# BEYOND MEAT, INC. (BYND) FY 2023 MD&A

Verbatim Item 7 Management's Discussion and Analysis from BEYOND MEAT, INC.'s 10-K for fiscal year 2023.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1655210/000165521024000025/bynd-20231231.htm
Accession: 0001655210-24-000025
Filing date: 2024-03-01
Report date: 2023-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/BYND/
All MD&A years: /company/BYND/mda/
Previous year: /company/BYND/mda/fy2022/ (FY 2022)
Next year: /company/BYND/mda/fy2024/ (FY 2024)

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including those set forth in Part I, Item 1A, “Risk Factors,” and “Note Regarding Forward-Looking Statements” included elsewhere in this report. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and related notes included elsewhere in this report.

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this document generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022. Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this document can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Overview

Beyond Meat is a leading plant-based meat company, offering a portfolio of revolutionary plant-based meats. We build meat directly from plants, an innovation that enables consumers to experience the taste, texture and other sensory attributes of popular animal-based meat products while enjoying the nutritional and environmental benefits of eating our plant-based meat products. Our brand promise, “Eat What You Love,” represents a strong belief that there is a better way to feed our future and that the positive choices we all make, no matter how small, can have a great impact on our personal health and the health of our planet. By shifting from animal-based meat to plant-based meat, we can positively impact four growing global issues: human health, climate change, constraints on natural resources and animal welfare.

We sell a range of plant-based meat products across our three core platforms of beef, pork and poultry. As of December 2023, Beyond Meat branded products were available at approximately 133,000 retail and foodservice outlets in more than 65 countries worldwide, across mainstream grocery, mass merchandiser, club store and natural retailer channels, and various food-away-from-home channels, including restaurants, foodservice outlets and schools. The number of retail and foodservice outlets where Beyond Meat branded products are available was derived from rolling 52-week data as of December 2023 and excludes approximately 44,000 U.S. retail outlets unique to Beyond Meat Jerky or 2,300 outlets on a rolling 12-week basis. In 2023, we continued the process of renegotiating certain contracts and changing operating activities related to Beyond Meat Jerky and assumed the distribution responsibilities for Beyond Meat Jerky in the fourth quarter of 2023. As part of our Global Operations Review, we made the decision to discontinue the Beyond Meat Jerky product line.

Net revenues decreased to $343.4 million in 2023 from $418.9 million in 2022, representing an 18.0% reduction. We have generated losses since inception. Net loss in 2023 and 2022 was $338.1 million and $366.1 million, respectively, as weak demand, driven by prolonged softness in demand in the category and for our products in certain channels and regions, increased competition and the lingering effects of COVID, among other things, resulted in declines in our net revenues that we were unable to offset with commensurate cost reductions. In 2023, our operating environment continued to be affected by uncertainty related to macroeconomic issues, including prolonged and further softening of demand in the plant-based meat category, high inflation, higher interest rates, and concerns about the likelihood of a recession, among other things, all of which have had and could continue to have unforeseen impacts on our actual realized results. Our net revenues, gross profit, gross margin, earnings and cash flows have been and may continue to be adversely impacted in 2024 and beyond by the following:

•unfavorable changes in our product sales mix, including the launch of new products, which may carry lower margin profiles relative to existing products, increased sales to strategic QSR customers, generally carrying a lower selling price per pound as a percentage of our total sales, and changing demand for our core products;

•continued weak demand and its resultant impact on our sales due to slower category growth, particularly for refrigerated plant-based meat, unfavorable changes in consumers’ perceptions about the health attributes of plant-based meats and increased competitive activity;

•deceleration of the adoption of plant-based meat across Europe and our ability to successfully launch extended shelf-life products, which could negatively impact our ability to expand distribution of our products;

•the impact of high inflation and the plant-based meat sector’s premium pricing relative to animal protein, which have caused and could continue to cause consumers to trade down into cheaper forms of protein, including animal meat, beans and other non-animal meat protein sources;

•negative impacts on capacity utilization as a result of lower than anticipated revenues, which have in the past and could in the future give rise to increased costs per unit, underutilization fees and termination fees and other costs to exit certain supply chain arrangements and product lines, and/or the write-down or write-off of certain equipment, driving less leverage on fixed costs and delaying the speed at which cost savings initiatives positively impact our financial results;

•changes in forecasted demand, including for our core products—namely Beyond Burger, Beyond Beef, and Beyond Sausage—and others;

•changes in operating and distribution activities related to Beyond Meat Jerky, including the impact of discontinuing the product line;

•managing inventory levels, including sales to liquidation channels and the level of inventory provision;

•changes in our pricing strategy, including actions intended to improve our price competitiveness relative to competing products or to improve profitability;

•increased unit cost of goods sold due to lower production volumes in response to weaker demand, which has and may continue in the future to adversely impact coverage of fixed production costs within our manufacturing facilities;

•increased unit cost of goods sold due to input cost inflation, including higher transportation, raw materials, energy, labor and supply chain costs;

•increased promotional programs and trade discounts or a failure or reduction in the efficacy of such programs to our retail and foodservice customers, including to bolster support for our core products, and shifts in product and channel mix resulting in negative impacts on our gross margins;

•potential disruption to our supply chain generally caused by distribution and other logistical issues, including the impact of cyber incidents at suppliers and vendors; and

•labor needs at the Company, as well as in the supply chain and at customers.

Cost-Reduction Initiatives and Global Operations Review

In response to the current difficult environment and the negative impact of certain factors on our business and the overall plant-based meat category, beginning in 2022 we pivoted our focus toward sustainable long-term growth supported by three pillars: (1) driving margin recovery and operating expense reduction through the implementation of lean value streams across our beef, pork and poultry platforms; (2) inventory reduction and cash flow generation through more efficient inventory management; and (3) focusing on near-term retail and foodservice growth drivers while supporting strategic key long-term partners and opportunities. Based on cost reduction initiatives intended to reduce operating expenses, in August 2022 and October 2022, we implemented reductions in force affecting approximately 4% and 19%, respectively, of our global workforce.

To further reduce operating expenses, in November 2023, we announced that we were initiating a review of our global operations (the “Global Operations Review”), narrowing our commercial focus to certain growth opportunities, and accelerating activities that prioritize gross margin expansion and cash generation. These efforts may include the exit or discontinuation of select product lines such as Beyond Meat Jerky; changes to our pricing architecture within certain channels; accelerated, cash-accretive inventory reduction initiatives; further optimization of our manufacturing capacity and real estate footprint; and the continued review of our operations in China. As part of this review, on November 1, 2023, our board of directors approved a plan to reduce our workforce by approximately 65 employees, representing approximately 19% of our global non-production workforce (or approximately 8% of our total global workforce).

