Beyond Meat, Inc. Q1 FY2026 Earnings Call

Thank you, everyone, and welcome to Beyond Meat's First Quarter 2026 Conference Call. Please note this event is being recorded. It is now my pleasure to turn today's conference over to Mr. Paul Sheppard, Vice President of FP&A and Investor Relations. Please go ahead.

Thank you. Hello, everyone, and thank you for participating in today's call. Joining me are Ethan Brown, Founder, President and Chief Executive Officer; and Lubi Kutua, Chief Financial Officer and Treasurer. By now, everyone should have access to our first quarter 2026 earnings press release filed today after market close. This document is available in the investor relations section of Beyond Meat's website at www.beyondmeat.com. Before we begin, please note that during the course of this call, management may make forward-looking statements within the meaning of the federal securities laws. These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Forward-looking statements in our earnings release, along with the comments on this call, are made only as of today and will not be updated as actual events unfold. We refer you to today's press release, our quarterly report on Form 10-Q for the quarter ended March 28, 2026, to be filed with the SEC, our annual report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC, along with other filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. Please note that on today's call, management may reference adjusted EBITDA, adjusted loss from operations, and adjusted net loss, which are non-GAAP financial measures. While we believe these non-GAAP financial measures provide useful information for investors, any reference to this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Please refer to today's press release for a reconciliation of these non-GAAP financial measures to their most comparable GAAP measures. With that, I'd now like to turn the call over to Ethan Brown.

