of plants to consumers is our exciting new drink platform Beyond Immerse. The Beyond Immerse platform, a clear and slightly carbonated beverage, is designed to provide the consumer with protein, fiber, antioxidants and electrolytes, effectively immersing the body in the nutritional benefits of plants. We launched Beyond Immersed as we now plan to do with all new retail innovation on the Beyond Test Kitchen to early fanfare and excitement, generating over 3 billion media impressions and selling out of our first limited run inventory quickly. Beyond Immerse is formulated to support muscle health and recovery, gut health, immune function and hydration. Each serving contains 10 or 20 grams of protein, 7 grams of fiber and only 60 or 100 calories depending on the level of protein. Beyond Immerse is made without added sugar, sugar, alcohols, artificial sweeteners or flavors, stabilizers, carrageenan and many other ingredients present in many popular protein drinks. Easier to drink than a thick protein shake and made without whey so it is dairy free. The product is designed for the casual to competitive athlete as well as the busy student or professional who wants protein, fiber, antioxidants and electrolytes at the gym, home, work or on the go. Moreover, we believe it is particularly well suited for DLP1 users. I personally find it satisfying post workout at breakfast or late afternoon when I’d like a boost between meals. It’s been fun to watch consumers enjoy it and like all things beyond, we continue to innovate and iterate based on what we believe is a state of the art science and consumer use and suggestions. Far from stepping away from our mission to change the source of protein at the center of the plate from animals to plants, we reaffirm it and take to these promising adjacencies to introduce our brand to a much larger number of consumers and currently participating in a plant based meat category. We do so not to dabble, but with a firm and serious belief that our technology, our brand, and our commitment to human health and the power of plants allows us to successfully deliver unique and compelling value within the certain segments we’ve identified. In the end, it is our aspiration that, though indirect, this expansion will lead more consumers back to beyond at the center of the plate as they enjoy our brand, clean ingredients and commitment to their health in less controversial, more convenient products like Beyond Immerse. As such, I close today’s comments as I have many others that we remain focused on building tomorrow’s global protein company of size and significance. With that, I’ll now turn the call over to Luby.
Luby Katua
Thank you Ethan and good afternoon everyone. I’ll begin with a review of our fourth quarter financial results before providing some brief comments on our outlook and additional matters regarding some of our recent disclosures. Total company net revenues decreased 19.7% to 61.6 million in the fourth quarter of 2025 from 76.7 million in the year ago period. The decrease was primarily driven by a 22.4% decrease in volume of products sold, partially offset by a 3.5% increase in net revenue per pound. Ongoing softness in volume of products sold primarily reflects weak category demand in many of our key geographies and channels and lower sales of chicken and burger products to QSR customers both in the US and abroad. Net revenue per pound increased primarily as a result of changes in product sales mix, favorable changes in foreign exchange exchange rates and price increases of certain of our products, partially offset by higher trade discounts. Breaking this down by channel US retail channel net revenues decreased 6.5% to 31.7 million in the fourth quarter of 2025 compared to 33.9 million in the year ago period. The decrease was primarily volume driven, which again largely reflects weak category demand, while net revenue per pound was flat. Although volume headwinds persist, we are beginning to see some benefit from recently announced distribution gains in the mass channel, which is helping to mitigate the general softness in US foodservice. Net revenues decreased 23.7% to 8 million in the fourth quarter of 2025 compared to 10.5 million in the year ago period. The decrease was primarily driven by a 25.1% decrease in volumes of products sold, partially offset by a slight year over year increase in net revenue per pound. Although category dynamics in the foodservice channel also remain weak, much of the decline in our business was due to the lapping of sales of chicken products to a US QSR customer in the year ago period. Turning to international international retail channel, net revenues decreased 32.5% to 8.8 million in the fourth quarter of 2025 compared to 13.1 million in the year ago period. The decrease in net revenues was primarily driven by a 33.5% decrease in volume of products sold, partially offset by a 1.5% increase in net revenue per pound. The decrease in volume of products sold was primarily driven by reduced burger sales in the EU and certain retail channels in Canada. Although our Canadian business generally remains healthy year over year, comparisons were negatively impacted in part by stocking activity in the year ago period in anticipation of potential tariffs. Finally, in international foodservice, net revenues decreased 31.8% to 13.1 million in the fourth quarter of 2025 from 19.3 million in the year ago period. The decrease in net revenues …
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