The following table summarizes the non-cash charges recorded in our consolidated statement of operations for the year ended December 31, 2023 as a result of our Global Operations Review:

[[GREPCENT_TABLE]]
[["(in thousands)"],["Non-cash charges recorded in cost of goods sold:"],["Incremental provision for excess and obsolete inventory(1)","","$","38,045"],["Accelerated depreciation on planned write-offs or disposals of fixed assets(2)","","23,860"],["Write-off of prepaid raw materials cost","","5,000"],["Total non-cash charges recorded in cost of goods sold","","$","66,905"],["Non-cash charges recorded in operating expenses :"],["Accelerated depreciation on planned write-offs or disposals of fixed assets recorded in research and development expenses","","$","962"],["Loss on sale and write-down of fixed assets recorded in SG&A expenses to fair value","","16,639"],["Total non-cash charges recorded in operating expenses","","$","17,601"],["Total","","$","84,506"]]
[[/GREPCENT_TABLE]]
__________

(1) Includes $16.5 million associated with Beyond Meat Jerky. As part of our ongoing Global Operations Review, we made the decision to discontinue the Beyond Meat Jerky product line.

(2) Includes $3.6 million associated with Beyond Meat Jerky fixed assets.

We may not be able to fully realize the cost savings and benefits initially anticipated from our cost-reduction initiatives and Global Operations Review, and the realized costs may be greater than expected. See Part I, Item 1A. Risk Factors— Risks Related to Our Business—Our strategic initiatives to improve our cost structure could have long-term adverse effects on our business, and we may not realize the operational or financial benefits from such actions, including achieving and/or sustaining cash flow positive operations.

Components of Our Results of Operations and Trends and Other Factors Affecting Our Business

Net Revenues

We generate net revenues primarily from sales of our products to our customers across mainstream grocery, mass merchandiser, club store and natural retailer channels, and various food-away-from-home channels, including restaurants, foodservice outlets and schools, mainly in the United States and the EU.

We present our net revenues by geography and distribution channel as follows:

[[GREPCENT_TABLE]]
[["Distribution Channel","","Description"],["U.S. Retail","","Net revenues from retail sales to the U.S. market and, sales to TPP, our joint venture with PepsiCo, Inc.(1)"],["U.S. Foodservice","","Net revenues from restaurant and foodservice sales to the U.S. market"],["International Retail","","Net revenues from retail sales to international markets, including Canada"],["International Foodservice","","Net revenues from restaurant and foodservice sales to international markets, including Canada"]]
[[/GREPCENT_TABLE]]

_____________

(1)There were no net revenues associated with Beyond Meat Jerky sold to TPP in the second half of 2023 as we assumed distribution responsibilities in the fourth quarter of 2023. As part of our Global Operations Review, we made the decision to discontinue the Beyond Meat Jerky product line.

The following factors and trends in our business have driven net revenue growth over prior periods and are expected to be key drivers of our net revenue growth over time, subject to the challenges discussed above:

•increased penetration across our retail channel, including mainstream grocery, mass merchandiser, club store and natural retailer channels, and our foodservice channel, including increased desire by foodservice establishments, including large Full Service Restaurant and/or global QSR customers, to add plant-based products to their menus and to highlight and retain these offerings;

•the strength and breadth of our partnerships with global QSR restaurants and retail and foodservice customers;

•the success of our pivot to focus on sustainable long-term growth, including focusing on near-term retail and foodservice growth drivers while supporting strategic key long-term partners and opportunities, and intensifying focus on channels and geographies that are exhibiting revenue growth;

•distribution expansion, increased sales velocity, household penetration, repeat purchases, buying rates (amount spent per buyer) and purchase frequency across our channels, including the success of promotional programs at attracting new users to the plant-based meat category;

•increased international sales of our products across geographies, markets and channels as we seek to expand the breadth and depth of our international distribution and grow our numbers of international customers;

•our operational effectiveness and ability to fulfill orders in full and on time;

•our continued innovation and product commercialization, including enhancing existing products such as the recent announcement of our Beyond IV generation of products, and introducing new products across our plant-based platforms that appeal to a broad range of consumers, specifically those who typically eat animal-based meat;

•enhanced marketing efforts and the success thereof, as we continue to build our brand, use our portfolio and marketing to directly counter misinformation about our products and category, amplify our value proposition around taste, health and planet, serve as a best-in-class partner to both retail and

foodservice customers to support product development and category management, and drive consumer adoption of our products;

•investment in in-store execution and field resources focused on shelf availability and presentation, particularly in the U.S. refrigerated meat case, to drive increased sales;

•overall market trends, including consumer awareness and demand for nutritious, convenient and high protein plant-based foods; and

•localized production and third party partnerships to improve our cost of production and increase the availability, accessibility and speed with which we can get our products to customers internationally.

As we seek to grow our net revenues, we continue to face several challenges, including prolonged, weakened demand within the plant-based meat category overall, broad macroeconomic headwinds, including elevated levels of inflation, higher interest rates, waning consumer confidence and recessionary concerns, adverse changes in consumers’ perceptions about the health attributes of our products, increased competitive activity in the plant-based meat category, and global events such as the war in Ukraine and the conflict in Israel, Gaza and surrounding areas and their potential impact on availability of raw materials and/or distribution of our products.

We routinely offer sales discounts and promotions through various programs to customers and consumers. These programs include rebates, temporary on-shelf price reductions, off-invoice discounts, retailer advertisements, product coupons and other trade activities. We anticipate that over time we will need to continue to offer more trade and promotion discounts to both our retail and foodservice customers, to drive increased consumer trials and in response to changing consumer and customer behavior and increased competition and pressure on the plant-based meat category. The expense associated with these discounts and promotions is estimated and recorded as a reduction in total gross revenues in order to arrive at reported net revenues. At the end of each accounting period, we recognize a contra asset to “Accounts receivable” for estimated sales discounts that have been incurred but not paid which totaled $6.9 million and $4.6 million as of December 31, 2023 and 2022, respectively. We continue to face increasing competition across all channels, especially if consumers continue to trade down among proteins in the context of significant inflationary pressure.