Thank you, Paul, and hello, everyone. Given that we have spoken recently, today I will briefly summarize our performance in the first quarter of 2026 before jumping right back into a progress report against the major priorities we are pursuing to position our enterprise for sustainable growth. First quarter net revenues of $58.2 million were in line with our expectations, although down year-over-year, reflecting continued headwinds in the plant-based meat category. Gross margin was up both sequentially and year-over-year, but significantly below what we believe to be an achievable target. A more substantial improvement in reported gross margin was frustrated by the flow-through of Q4 2025 inventory produced during a period of particularly low volume and overhead absorption, obscuring progress we are making on COGS, specifically conversion rates. Adjusted EBITDA figures tell a similar story, sequential and year-over-year improvement, yet considerable ground left to cover. For the quarter, and perhaps what is the strongest data point that we are emerging from the most intensive cash component of our restructuring, while also starting to see the impact of earlier headcount, other SG&A, and inventory management measures, our cash use for the quarter was $11.8 million, down significantly sequentially and year-over-year. To our broader recovery activities, I'll continue to organize these in three main buckets. One, our transition to beyond the plant protein company and associated strategic entry into adjacent categories within the growing functional food and beverage space. Two, our distribution and portfolio strategy activities around our core product narrative and associated product development. Three, operations and manufacturing initiatives currently being executed via our standing transformation office. As you will recall, we began our transition from Beyond Meat to Beyond, a plant protein company, earlier this year to bring the strength of our brand, expertise, and technology to adjacent growing categories in the functional food and beverage space. We believe that we are strongly positioned to compete and win based on what is now nearly two decades of work on the functionality, characteristics, cost, and presentation of plant-based inputs. It's possible that we've done this work, that is, we've innovated with plants under more scrutiny than any other company ever. I believe that because we've chosen to confront challenges, criticism, and incumbent industry campaigns against us by innovating more intensely, taking perceived weakness and seeking to create strength from it, we've developed disciplines and capabilities that allow us to produce winning products in adjacent categories. Consider, for example, that many of the most dominant products in these fast-growing segments use ingredients that we long ago dismissed and learned to work around. More generally, our scientists have labored against the arduous task of making plant protein and other plant-based ingredients taste, behave, and feel like animal muscle. Delivering the attributes of plants in products with less formidable characteristics offers degrees of freedom previously unavailable to our technical teams. The first product to emerge from this broadened aperture is Beyond Immerse, a clear, lightly carbonated drink delivering protein, fiber, antioxidants, and electrolytes. One way to think about Beyond Immerse is to note that it is concurrently addressing four distinct beverage categories, each of which serve a specific need: protein drinks, fiber drinks, vitamin drinks, and electrolyte drinks. The product delivers against each relevant need state within not four, but one beverage, and does so with a refreshing, enjoyable delivery. The consolidation of these nutrients in a single platform is intuitive given the presence of each in the plant kingdom. It is this feature that gives the product its name, with the consumer immersing their body in the power of plants. 20 grams of clean protein, critical to support muscle health. 7 grams of fiber, vital to support a healthy gut. Antioxidants for immunity and recovery, and electrolytes for hydration, all with only 100 calories. The product is formulated without added sugar, artificial sweeteners or colors, stabilizers or dairy, and is designed for athletes, students, professionals, as well as GLP-1 users seeking a clean, functional beverage that delivers on nutrition without additives and with minimal calories. As is our process, we've developed many iterations since its initial conception, each more refined than the last. I'm confident that as we launch in earnest across New York this summer, we are bringing a compelling product to market. Importantly, we are doing so with a world-class partner in Big Geyser, one of the nation's largest non-alcoholic beverage distributors and the number-one non-alcoholic beverage distributor in New York, with a footprint of more than 26,000 outlets across grocery, drug, convenience, mass merchandisers, club, and food service. Finally, before turning to the next set of key objectives driving our turnaround, I'll make two final comments on our entry into adjacencies within the functional food and beverage space. One, though we are entering the clear protein beverage category initially, our thesis is that we have the brand and capabilities to deliver the power of plants across multiple related categories within functional food and beverage. Two, as I stated in our previous call, in broadening the company's aperture, we do not see a retreat from our core category. To the contrary, I believe that introducing consumers to our brand and our foundational commitment to great taste, clean