Beyond Meat, Inc. (BYND) Earnings Call Transcript & Summary

Good day, everyone. Once again, thank you for your patience, and we would like to welcome everyone to Beyond Meat's Second Quarter 2026 Conference Call. [Operator Instructions] Please also note today's event is being recorded. It is now my pleasure to turn the conference call over to 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 second 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 June 27, 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. And with that, I'd now like to turn the call over to Ethan Brown.

Thank you, Paul, and good afternoon, everyone. I'll start with our second quarter results, then turn to how we're executing our turnaround across 3 pillars. Beginning with net revenues, we came in at $68.8 million, roughly $4 million above the high end of our $60 million to $65 million guidance range. This figure headlines a quarter of sequential progress, even if it is slower than we would like. Specifically, net revenues were down 8.2% year-over-year, an improvement from year-over-year declines of 15.3% in Q1 2026 and 19.7% in Q4 2025. Gross margin tells a similar story at 8.5%, roughly 5 and 6 points better than Q1 2026 and Q4 2025, respectively. Importantly, this is the last quarter to carry the drag of accelerated depreciation tied to cessation of our China operations, a weight equal to more than 2 points of margin this quarter. Operating expenses of $36.7 million represented a 15% sequential decline and a 19% decline year-over-year, while EBITDA of negative $27.7 million is a slight improvement over the first quarter of 2026. Reduced cash use was a more pronounced improvement, which, excluding financing activities, fell to approximately $18 million, a 44% reduction, or $14 million less than cash used in the year ago period. All in, a quarter of positive momentum with substantial ground still to cover. Before diving into our forward path, I'll now give some additional detail around select components of our results, starting with net revenues. Our core plant-based meat business continues to face pressure in U.S. retail and foodservice and in global foodservice, consistent with category trends. However, this pressure was partially offset by strong growth in Europe and Canada, where retail was up by double digits in both markets year-over-year, respectively. In the U.S., we are seeing some signs of stabilization in certain pockets of U.S. retail, with our core burger, ground beef and dinner sausage products demonstrating resiliency in specific, though certainly not all, accounts. We are hopeful that these positive signs endure and strengthen, but are also acutely aware that misinformation regarding the health of our products continues to impact our retail and foodservice businesses in the United States. As I've often shared, over the years, we've responded to this misinformation by further leaning in to the health of our portfolio, raising the bar on its nutritional profile while working extensively with health institutions, physicians, nutritionists and universities. That work has earned recognition from the American Heart Association and American Diabetes Association, among others, and is buttressed by clinical trials by leading researchers as well as consumer case studies. These efforts notwithstanding, we still operate in a world where clean protein from faba beans, grown by farmers in the rich soils of North Dakota and Montana, blended with heart-healthy avocado oil, has been, in the main, tarnished by incumbent industry-funded campaigns. To this end, we are increasingly addressing the source of this information in our efforts to educate consumers. Most recently, our Don't Believe the Cropaganda campaign was named by Ad Age as one of the top 5 creative ads to know about right now and voted a top 5 campaign in the publication's Best Campaign of the Month reader poll. This upper funnel education work is being done simultaneously with targeted lower funnel activities, including shopper marketing programs at leading retailers that clearly emphasize what our products actually offer: strong macronutrient content and ratios, clean ingredient decks and compelling taste. Turning now to operations. As we move past many of the drags of elevated operating expenses and higher cost inventory, the underlying strength of our operations is beginning to emerge as we see strong execution across our global production network and a notable sequential reduction in cost of goods sold. The quarter's margin reflects early returns from some of this execution. First, we consolidated our production network and are finishing trials on our new continuous line at our Columbia, Missouri, facility, absorbing volume that had previously been outsourced and improving conversion costs year-over-year. Second, we reduced certain material costs through contract renegotiation with further savings in progress through RFPs, secondary sourcing and formulation adjustments. Third, we consolidated warehouses, lowered logistics expense and exited less profitable product lines. As in prior quarters, the benefit of these programs was muted by lower volume and the resulting underabsorption of overhead, a persistent overhang we are aiming to address through a combination of growth programs and facilities planning. Finally, as noted at the onset, operating expenses continue to fall and, while benefiting from certain non-routine items, mainly reflect the impact of ongoing focus on SG&A and transformation work required to position the business for sustainable operations. Moving from the quarter's results to our path forward, I'll now focus my comments around 3 pillars intended to deliver the enterprise to sustainable growth. These are: one, invest in growth in Europe and Canada while continuing to work to stabilize our core U.S. business; two, complete our evolution from a narrow focus on plant-based meat to a broader focus on nutrition as Beyond, the plant protein company; three, drive operational efficiency and unit economic improvement. I'll now turn to the first pillar. Europe and Canada present our clearest near-term growth engines for our core product lines and we are investing behind them accordingly. In Europe, we are cautiously encouraged by markets such as Germany and the U.K. as well as performance therein, while in Canada, we continue to enjoy strong retail distribution. In both markets, we plan to invest behind this growth as well as bring innovation to the consumer. Here in the U.S., in addition