In addition, because we do not have any purchase commitments from our distributors or customers, the amount of net revenues we recognize has varied and will vary in the future, from period to period depending on the volume, timing and the channels through which our products are sold, and the impact of customer orders ahead of holidays, causing variability in our results. Similarly, the timing of retail shelf resets are not within our control, and to the extent that retail customers change the timing of such events, variability of our results may also increase. Lower customer orders ahead of holidays, shifts in customer shelf reset activity and changes in order patterns of one or more of our large retail customers could cause a significant fluctuation in our quarterly results and could have a disproportionate effect on our results of operations for the entire fiscal year.

Our financial performance also depends on our operational effectiveness and ability to fulfill orders in full and on time. Disruptions in our supply chain could affect customer demand, orders that may not materialize due to delayed deliveries and subsequent lost sales that we may not be able to recover in full, or at all.

Further, we may not be able to recapture missed opportunities in later periods, for example if the opportunity is related to a significant grilling holiday like Memorial Day weekend, the Fourth of July, or Labor Day weekend. Missed opportunities may also result in missing subsequent additional opportunities. Internal and external operational issues therefore may impact the amount and variability of our results.

Seasonality

Generally, we expect to experience greater demand for certain of our products during the U.S. summer grilling season. In 2023, 2022 and 2021, U.S. retail channel net revenues during the second quarter were 10%, 16% and 21% higher than the first quarter, respectively. While we expected to continue to see additional seasonality effects in 2023, as compared to 2022 and 2021, we saw more muted effects from seasonality in the

third and fourth quarters of 2023 as compared to the prior-year period and the second quarter of 2023, primarily reflecting weak category demand and pricing actions. In general, any historical effects of seasonality have been more pronounced within our U.S. retail channel, with revenue contribution from this channel generally tending to be greater in the second and third quarters of the year, driven by increased levels of grilling activity, higher levels of purchasing by customers ahead of holidays, the impact of customer shelf reset activity and the timing of product restocking by our retail customers. In an environment of heightened uncertainty from recessionary and inflationary pressures, prolonged weakness in the plant-based meat category, competition and other factors impacting our business, we are unable to assess the ultimate impact on the demand for our products as a result of seasonality.

Gross Profit and Gross Margin

Gross profit consists of our net revenues less cost of goods sold. Gross margin is gross profit expressed as a percentage of our net revenues. Our cost of goods sold primarily consists of the cost of raw materials including ingredients and packaging, co-manufacturing fees, direct and indirect labor and certain supply costs, inbound and internal shipping and handling costs incurred in manufacturing our products, warehouse storage fees, plant and equipment overhead, depreciation and amortization expense, provision for excess and obsolete inventory, and accelerated depreciation on write-offs and disposals of certain fixed assets. Under certain circumstances, our cost of goods sold may also include underutilization and/or termination fees associated with our co-manufacturing agreements. Gross profit and gross margin in the year ended December 31, 2023 as compared to the prior-year periods were positively impacted by lower manufacturing costs including lower depreciation expense resulting from a change in the estimated useful lives of certain of our large manufacturing equipment. See Note 6, Property, Plant and Equipment, to the Notes to Consolidated Financial Statements included elsewhere in this report.

Subject to the recessionary and inflationary pressures, competition, prolonged weakness in the plant-based meat category and other factors impacting our business, which are discussed above, we continue to expect that long-term gross profit and gross margin improvements will be delivered primarily through:

•implementation of lean value streams across our beef, pork and poultry platforms;

•reviewing and adjusting our pricing architecture within certain channels;

•exiting select product lines in order to eliminate margin-dilutive products or to streamline our supply chain operations;

•improved volume leverage and throughput;

•reduced manufacturing conversion costs driven in part by network consolidation and optimization of our production network;

•greater internalization and geographic localization of our manufacturing footprint;

•finished goods, materials and packaging input cost reductions and scale of purchasing;

•end-to-end production processes across a greater proportion of our manufacturing network;

•scale-driven efficiencies in procurement and fixed cost absorption;

•product and process innovations and reformulations; and

•improved supply chain logistics and distribution costs.

Gross margin improvement may, however, continue to be negatively impacted by reduced capacity utilization if demand for our products continues to decline, investments in our production infrastructure across the U.S., EU and China in advance of anticipated demand, which may not materialize within the expected timeframe, investing in production personnel, partnerships and product pipeline, aggressive pricing strategies

and increased discounting, increases in inventory provision, write-down or write-off of obsolete inventory and potentially increased sales to liquidation channels at lower prices, changes in our product and customer sales mix, expansion into new geographies and markets where cost and pricing structures may differ from our existing markets, and underutilization fees, termination fees and other costs to exit certain supply chain arrangements and product lines. Gross margin improvement may also be negatively impacted by the impact of inflation, increasing labor costs, materials costs and transportation costs.

Operating Expenses

Research and Development Expenses

Research and development expenses consist primarily of personnel and related expenses for our research and development staff, including salaries, benefits, bonuses, share-based compensation, scale-up expenses, depreciation and amortization expenses on research and development assets, and facility lease costs. Our research and development efforts are focused on enhancements to our existing product formulations and production processes in addition to the development of new products. We expect to continue to invest in research and development over time, as research and development and innovation are core elements of our business strategy, and we believe they represent a critical competitive advantage for us. We believe that we need to continue to innovate in order to capture a larger share of consumers who typically eat animal-based meats. We decreased our research and development expenses in 2023 and expect research and development expenses in 2024 to decrease further from the levels in 2023 primarily as a result of the reduction-in-force implemented in November 2023 and as we focus on reducing and optimizing operating expenses more broadly.

Selling, General and Administrative (“SG&A”) Expenses

SG&A expenses consist primarily of selling, marketing and administrative expenses, including personnel and related expenses, share-based compensation, outbound shipping and handling costs, non-manufacturing lease expense, depreciation and amortization expense on non-manufacturing and non-research and development assets, charges related to asset write-offs including loss on sale and write-down of fixed assets, consulting fees and other non-production operating expenses. Marketing and selling expenses include advertising costs, share-based compensation awards to brand ambassadors, costs associated with consumer promotions, product donations, product samples and sales aids incurred to acquire new customers, retain existing customers and build our brand awareness. Administrative expenses include expenses related to management, accounting, legal, IT and other office functions. We decreased SG&A expenses in 2023 and expect SG&A expenses in 2024 to decrease further from the levels in 2023, as we focus on reducing and optimizing operating expenses more broadly, including as part of the implementation of lean value streams across our beef, pork and poultry platforms.