ingredients, and plant-based nutrition in less controversial applications, we will bring back many to the center of the plate. With this context, I'll now move to our efforts to stabilize and grow anew the center of the plate business. We are approaching this task in at least three ways. One, we continue to focus on gaining distribution and building out brand blocks in the frozen retail set. Last month, we began rolling out Beyond Chicken Pieces Spicy Buffalo, a bold new Beyond Chicken Pieces variety at over 2,000 Kroger stores nationwide, marking an exciting expansion of our chicken portfolio. Like the original, it offers the same craveable, satisfying taste and strong nutritional profile, 21 grams of plant protein per serving and just 0.5 grams of saturated fat from heart-healthy avocado oil, no cholesterol, and only 130 calories. I invite the listener to pause a moment on these nutritionals: 21 grams of protein to only 130 calories, all with 0.5 gram of saturated fat, no cholesterol, no antibiotics, no hormones. To compare against popular functional protein products: no gels, no gums, no artificial fat systems, flavors or colors. As we move out from under the cloud of misinformation that has impeded our growth, I believe that it's this type of value proposition that will resonate strongly with the consumer. Both the original and Spicy Buffalo varieties are made with ingredients that comply with non-GMO project standards and are the first plant-based chicken products to be certified by the Clean Label Project. Two, we are rounding out the Beyond portfolio, recently announcing the nationwide rollout of our new Beyond Breakfast Sausage lineup at Kroger, Sprouts, and soon, Whole Foods Market. The new lineup includes Beyond Breakfast Sausage Links and Beyond Breakfast Sausage Patties in original and spicy. Crafted with simple ingredients and heart-healthy avocado oil, Beyond Breakfast Sausage are the first plant-based breakfast sausages to earn Clean Label Project certification. In aggregate, we now hold more than 20 Clean Label Project certifications. Lastly, in the area of accreditations, both the Beyond Burger and Beyond Steak were recently recognized as the first plant-based meats to qualify as Climate Solutions under the Climate Solution Framework developed by the Exponential Roadmap Initiative and Oxford Net Zero. Three, we continue to push the envelope with regard to new center-of-the-plate protein offerings. In just one example, I encourage you to take a look at consumer reactions to Beyond Steak Filet, which is currently only offered through our direct-to-consumer platform, Beyond Test Kitchen. With 28 grams of protein, 3 grams of fiber, 1 gram of saturated fat from heart-healthy avocado oil, no cholesterol, and only 230 calories, it is gaining an enthusiastic following. Here, too, we are delivering outstanding protein levels enveloped in great taste, all with minimal saturated fat, no cholesterol, no hormones, no antibiotics, and so on. We expect to be able to bring this innovation to certain retail markets as production ramps up later this year. We are starting to see some benefit as we execute across our distribution and portfolio strategy in our retail business. These encouraging signs are not, however, present yet in our U.S. or international food service businesses. To this end, we are applying significant emphasis to impactful portfolio modifications within certain food service distribution channels and expect to be able to report out additional detail during our next call. Having offered commentary on what we are doing in an effort to stabilize and grow the top line from our transition to beyond the plant protein company and entry into adjacent functional food, beverage, and food and beverage categories, and on our focus on increasing distribution in our core business, including through product renovation and innovation, I'll now turn to our transformation initiative activities. To date, we have achieved the following: consolidated our production network, activated our continuous production line in Columbia, Missouri, to allow us to internalize additional volume that was previously outsourced, made investments that are driving year-over-year improvement in conversion costs, implemented RFP actions intended to reduce material costs, secure secondary sourcing, and enhance our formulations, consolidated warehouses and lowered logistics costs, exited less profitable lines, finalized plans to exit China and dispositioned certain non-strategic assets, and realized significant reductions in inventory. As I mentioned at the beginning of my comments, the impact of these gains on gross margin was, as it has been in prior quarters, obscured by lower volume and associated lower overhead absorption, among other factors. We are, however, as I touched on earlier, beginning to see the positive impact of our prior reductions in force and SG&A streamlining, the cessation of certain legal expenses alongside other transformation office operational efficiency measures. The combined impact of these and other savings netted an approximately $14 million year-over-year reduction in operating expenses. Finally, a key achievement of our transformation office in the first quarter of 2026 was the lowest quarterly cash use we've seen in over two years at the aforementioned $11.8 million. Clearly, we have work ahead across top-line recovery, margin expansion, and operating expense reduction, yet we are confident in the plan we are executing to deliver results in each case. We look forward to updating you on our progress in the months ahead. With that, I'll now turn the call to Lubi to review our first quarter financials in greater detail.