to the upper and lower funnel marketing campaigns that I discussed earlier, we continue to bring new center-of-the-plate protein to market as we seek to stabilize U.S. net revenues. Beyond Steak Filet made its retail debut this quarter. Since launching on a direct-to-consumer platform, Beyond Test Kitchen, in late 2025, it's become one of our best-selling items online, with strong consumer reviews for taste, texture and nutrition. It delivers 28 grams of plant protein, 3 grams of fiber and 1 gram of saturated fat per serving from avocado oil and is one of more than 20 products in our portfolio to earn Clean Label Project certification. We believe it is one of our most compelling center-of-the-plate innovations since the Beyond Burger. It launched at Wegmans and H-E-B in July, followed by Meijer, and we expect additional retailers to come. We are also building stronger brand blocks in frozen retail with existing products. Beyond Chicken Pieces Spicy Buffalo rolled out to more than 2,000 Kroger stores nationwide. 21 grams of plant protein, 0.5 grams of saturated fat, no cholesterol and 130 calories. Like the original variety, it meets Non-GMO Project standards. Together, they are the first plant-based chicken product certified by the Clean Label Project. And we launched our new Beyond Breakfast Sausage lineup, links and patties, original and spicy, at Kroger, Sprouts, and Whole Foods Market nationwide, strengthening our position in the breakfast category. With that, I'll now cover our second pillar, the broadening of our company aperture and entry into faster-growing adjacent markets. For nearly two decades, we have innovated with plants under intense scrutiny, and we've made a habit of turning attacks into strengths. As noted, when misinformation campaigns falsely painted our products as unhealthy, we made them even healthier. When those campaigns disingenuously sought to seed doubt about our ingredients, we pushed the envelope on clean and simple formulations, and as mentioned previously, now hold more than 20 Clean Label Project certifications. Throughout this journey, we've become exceptionally good at making simple plant-based ingredients perform as delicious center-of-the-plate proteins, leveraging significant investments across plant biology, chemistry and functionality. These capabilities travel and, coupled with the extraordinary nutritive power of plants, form the basis of our second strategic pillar. As we enter adjacent categories, we are not looking to repeat what has already been done. Instead, we apply a different lens. We seek to deliver powerful phytonutrients that are often underconsumed in modern diets but can be so essential to optimized health. Today, many products make claims that deliver a light dusting of phytonutrients when, in fact, clinically meaningful amounts are required to create useful signals in the body. Our system is intended to avoid that trap. You can see early signs of this strategy in the greater inclusion of fiber across our lines, from beverage to ground to steak. The first product to launch under this expanded aperture targets the large and growing functional drink market. Beyond Immerse is a clear, lightly carbonated beverage built around 4 plant superpowers: protein, fiber, antioxidants, and electrolytes. In doing so, it addresses 4 distinct functional beverage categories: protein, fiber, vitamin and electrolyte drinks in a single, refreshing format. Each can delivers 20 grams of clean plant protein for muscle health, 5 to 7 grams of fiber for gut health, antioxidants for immunity and recovery and electrolytes for hydration, all at 100 to 110 calories. As with Beyond Steak Filet, we introduced Immerse through Beyond Test Kitchen, allowing us to engage consumers directly, gather feedback and bring our community into the innovation process. In keeping with our rapid and relentless innovation program, we turned iterations quickly. After launching online what was then our latest iteration in a sleek green can, Immerse has averaged 4.7 out of 5 stars on submitted reviews on our direct-to-consumer platform. I call this version the then-latest iteration as we have just launched our newest version, leveraging the natural sweetness of agave as part of our rollout with Big Geyser, the New York distributor. This sequence, access our community through our direct-to-consumer platform, engage and learn from early adopters who become part of our innovation process, then move at a deliberate pace into a focused geography, innovating along the way, is at the center of our adjacent market strategy. Over time, we intend to build a portfolio across relevant adjacencies, unified by a single product strategy, delivering powerful, delicious and convenient plant-based nutrition across consumer need states. As we do so, you will also see us return to a playbook that we used extensively while building our business. Athletes who understand the superpowers of plants and what they can do to build, fuel and restore the body. I'd encourage you to check out our latest work with Josh Hart, the world champion New York Knicks. And finally, to our third pillar, we'll remain focused on operating expenses, unit economics, fixed cost absorption and cash use. Despite recent progress, we have a great deal of work ahead. We plan to keep downward pressure on operating expenses and intend to further pursue margin gains by optimizing our production system, including the new continuous line that I referenced in Columbia and through RFPs across ingredients and materials. We plan to better calibrate our facilities to volume, even as we seek to execute the above-articulated two-track return to growth and bring higher throughput to our production facilities and lines. And we will continue to take steps, large and small, with the goal of reaching cash flow positive operations as quickly as possible. In closing, we've done a lot of spadework toward what I believe will be an exciting turnaround. We continue to be focused on simultaneously stabilizing our core business, improving our cost structure and expanding into faster-growing functional food and beverage categories. With a more efficient operating model, a disciplined and cutting-edge approach to innovation and a focused go-to-market strategy, we believe we can deliver improved financial performance and the extraordinary powers of plant-based nutrition to an ever-broadening base of consumers. With that, I'll turn the call over to Lubi to review our second quarter of financials in greater detail.