Reduction-In-Force

On November 1, 2023, our board of directors approved a plan to reduce our workforce by approximately 65 employees, representing approximately 19% of our global non-production workforce (or approximately 8% of our total global workforce). This decision was based on cost-reduction initiatives intended to reduce operating expenses. In 2023, we incurred one-time cash charges of approximately $1.8 million in connection with the reduction-in-force, primarily consisting of notice period and severance payments, employee benefits and related costs. These charges were incurred in the fourth quarter of 2023, and the reduction-in-force was substantially complete by the end of 2023.

In aggregate, in 2024, the reduction-in-force, combined with the elimination of certain open positions, is expected to result in approximately $9.5 million to $10.5 million in cash operating expense savings, and an additional approximately $1.0 million to $2.0 million in non-cash savings related to previously granted, unvested stock-based compensation which would have vested in 2024. See Part I, Item 1A. Risk Factors— Risks Related to Our Business—Our strategic initiatives to improve our cost structure could have long-term adverse effects on our business, and we may not realize the operational or financial benefits from such actions, including achieving and/or sustaining cash flow positive operations.

Restructuring Expenses

In May 2017, management approved a plan to terminate an exclusive supply agreement with one of our co-manufacturers. On October 18, 2022, the parties entered into a confidential written settlement agreement and mutual release in connection with this matter. See Note 3, Restructuring, and Note 10, Commitments and Contingencies, to the Notes to Consolidated Financial Statements included elsewhere in this report.

Results of Operations

The following table sets forth selected items in our consolidated statements of operations for the respective periods presented:

[[GREPCENT_TABLE]]
[["","","","","Year Ended December 31,"],["(in thousands)","","","","","","2023","","2022","","2021"],["Net revenues","","","","","","$","343,376","","","$","418,933","","","$","464,700"],["Cost of goods sold","","","","","","426,031","","","442,676","","","347,419"],["Gross (loss) profit","","","","","","(82,655)","","","(23,743)","","","117,281"],["Research and development expenses","","","","","","39,530","","","62,264","","","66,946"],["Selling, general and administrative expenses","","","","","","220,344","","","239,505","","","209,474"],["Restructuring expenses","","","","","","(631)","","","17,259","","","15,794"],["Total operating expenses","","","","","","259,243","","","319,028","","","292,214"],["Loss from operations","","","","","","$","(341,898)","","","$","(342,771)","","","$","(174,933)"]]
[[/GREPCENT_TABLE]]

The following table presents selected items in our consolidated statements of operations as a percentage of net revenues for the respective periods presented:

[[GREPCENT_TABLE]]
[["","","","","","","Year Ended December 31,"],["","","","","","","2023","","2022","","2021"],["Net revenues","","","","","","100.0","%","","100.0","%","","100.0","%"],["Cost of goods sold","","","","","","124.1","","","105.7","","","74.8"],["Gross (loss) profit","","","","","","(24.1)","","","(5.7)","","","25.2"],["Research and development expenses","","","","","","11.5","","","14.9","","","14.4"],["Selling, general and administrative expenses","","","","","","64.2","","","57.2","","","45.1"],["Restructuring expenses","","","","","","(0.2)","","","4.1","","","3.4"],["Total operating expenses","","","","","","75.5","","","76.2","","","62.9"],["Loss from operations","","","","","","(99.6)","%","","(81.9)","%","","(37.7)","%"]]
[[/GREPCENT_TABLE]]

Year Ended December 31, 2023 Compared to Year Ended December 31, 2022

Net Revenues

[[GREPCENT_TABLE]]
[["","","","","","","Year Ended December 31,","","Change"],["(in thousands)","","","","","","","","","","2023","","2022","","Amount","","%"],["U.S.:"],["Retail","","","","","","","","","","$","155,240","","","$","234,744","","","$","(79,504)","","","(33.9)","%"],["Foodservice","","","","","","","","","","50,647","","","69,289","","","(18,642)","","","(26.9)","%"],["U.S. net revenues","","","","","","","","","","205,887","","","304,033","","","(98,146)","","","(32.3)","%"],["International:"],["Retail","","","","","","","","","","$","61,723","","","$","60,907","","","$","816","","","1.3","%"],["Foodservice","","","","","","","","","","75,766","","","53,993","","","21,773","","","40.3","%"],["International net revenues","","","","","","","","","","137,489","","","114,900","","","22,589","","","19.7","%"],["Net revenues","","","","","","","","","","$","343,376","","","$","418,933","","","$","(75,557)","","","(18.0)","%"]]
[[/GREPCENT_TABLE]]

Net revenues in 2023 decreased $75.6 million, or 18.0%, as compared to the prior year driven by a 10.8% decrease in net revenue per pound and an 8.1% decrease in volume of products sold. The decrease in net revenue per pound was primarily driven by changes in product sales mix and increased trade discounts, partially offset by pricing changes and favorable changes in foreign currency exchange rates. The decrease in volume of products sold primarily reflected weak category demand and the cycling of significant sell-in of Beyond Meat Jerky to TPP in 2022. Net revenues from sales of Beyond Meat Jerky to TPP were $5.3 million in 2023, as compared to $33.5 million in 2022. Net revenues from retail channel sales decreased 26.6% primarily due to higher trade discounts and reduced pricing, and lower overall demand as a result of a deceleration in growth of the plant-based meat category. Net revenues from foodservice channel sales increased 2.5%, primarily from international foodservice channel sales.

Net revenues from U.S. retail sales in 2023 decreased $79.5 million, or 33.9%, as compared to the prior year. Total volume of products sold decreased 26.4%, primarily reflecting weak category demand and the cycling of significant sell-in of Beyond Meat Jerky to TPP in 2022. Net revenue per pound decreased 10.1%. The decrease in net revenue per pound was primarily driven by higher trade discounts and changes in product sales mix, partially offset by changes in product pricing. By product, the decrease in U.S. retail channel net revenues was primarily due to decreased sales of Beyond Meat Jerky to TPP, Beyond Burger, Beyond Sausage and Beyond Breakfast Sausage, partially offset by increased revenues from sales of Beyond Steak and Beyond Chicken products. Beyond Meat branded products were available at approximately 32,000 U.S. retail outlets as of December 2023, excluding outlets unique to Beyond Meat Jerky.