Thank you, Ethan, and hello, everyone. I'll begin with a review of our first quarter financial results, and will then provide some brief comments on our outlook. Net revenues decreased 15.3% to $58.2 million in the first quarter of 2026 compared to $68.7 million in the year-ago period. The decrease in net revenues was primarily driven by a 19.5% decrease in volume of products sold, partially offset by a 5.4% increase in net revenue per pound. The decrease in volume of products sold was primarily driven by lower sales of burger and chicken products to QSR customers in the international food service channel and by weak category demand and some loss of distribution in our U.S. retail and food service channels. The increase in net revenue per pound was primarily driven by changes in product sales mix, including the impact of reduced sales to QSR customers, as I just noted, and was further aided by favorable changes in foreign currency exchange rates, though partially offset by a higher trade discount rate versus the year-ago period. Taking a closer look at our sales results by channel. U.S. retail net revenues decreased 15.3% to $26.6 million in the first quarter of 2026 compared to $31.4 million in the year-ago period. Volume of products sold declined 14.7% versus the year-ago period, primarily driven by weak category demand and reduced points of distribution within certain channels. Net revenue per pound in U.S. retail was down slightly, falling 0.6% year-over-year as higher trade discounts and favorable changes in product sales mix largely offset each other. In U.S. food service, net revenues decreased 29.7% to $6.6 million in the first quarter of 2026 compared to $9.4 million in the year-ago period. The decrease in net revenues was primarily driven by a 31.8% decrease in volume of products sold, partially offset by a 3% increase in net revenue per pound. The decrease in volume of products sold was primarily driven by weak category demand and loss of distribution within certain channel segments, including sales of chicken products to a QSR customer in the year-ago period that did not repeat in the first quarter of 2026. The increase in net revenue per pound was primarily driven by changes in product sales mix and lower trade discounts, partially offset by price decreases of certain of our products. Turning to international. International retail net revenues increased 8.1% to $13.7 million in the first quarter of 2026 compared to $12.7 million in the year-ago period. Net revenue per pound increased 7.8% primarily due to favorable changes in foreign currency exchange rates and price increases of certain of our products, partially offset by higher trade discounts. Volume of products sold increased 0.3% year-over-year, primarily driven by improved demand and distribution gains in certain European markets, partially offset by limited distribution losses in Canada. Finally, in international food service, net revenues decreased 25.9% to $11.3 million in the first quarter of 2026 compared to $15.3 million in the year-ago period. The decrease in net revenues was primarily driven by a 32.6% decrease in volume of products sold, mainly reflecting lower sales of burger and chicken products to certain QSR customers. Net revenue per pound in international food service increased 10.2% on a year-over-year basis, primarily driven by favorable changes in foreign currency exchange rates and lower trade discounts, partially offset by changes in product sales mix. Moving down the P&L, gross profit in the first quarter of 2026 was approximately $2 million or a gross margin of 3.4% compared to a loss of $6.9 million or gross margin of minus 10.1% in the year-ago period. Compared to the first quarter of 2025, gross profit and gross margin benefited from lower cost per pound and higher net revenue per pound, with the former mainly reflecting lower inventory provision and reduced manufacturing expenses, including depreciation, partially offset by increased materials costs. Improvements in our cost of production reflect, among other things, benefits from our recent SKU rationalization initiative and certain efficiency projects implemented within our U.S. manufacturing network. Our cost of goods sold in the first quarter of 2026 was negatively impacted by the flow-through of inventory produced in the fourth quarter of 2025 that absorbed more fixed costs due to our significant curtailment of production volumes in that period. The decline in volume of products sold in the first quarter of 2026 also drove unfavorable fixed cost absorption compared to the year-ago period, representing a drag on our Q1 gross margin. Gross profit and gross margin in the first quarter of 2026 also included approximately $0.5 million in expenses related to the shutdown of our business in China, which we expect to substantially complete by the end of the year. Turning to operating expenses, total operating expenses were $43.1 million in the first quarter of 2026 compared to $57.4 million in the year-ago period. Operating expenses in the first quarter of 2026 included $3.7 million in incremental share-based compensation expense stemming from our convertible debt exchange, $0.8 million in certain non-routine SG&A expenses, $0.4 million in amortization of costs related to the partial lease termination of a portion of our campus headquarters, and $0.2 million in incremental legal and other fees and expenses associated with arbitration proceedings related to a contractual dispute with a former co-manufacturer. Notwithstanding these items, the decrease in operating expenses compared to the first quarter of 2025 was primarily driven by lower product donation costs, lower legal expenses, and reduced salary and related expenses. Combined with the previously mentioned increase in gross profit, the net result was a reduction in loss from operations from $64.4 million in the year-ago period to $41.1 million in the first quarter of 2026. Below the line, total other income net was $12.6 million in the first quarter of 2026 compared to $3.3 million in the year-ago period. The increase was primarily due to non-cash gains from the remeasurement of derivative liability and gain on debt extinguishment resulting from the conversion of some of our 2030 convertible notes. These gains were partially offset by an increase in interest expense related to our delayed draw term loan facility and net realized and unrealized foreign currency transaction losses due to unfavorable changes in FX rates of the euro. Net loss was $28.5 million or $0.06 per common share in the first quarter of 2026 compared to net loss of $61.1 million or $0.80 per common share in the year-ago period. Adjusted EBITDA was a loss of $27.8 million or minus 47.7% of net revenues in the first quarter of 2026 compared to an adjusted EBITDA loss of $50.5 million or minus 73.5% of net revenues in the year-ago period. Turning to our balance sheet and cash flow highlights, our cash and cash equivalents balance, including restricted cash, was $205.8 million as of March 28, 2026, or a decrease of approximately $11.8 million compared to our 2025 ending cash balance. Excluding the impact from financing activities, this represents our lowest rate of quarterly cash consumption in over two years, reflecting the benefit of various capital and cost reduction measures we have implemented over the last several quarters, unencumbered by many of the non-routine costs stemming from our transformation efforts that have burdened our P&L in recent periods. Total outstanding carrying value of debt, net of debt discount, was $411.6 million as of March 28, 2026, which included the total undiscounted future cash flows of the new 2030 notes recorded at the completion of our convertible debt exchange. Net cash used in operating activities was $5 million in the three months ended March 28, 2026, compared to $26.1 million in the year-ago period. Capital expenditures totaled $2.5 million compared to $4.5 million in the year-ago period. Net cash used in financing activities was $4.5 million in the three months ended March 28, 2026, compared to $0.6 million in the year-ago period, primarily driven by withholding tax payments associated with equity awards related to our convertible debt exchange. It is also worth noting that subsequent to the end of the first quarter, an additional $62.6 million in aggregate principal amount of our 2030 convertible notes were converted into approximately $52.1 million shares of common stock, and an additional $3.9 million anti-dilution restricted stock units were also granted to management in accordance with the management incentive plan awards associated with the convertible debt exchange. Let me now touch briefly on our outlook before concluding my remarks. As in recent periods, we are continuing to provide only limited net revenue guidance given ongoing levels of uncertainty and volatility within our operating environment, which we believe may continue to have unforeseen impacts on our actual realized results. To this end, in the second quarter of 2026, we expect net revenues to be in the range of approximately $60 million to $65 million. And with that, I'll turn the call over to the operator to open it up for your questions. Thank you.