Thank you, Ethan, and hello, everyone. I'll begin my remarks today by reviewing our second quarter financial results in a bit more detail and we'll then provide some brief comments on our third quarter outlook before opening up the call for your questions. Net revenues decreased 8.2% to $68.8 million in the second quarter of 2026, compared to $75 million in the year ago period. The decrease in net revenues was primarily driven by a 9.5% decrease in volume of products sold, partially offset by a 1.4% increase in net revenue per pound. Broadly speaking, on a year-over-year basis, we continue to experience greatest pressure in our foodservice channels, both in the U.S. and abroad, while our retail channels are showing more encouraging signs of improvement, most notably in international. Overall, the decrease in volume of products sold for the second quarter of 2026 was primarily driven by lower sales of burger and chicken products to certain QSR customers in the international foodservice channel and by weak category demand and reduced points of distribution in our U.S. retail and foodservice channels. Net revenue per pound increased on a year-over-year basis, primarily driven by changes in product sales mix and favorable changes in foreign currency exchange rates, partially offset by higher trade discounts. Taking a closer look by channel, in our U.S. retail channel, net revenues decreased 9.9% to $29.6 million in the second quarter of 2026, compared to $32.9 million in the year ago period. Total volume of products sold in U.S. retail declined 5.7% on a year-over-year basis, primarily reflecting persistent category softness and reduced points of distribution within certain channels. With respect to the latter, some of the distribution losses that impacted our Q2 results were associated with packaging transitions on certain items and are, therefore, expected to be transitory. However, challenges related to general category softness remain. In terms of price realization, net revenue per pound in U.S. retail was down 4.5% year-over-year, primarily driven by higher trade discounts and lower price realization on certain items, partially offset by changes in product sales mix. Turning to U.S. foodservice, net revenues in our U.S. foodservice channel decreased 27.6% to $8 million in the second quarter of 2026, compared to $11.1 million in the year ago period. The decrease was primarily driven by a 27.4% decrease in volume of products sold, with net revenue per pound declining slightly year-over-year. Volume of products sold in our U.S. foodservice channel continue to be negatively impacted by distribution losses, primarily among smaller independent operators and general category softness. Net price realization in U.S. foodservice was slightly unfavorable on a year-over-year basis as higher trade discounts and lower price realization on certain items more than offset favorable changes in product sales mix. Moving on to international. Our international retail channel net revenues increased 16.5% to $18.5 million in the second quarter of 2026, compared to $15.9 million in the year ago period. The increase in international retail channel net revenues was primarily driven by an 8.2% increase in volume of products sold and a 7.7% increase in net revenue per pound. The volume of products sold in this channel continues to benefit from higher sales of burger and chicken products in European markets, as well as increased sales of ground beef products in Canada. The increase in net revenue per pound in international retail primarily reflects price increases in certain geographies and favorable changes in foreign currency exchange rates, partially offset by higher trade discounts. Finally, in our international foodservice channel, net revenues decreased 16% to $12.7 million in the second quarter of 2026, compared to $15.1 million in the year ago period. The decrease in international foodservice channel net revenues was primarily driven by a 20.4% decrease in volume of products sold, partially offset by a 5.5% increase in net revenue per pound. The decrease in volume of products sold in our international foodservice channel mainly reflects lower sales of burger and chicken products to certain QSR customers in Europe and Canada, while the increase in net revenue per pound was mainly attributable to favorable changes in foreign currency exchange rates and lower trade discounts. Now turning to gross profit. Gross profit in the second quarter of 2026 was $5.9 million, or gross margin of 8.5%, compared to gross profit of $7.9 million or gross margin of 10.6% in the year ago period. Gross profit and gross margin in the second quarter of 2026 included $1.6 million in expenses related to the cessation of our operational activities in China, compared to $1.7 million in the year ago period. Additionally, gross profit and gross margin in the second quarter of 2026 were negatively impacted by higher materials costs and higher manufacturing expenses, including depreciation, partially offset by lower inventory provision. The increase in manufacturing expenses, in part, reflected the impact from year-over-year volume declines, which has a negative impact on fixed cost absorption. Operating expenses were $36.7 million in the second quarter of 2026 compared to $45.4 million in the year ago period. Operating expenses in the second quarter of 2026 included $4.7 million in incremental share-based compensation expense related to our convertible debt exchange, $0.5 million in certain non-routine SG&A expenses, $0.5 million in amortization of costs related to a partial lease termination of a portion of our campus headquarters and a credit of $11 million reflecting the settlement of arbitration proceedings related to a previously disclosed contractual dispute with a former co-manufacturer compared to an expense of $2.5 million in the year ago period. Loss from operations was, therefore, $30.8 million in the second quarter of 2026, compared to $37.5 million in the year ago period. Below the line, total other income net was $47.2 million in the second quarter of 2026 compared to $5.7 million in the year ago period with a significant increase primarily reflecting a non-cash gain on debt extinguishment of $57.7 million, partially offset by a reduction in other income net, increased interest expense related to our delayed draw term loan facility and remeasurement loss of derivative liability stemming from the 2030 notes embedded derivatives. Net income was, therefore, $16.4 million in the second quarter of 2026, or $0.03 per common basic share, compared to net loss of $31.8 million in the year ago period, or minus $0.42 per common share in the year ago period. Adjusted EBITDA was a loss of $27.7 million or minus 40.2% of net revenues in the second quarter of 2026 compared to an Adjusted EBITDA loss of $24.7 million or minus 33% of net revenues in the year ago period. Turning briefly to our balance sheet and cash flow highlights. Our cash and cash equivalents balance, including restricted cash, was $186.1 million and total outstanding carrying value of debt, net of debt discount, was $323.8 million as of June 27, 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 $23.2 million in the 6 months ended June 27, 2026, compared to $58 million in the year ago period. Capital expenditures totaled $4 million in the 6 months ended June 27, 2026, compared to $6.4 million in the year ago period. Net cash used in financing activities was $6.6 million in the 6 months ended June 27, 2026, compared to net cash provided by financing activities of $32.3 million in the year ago period, which included a partial draw on our delayed draw term loan. As Ethan mentioned, we were pleased that our quarterly cash consumption, excluding financing activities, continues to show meaningful improvement versus year ago levels, which reflects in part savings related to our transformation program as well as effective inventory management. Finally, I'll touch briefly on our outlook. 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 third 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.