Net revenues from U.S. foodservice sales in 2023 decreased $18.6 million, or 26.9%, as compared to the prior year primarily due to a 30.2% decrease in volume of products sold, primarily reflecting the cycling of sales to a large QSR customer for a limited time offering in the prior year which did not repeat in 2023, partially offset by a 4.8% increase in net revenue per pound. The increase in net revenue per pound was primarily due to changes in product sales mix, partially offset by higher trade discounts. By product, the decrease in U.S. foodservice channel sales was primarily due to decreased sales of certain chicken products, which included the impact from a limited time offering at a large QSR customer in 2022 that ended in early 2023, and Beyond Burger. Beyond Meat branded products were available at approximately 41,000 U.S. foodservice outlets as of December 2023.

Net revenues from international retail channel sales in 2023 increased $0.8 million, or 1.3%, as compared to the prior year primarily due to a 3.5% increase in volume of products sold, primarily reflecting strong sales from new product introductions and the lapping of a weak year-ago comparison, partially offset by a 2.0% decrease in net revenue per pound. The decrease in net revenue per pound was primarily due to higher trade discounts and pricing changes, partially offset by favorable changes in foreign currency exchange rates. By

product, the increase in net revenues was primarily due to increased sales of certain chicken products, including Beyond Chicken Tenders, and Beyond Beef, partially offset by the decreased sales of Beyond Sausage and Beyond Burger. Beyond Meat branded products were available at approximately 36,000 international retail outlets as of December 2023.

Net revenues from international foodservice channel sales in 2023 increased $21.8 million, or 40.3%, as compared to the prior year primarily due to a 59.6% increase in volume of products sold, partially offset by a 12.1% decrease in net revenue per pound. The decrease in net revenue per pound was mainly due to higher trade discounts and changes in product sales mix, partially offset by the impact of favorable foreign currency exchange rates. By product, the increase in net revenues was primarily due to increases in sales of certain chicken products, including sales to a large QSR customer, and Beyond Burger, partially offset by decreased sales of Beyond Sausage and Beyond Beef Crumble. Beyond Meat branded products were available at approximately 24,000 international foodservice outlets as of December 2023.

The following table presents consolidated volume of our products sold in pounds for the respective periods presented:

[[GREPCENT_TABLE]]
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[[/GREPCENT_TABLE]]

Cost of Goods Sold

[[GREPCENT_TABLE]]
[["","","","","","","Year Ended December 31,","","Change"],["(in thousands)","","","","","","","","","","2023","","2022","","Amount","","%"],["Cost of goods sold","","","","","","","","","","$","426,031","","","$","442,676","","","$","(16,645)","","","(3.8)","%"]]
[[/GREPCENT_TABLE]]

Cost of goods sold decreased by $16.6 million, or 3.8%, to $426.0 million in 2023 as compared to the prior year. As a percentage of net revenues, cost of goods sold increased to 124.1% of net revenues in 2023 from 105.7% of net revenues in the prior year. The decrease in cost of goods sold was primarily due to lower volume of products sold and, to a lesser extent, increased cost per pound. On a per pound basis, cost of goods sold was impacted by higher provision for excess and obsolete inventory and accelerated depreciation on planned write-offs and disposals of certain fixed assets, partially offset by lower logistics costs, lower manufacturing costs and lower materials costs. The introduction of Beyond Meat Jerky in the first quarter of 2022 negatively impacted cost per pound in 2022 but had a substantially lower impact in 2023 as a result of meaningfully reduced sales of Beyond Meat Jerky to TPP in 2023 as compared to 2022. In the year ended December 31, 2023, depreciation expense benefited by $19.0 million as a result of a change in the estimated useful lives of certain of our large manufacturing equipment, relative to depreciation expense utilizing our previous estimated useful lives. See Note 6, Property, Plant and Equipment, to the Notes to Consolidated Financial Statements, included elsewhere in this report. Cost of goods sold in 2022 included $22.6 million in write-offs of excess and obsolete inventories and $1.0 million in write-down of inventory to lower of cost or net realizable value.

Cost of goods sold in 2023 included $66.9 million in costs resulting from our Global Operations Review including incremental provision for excess and obsolete inventory, accelerated depreciation on planned write-offs or disposals of fixed assets, and write-off of prepaid raw materials cost. In addition, cost of goods sold in

2023 included contract termination costs associated with certain co-manufacturing agreements in the amount of $4.4 million and additional specific provision, primarily for inventory associated with a large QSR customer in the amount of $6.1 million. Cost of goods sold in 2022 included contract termination and underutilization fees associated with a certain co-manufacturing agreement in the amounts of $4.1 million and $5.0 million, respectively.

Gross (Loss) Profit and Gross Margin

[[GREPCENT_TABLE]]
[["","","","","","","Year Ended December 31,","","Change"],["(in thousands)","","","","","","","","","","2023","","2022","","Amount","","%"],["Gross (loss) profit","","","","","","","","","","$","(82,655)","","","$","(23,743)","","","$","(58,912)","","","248.1","%"],["Gross margin","","","","","","","","","","(24.1)","%","","(5.7)","%","","N/A","","N/A"]]
[[/GREPCENT_TABLE]]

Gross profit in 2023 was a loss of $82.7 million, as compared to a loss of $23.7 million, in the prior year, a decline of $58.9 million or 248.1%. Gross margin in 2023 decreased to a negative gross margin of 24.1% from a negative gross margin of 5.7% in the prior year. Gross profit and gross margin decreased primarily due to a 10.8% decrease in net revenue per pound, a 8.1% decrease in total volume of products sold, and a 4.8% increase in cost per pound in 2023 compared to the prior year.

Gross profit and gross margin in 2023 as compared to 2022 were negatively impacted by lower net revenues per pound, higher inventory provision per pound and higher manufacturing costs including depreciation, partially offset by lower logistics costs and lower materials costs per pound. The increase in inventory provision included $38.0 million in non-cash charges resulting from our Global Operations Review. In addition, gross profit and gross margin in 2023 included a $4.4 million in contract termination costs associated with a certain co-manufacturing agreement and $6.1 million in additional provision for inventory associated with a large QSR customer. In 2023, gross profit and gross margin benefited by $19.0 million and 23%, respectively, as a result of a change in the estimated useful lives of certain of our large manufacturing equipment, as compared to those same measures calculated using our previous estimated useful lives. See Note 6, Property, Plant and Equipment, to the Notes to Consolidated Financial Statements included elsewhere in this report.