Your first question today comes from Ben Theurer from Barclays. Please go ahead.

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

Sure. I'll let Lubi tackle the specifics on that. I think in general, both on the operating expense as well as on margin, you're seeing a business that is digging out from a lot of intense expense and drag. On the operating expense, it was really around a lot of legal fees as we were involved in several issues there and then a lot of restructuring expense, just heavy OpEx and cash use. And then on the margin side, you do continue to see some of this flow-through just as we right-size the business and things of that nature that have made it difficult for us, as I mentioned in my comments, to really demonstrate the progress that's occurring at the conversion level at our plants where our conversion continues to improve and our cost of goods continue to get stronger. While we don't provide very specific guidance on margin, I'm absolutely confident that we'll be headed in a good direction in the next quarter. We don't give a particular number. Lubi, unless you want to.

Yes. Thanks for the question, Ben. I think Ethan covered it for the most part. I think the way you're thinking about it, though, is right in the sense that typically the second quarter does tend to be, seasonally, a higher volume quarter for us. That always represents a benefit from a gross margin perspective and fixed cost absorption perspective. That flow-through effect that we talked about that impacted us in Q1, we would expect it to not impact Q2 to the same degree that it did in Q1. And then also, not only do we have, generally speaking, seasonally higher volumes in Q2 relative to Q1, but the mix of our sales does tend to benefit us when we do sell some of the more higher margin core products as a result of the summer grilling season. We are continuing, as part of the improvements in conversion costs that Ethan referenced, to pursue efficiency projects. I think we would expect to build on those in the balance of the year, not necessarily expecting a step change in the next quarter, but gradually we should start to see more and more benefit from some of those projects that we've been working on.

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

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

Sure. I think there's a couple key words. First, leverage. We are leveraging the tremendous expertise we have on our board, whether it's Kathy Waller, former CFO of Coca-Cola; or Seth Goldman, our Chairman, founder of Honest Tea and Just Ice Tea; and Jim Koch, founder of Boston Beer Company. We're leveraging decades of combined expertise to make sure that we're going about this in the smartest way possible. The second word is focus. We're not going broad here. If you think about the New York launch we're doing, it's very intentional. We want to go into that market with the best partner that I think you can get. Big Geyser's been working with Seth for a very long time. Having the opportunity to go into New York with a world-class partner and having tested the product now with many consumers online, I am very excited about the version that we're going to be sending to New York. It has gotten better and better; it's a total winner. If you think about how we're going to market this, here's a simple way to understand it, which I mentioned in the script. It's not necessarily just a protein drink; it's a system, and it's a system for people who want to tap into the tremendous nutritional benefits of plants in a convenient way. You're getting your protein, and a substantial amount: 20 grams of protein. You're getting 7 grams of fiber, which is 25% daily value. You're getting your antioxidants, including a full daily dose of vitamin C, and you're getting electrolytes, something similar to what you'd get in a sports drink. You're getting all of these things without anything artificial, with a very limited ingredient list, a very clean ingredient list, and a really convenient and great taste. We're going to go back to our playbook that we've used over many years. If you think back to 2017, there was a Sports Illustrated article titled, Are Veggie Burgers the New Gatorade? It had a bunch of NBA players who had invested in Beyond; they were using Beyond products to help them recover more quickly and build muscle. This drink is an opportunity to go back to that storyline. I think you'll see us using athletes and active people, being very focused in terms of who in New York we're going after, whether it's run clubs, fitness studios, folks that are active in hiking and outdoor sports, competitive athletes, people that are really going to benefit from that system. Then it'll spread out to the general population from there.

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

Thank you. Thanks for listening. We obviously are at a very pivotal point in the business, taking the brand and the technology expertise that we've built over what is now a generation, almost 18 years, and bringing it into adjacent fast-growing markets in the functional food and beverage space. We're also continuing to focus very much on our core and seeing some promising signs within it, although there's a lot of work left to do. If you look at retail, and some of the largest conventional grocers, and if you look at the 13-week data, in one of them you see that we've started to return to very modest single-digit unit and dollar growth. You look at another one which reports on a 12-week period, and you see the same, in fact, double-digit. That's being offset in other areas by, let's say, the loss of club business and things like that. But you can start to see signs of recovery. How quick in the core business? I can't say. We're not waiting around. We are going into the adjacencies so that when that core business does recover, which it will, we're also augmenting it with these additional product lines that leverage all the brand and expertise that we have here. I think our team is energized and focused on this, and we look forward to delivering results. Thanks.

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