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

A couple of things I just wanted to get through real quick. So as you look at the performance in the different regions, and you've clearly highlighted Europe and Canada as like good opportunities, but still drag in others. So first of all, as you kind of look at the different consumer dynamics or demand dynamics in these regions, can you help us maybe understand a little bit better why there is such a difference in terms of just acceptance or just consumer willingness to engage with the products in, for example, Europe versus the U.S.? That would be my first question.

Thank you, and it's good to hear from you. So I think what we're seeing and we're beginning to see this in a sustained level, in Europe, we do not face the same very significant campaigns and misinformation that we do here in the U.S. from the incumbent industry. I mean, they are organized there, and they do have some activities going on, but it did not gather the same momentum. So that's one backdrop. And the second is that the consumer there, I think, links much more readily their food consumption choices to climate. And climate there is obviously being taken much more seriously than it is here in the U.S. from a policy and consumer behavior perspective. And of course, they're experiencing some of the most difficult summers they've had in a long time. So I think those types of things are working in our favor in the markets and then you look at different pockets. Germany is very strong. U.K. is pretty good. Netherlands, where we are, also has some strength to it. And we've also just appointed, I think, a long-time partner of mine and of ours to run Europe for us, Adriaan, and we're very excited about that. So you'll see us continue to invest in Europe. The dynamics there are such that the kind of negative narrative that was framed here by the meat industry is just not present there in the same strength. And so I think that's the overall reason.

Okay. And then more like of a corporate actions, I mean, just a couple of days ago, you made a couple of changes, hiring or bringing on a COO with Krishnaswamy. You're returning to the Board. Could you talk a little bit more about what the thought process behind that is, behind those changes?