As disclosed in Note 2, Summary of Significant Accounting Policies—Shipping and Handling Costs, in the Notes to Consolidated Financial Statements included elsewhere in this report, we include outbound shipping and handling costs within SG&A expenses. As a result, our gross profit and gross margin may not be comparable to other entities that present all shipping and handling costs as a component of cost of goods sold.

Research and Development Expenses

[[GREPCENT_TABLE]]
[["","","","","","","Year Ended December 31,","","Change"],["(in thousands)","","","","","","","","","","2023","","2022","","Amount","","%"],["Research and development expenses","","","","","","","","","","$","39,530","","","$","62,264","","","$","(22,734)","","","(36.5)","%"]]
[[/GREPCENT_TABLE]]

Research and development expenses decreased $22.7 million, or 36.5%, in 2023, as compared to the prior year. Research and development expenses decreased primarily due to $17.4 million in lower scale-up expenses and $14.3 million in lower salaries and related expenses compared to the prior year, resulting from a lower headcount, partially offset by higher facility lease-related costs and approximately $1.0 million in incremental accelerated depreciation from planned write-offs and disposals of certain fixed assets associated with research and development resulting from our Global Operations Review.

SG&A Expenses

[[GREPCENT_TABLE]]
[["","","","","","","Year Ended December 31,","","Change"],["(in thousands)","","","","","","","","","","2023","","2022","","Amount","","%"],["Selling, general and administrative expenses","","","","","","","","","","$","220,344","","","$","239,505","","","$","(19,161)","","","(8.0)","%"]]
[[/GREPCENT_TABLE]]

SG&A expenses decreased by $19.2 million, or 8.0%, in 2023, to $220.3 million or 64.2% of net revenues as compared to the prior year. The decrease was primarily due to $15.6 million in lower salaries and related expenses resulting from a lower headcount, $14.0 million in lower marketing expenses including $5.4 million in lower advertising expenses, $6.8 million in lower outbound freight expenses, $4.8 million in lower share-based compensation expenses, $2.7 million in lower product donations and $2.1 million in lower legal fees, partially offset by $19.2 million in higher loss on sale and write-down of fixed assets to fair value, $3.8 million in write-off of an uncollectible note receivable that was previously recorded for assets sold and $2.5 million in higher consulting expenses. In 2023, SG&A expenses included $16.6 million in non-cash charges from the loss on sale and write-down of fixed assets to fair value resulting from the Global Operations Review, which primarily included the write-down of assets held for sale to their estimated net realizable value less cost to sell.

Restructuring Expenses

As a result of the termination in May 2017 of an exclusive supply agreement with one of our co- manufacturers due to non-performance under the agreement, we recorded a credit of $(0.6) million, primarily driven by a reversal of certain accruals in 2023 and restructuring expenses of $17.3 million in 2022, primarily related to legal and other expenses associated with the dispute. As of December 31, 2023 and 2022, there were $0 and $0.7 million, respectively, in accrued unpaid restructuring expenses. On October 18, 2022, the parties entered into a confidential written settlement agreement and mutual release pursuant to which the parties agreed to dismiss with prejudice all claims and cross-claims asserted in the associated cases filed in the Superior Court of the State of California for the County of Los Angeles and the United States District Court for the Central District of California. See Note 3, Restructuring, and Note 10, Commitments and Contingencies, to the Notes to Consolidated Financial Statements, included elsewhere in this report.

Loss from Operations

Loss from operations in 2023 was $341.9 million compared to loss from operations of $342.8 million in the prior year. The decrease in loss from operations was primarily driven by the decline in gross profit, fully offset by lower SG&A expenses, research and development expenses and restructuring expenses.

Total Other Income (Expense), Net

Total other income (expense), net, in the year ended December 31, 2023 of $7.7 million consisted primarily of $10.8 million in interest income and $1.1 million in realized and unrealized foreign currency transaction gains due to favorable changes in foreign currency exchange rates of the Euro and Chinese Yuan, partially offset by $4.0 million in interest expense from the amortization of convertible debt issuance costs. Total other expense, net, in the year ended December 31, 2022 of $4.4 million consisted primarily of $4.0 million in interest expense from the amortization of convertible debt issuance costs and $4.9 million in realized and unrealized foreign currency transaction losses due to unfavorable changes in foreign currency exchange rates of the Euro and Chinese Yuan, partially offset by $4.5 million in interest income.

Income Tax Expense

For 2023 and 2022, we recorded an income tax expense of $5,000 and $32,000, respectively. These amounts primarily consist of income taxes for state jurisdictions which have minimum tax requirements. No tax benefit was provided for losses incurred because those losses were offset by a full valuation allowance.

Net Loss

Net loss was $338.1 million in 2023 compared to $366.1 million in the prior year. This decrease in net loss was driven by the year-over-year decrease in operating expenses and increase in Other income, net, partially offset by the decrease in gross profit.

Non-GAAP Financial Measures

We use the non-GAAP financial measures set forth below in assessing our operating performance and in our financial communications. Management believes these non-GAAP financial measures provide useful

additional information to investors about current trends in our operations and are useful for period-over-period comparisons of operations. In addition, management uses these non-GAAP financial measures to assess operating performance and for business planning purposes. Management also believes these measures are widely used by investors, securities analysts, rating agencies and other parties in evaluating companies in our industry as a measure of our operational performance. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures. In addition, these non-GAAP financial measures may not be computed in the same manner as similarly titled measures used by other companies.

“Adjusted EBITDA” is defined as net loss adjusted to exclude, when applicable, income tax expense, interest expense, depreciation and amortization expense, restructuring expenses, share-based compensation expense, and Other, net, including interest income, loss on extinguishment of debt and foreign currency transaction gains and losses.

“Adjusted EBITDA as a % of net revenues” is defined as Adjusted EBITDA divided by net revenues.

There are a number of limitations related to the use of Adjusted EBITDA and Adjusted EBITDA as a % of net revenues rather than their most directly comparable GAAP measures. Some of these limitations are:

•Adjusted EBITDA excludes depreciation and amortization expense and, although these are non-cash expenses, the assets being depreciated may have to be replaced in the future increasing our cash requirements;

•Adjusted EBITDA does not reflect interest expense, or the cash required to service our debt, which reduces cash available to us;

•Adjusted EBITDA does not reflect income tax payments that reduce cash available to us;

•Adjusted EBITDA does not reflect restructuring expenses that reduce cash available to us;

•Adjusted EBITDA does not reflect share-based compensation expense and therefore does not include all of our compensation costs;

•Adjusted EBITDA does not reflect Other, net, including interest income, loss on extinguishment of debt and foreign currency transaction gains and losses, that may increase or decrease cash available to us; and

•other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

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The following table presents the reconciliation of Adjusted EBITDA to its most comparable GAAP measure, net loss, as reported (unaudited):

[[GREPCENT_TABLE]]
[["","","","","Year Ended December 31,"],["(in thousands)","","","","","","2023","","2022","","2021"],["Net loss, as reported","","","","","","$","(338,144)","","","$","(366,137)","","","$","(182,105)"],["Income tax expense","","","","","","5","","","32","","","60"],["Interest expense","","","","","","3,955","","","3,966","","","3,648"],["Depreciation and amortization expense","","","","","","48,094","","","32,582","","","21,663"],["Restructuring expenses(1)","","","","","","(631)","","","17,259","","","15,794"],["Share-based compensation expense","","","","","","29,098","","","33,857","","","27,698"],["Other, net(2)(3)","","","","","","(11,616)","","","420","","","487"],["Adjusted EBITDA","","","","","","$","(269,239)","","","$","(278,021)","","","$","(112,755)"],["Net loss as a % of net revenues","","","","","","(98.5)","%","","(87.4)","%","","(39.2)","%"],["Adjusted EBITDA as a % of net revenues","","","","","","(78.4)","%","","(66.4)","%","","(24.3)","%"]]
[[/GREPCENT_TABLE]]

_____________

[[GREPCENT_TABLE]]
[["(1)","Primarily comprised of legal and other expenses associated with the dispute with a co-manufacturer with whom an exclusive supply agreement was terminated in May 2017. On October 18, 2022, the parties to this dispute entered into a confidential written settlement agreement and mutual release related to this matter. In the year ended December 31, 2023, we recorded a credit of $(0.6) million, in restructuring expenses, primarily driven by a reversal of certain accruals. See Note 3, Restructuring, to the Notes to Consolidated Financial Statements included elsewhere in this report."],["(2)","Includes $1.1 million, $(4.9) million and $(0.2) million in net foreign currency transaction gains (losses) in 2023, 2022 and 2021, respectively. Also includes $1.0 million loss on extinguishment of debt associated with termination of the Company\u2019s credit facility in 2021."],["(3)","Includes $10.8 million, $4.5 million and $0.2 million in interest income in 2023, 2022 and 2021, respectively."]]
[[/GREPCENT_TABLE]]

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Liquidity and Capital Resources

ATM Program

On May 10, 2023, we filed an automatically effective shelf registration statement on Form S-3 with the SEC, which allows us to sell, from time to time, and at our discretion, subject to our compliance with applicable laws and the applicable requirements of the Equity Distribution Agreement (as defined below), shares of our common stock having an aggregate offering price of up to $200.0 million pursuant to an “at the market” offering program (the “ATM Program”). We intend to use the net proceeds, if any, from sales of our common stock issued under the ATM Program for general corporate and working capital purposes. The timing of any sales and the number of shares sold, if any, will depend on a variety of factors to be determined by us.

The shares will be offered pursuant to an equity distribution agreement between us and Goldman Sachs and Co. LLC (“Goldman Sachs”), as sales agent (the “Equity Distribution Agreement”). We will pay Goldman Sachs a commission equal to 3.25% of the aggregate gross proceeds of any shares sold through Goldman Sachs pursuant to the Equity Distribution Agreement. We are not obligated to sell any shares under the Equity Distribution Agreement. As of December 31, 2023, no sales had been made under the Equity Distribution Agreement and the ATM Program’s full capacity remained available.

Convertible Senior Notes

In 2021, we issued a total of $1.15 billion aggregate principal amount of 0% Convertible Senior Notes due 2027 (the “Notes”) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). For a discussion about the Notes, see Note 7, Debt, to the Notes to Consolidated Financial Statements included elsewhere in this report.

Liquidity Outlook

In 2024, our cash from operations could be affected by various risks and uncertainties, including, but not limited to, the risks detailed in Part I, Item 1A, Risk Factors, and Note Regarding Forward-Looking Statements included elsewhere in this report. In addition, inflation, rising and higher interest rates, overall economic conditions, concerns about the likelihood of a recession and hostilities in Eastern Europe and the Middle East, among other factors, have led to increased disruption and volatility in capital markets and credit markets generally, which could adversely affect our ability to access capital resources in the future and potentially harm our liquidity outlook.

Our current business plan is to continue to reduce operating expenses and utilize inventory management to reduce working capital. To further reduce operating expenses, in the fourth quarter of 2023, we announced the initiation of our Global Operations Review, which involves narrowing our commercial focus to certain growth opportunities and accelerating activities that prioritize gross margin expansion and cash generation. These efforts have to date included, and may in the future include, the discontinuation of select product lines such as Beyond Meat Jerky; changes to our pricing architecture within certain channels (including our current plan to increase the prices of certain of our products); accelerated, cash-accretive inventory reduction initiatives; further optimization of our manufacturing capacity and real estate footprint; and the continued review of our operations in China.

Based on our current business plan, we believe that our existing cash balances, including our anticipated cash flow from operations, will be sufficient to finance our operations and meet our foreseeable cash requirements through at least the next twelve months. We anticipate that we will seek to raise additional capital in 2024, which may include the issuance of debt or equity securities, including through the ATM Program, subject to our compliance with applicable laws and the applicable requirements of the Equity Distribution Agreement, or securities convertible into or exchangeable for our common stock. Such financing and other potential financings may result in dilution to stockholders, reduction in the market price of our common stock, imposition of debt covenants and repayment obligations, or other restrictions that may adversely affect our business. In addition, we may seek additional capital due to favorable market conditions or strategic

74

considerations even if we believe we have sufficient funds for our current or future operating plans. However, we may be unable to raise additional funds or enter into such other arrangements when needed, on favorable terms or at all. Our cash requirements under our significant contractual obligations and commitments are listed below in the section titled “Contractual Obligations and Commitments.”

Our future capital requirements may vary materially from those currently planned and will depend on many factors including, among others, demand in the plant-based meat category and for our products; our rate of revenue growth; the results of our review of our global operations and the successful implementation of our ongoing cost-reduction initiatives; timing to adjust our supply chain and cost structure in response to material fluctuations in product demand; the number and characteristics of any additional products or manufacturing processes we develop or acquire to serve new or existing markets; our investment in and build out of our Campus Headquarters, including the timing and success of subleasing excess space at our Campus Headquarters; the success of, and expenses associated with, our marketing initiatives; our investment in manufacturing and facilities to optimize our manufacturing and production capacity, including underutilization fees, termination fees and exit costs; our investments in real property and joint ventures; the costs required to fund domestic and international operations and growth; the scope, progress, results and costs of researching and developing future products or improvements to existing products or manufacturing processes; any lawsuits related to our products or commenced against us or our directors and officers; the expenses needed to attract and retain skilled personnel; variations in product selling prices and costs, the timing and success of changes to our pricing architecture within certain channels and the mix of products sold; the level of trade and promotional spending to support our products appropriately; the expenses associated with our sales force; our management of accounts receivable, inventory, accounts payable and other working capital accounts; the impact of foreign currency exchange fluctuations on our cash balances; the costs associated with being a public company; the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing intellectual property claims, including litigation costs and the outcome of such litigation; and the timing, receipt and amount of sales of, or royalties on, any future approved products, if any.

Our operating environment continues to be affected by uncertainty related to macroeconomic issues, including ongoing, further weakened demand in the plant-based meat category, high inflation, higher interest rates, and concerns about the likelihood of a recession, among other things, all of which have had and could continue to have unforeseen impacts on our actual realized results, including our liquidity outlook. Although in the third quarter of 2023 we met our previously stated target of achieving cash flow positive operations within the second half of 2023, this outcome included the benefit of certain transitory factors which abated and, as such, we did not sustain free cash flow positive operations in the fourth quarter of 2023. Our ability to make progress toward our goal of achieving sustained cash flow positive operations is dependent on a number of assumptions and uncertainties, including, without limitation, demand in the plant-based meat category and for our products; our ability to reduce costs and achieve positive gross margins; our ability to grow revenues and meet operating expense reduction targets, which may be subject to factors beyond our control; timing of capital expenditures; and our ability to monetize inventory and manage working capital.

On November 1, 2023, our board of directors approved a plan to reduce our workforce by approximately 65 employees, representing approximately 19% of our global non-production workforce (or approximately 8% of our total global workforce). This decision was based on cost-reduction initiatives intended to reduce operating expenses. In 2023, we incurred one-time cash charges of approximately $1.8 million in connection with the reduction-in-force, primarily consisting of notice period and severance payments, employee benefits and related costs. These charges were incurred in the fourth quarter of 2023, and the reduction-in-force was substantially complete by the end of 2023, but local law and consultation requirements may extend the process beyond the end of 2023 in certain countries.

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Sources of Liquidity

Our primary cash needs are for operating expenses, working capital and capital expenditures to support our business. We finance our operations primarily through sales of our products and existing cash. We raised a total of $199.5 million from the sale of convertible preferred stock, including through sales of convertible notes which were converted into preferred stock, net of costs associated with such financings. In connection with our IPO, we sold an aggregate of 11,068,750 shares of our common stock at a public offering price of $25.00 per share and received approximately $252.4 million in net proceeds. In 2019, we completed a secondary public offering of our common stock in which we sold 250,000 shares and certain selling stockholders sold 3,487,500 shares. We sold 250,000 shares of our common stock at a public offering price of $160.00 per share and received approximately $37.4 million in net proceeds.

In 2021, we issued a total of $1.15 billion in aggregate principal amount of Notes as discussed above. See Note 7, Debt, to the Notes to Consolidated Financial Statements included elsewhere in this report. On May 10, 2023, we filed an automatically effective shelf registration statement on Form S-3, in connection with our ATM Program, discussed above. As of December 31, 2023, no sales had been made under the Equity Distribution Agreement and the ATM Program’s full capacity remained available.

As of December 31, 2023, we had $190.5 million in unrestricted cash and cash equivalents and $15.4 million in restricted cash, which was comprised of $12.6 million to secure the letter of credit to support the development and leasing of our Campus Headquarters and $2.8 million to secure a letter of credit associated with a third party contract manufacturer in Europe.

We anticipate that we will seek to raise additional capital in 2024, which may include the issuance of debt or equity securities, including through our ATM Program, subject to our compliance with applicable laws and the applicable requirements of the Equity Distribution Agreement, or securities convertible into or exchangeable for our common stock.

Cash Flows

The following table presents the major components of net cash flows used in and provided by operating, investing and financing activities for the periods indicated.

[[GREPCENT_TABLE]]
[["","","Year Ended December 31,"],["(in thousands)","","2023","","2022","","2021"],["Cash (used in) provided by:"],["Operating activities","","$","(107,825)","","","$","(320,244)","","","$","(301,370)"],["Investing activities","","$","(9,491)","","","$","(87,527)","","","$","(147,479)"],["Financing activities","","$","(550)","","","$","276","","","$","1,022,322"]]
[[/GREPCENT_TABLE]]

Net Cash Used in Operating Activities

In 2023, we incurred a net loss of $338.1 million, which was the primary reason for net cash used in operating activities of $107.8 million. Net cash inflows from changes in our operating assets and liabilities were $114.7 million, primarily due to a decrease in inventory balances, decrease in prepaid expenses and other assets, an increase in accounts payable and a decrease in accounts receivable balances, partially offset by cash outflows due to an increase in prepaid lease costs in the amount of $4.2 million associated with the Campus Lease (see Note 10, Commitments and Contingencies, to the Notes to Consolidated Financial Statements included elsewhere in this report), a decrease in operating lease liabilities and a decrease in accrued expenses and other current liabilities. Net loss in 2023, included $115.7 million in non-cash expenses primarily comprised of depreciation and amortization expense, share-based compensation expense, loss on sale and write-down of fixed assets, non-cash lease expense, amortization of debt issuance costs, equity in losses in TPP and write-down of a note receivable.

76

In 2022, we incurred a net loss of $366.1 million, which was the primary reason for net cash used in operating activities of $320.2 million. Net cash outflows from changes in operating assets and liabilities were primarily due to $55.1 million in cash outflows associated with the prepaid lease costs for the Campus Lease (see Note 10, Commitments and Contingencies, to the Notes to Consolidated Financial Statements included elsewhere in this report), payments toward accounts payable and a decrease in accrued expenses. The net cash outflows were partially offset by a decrease in accounts receivable, prepaid expenses and other assets and a decrease in inventory. Net loss in 2022 included $100.1 million in non-cash expenses primarily comprised of share-based compensation expense, depreciation and amortization expense, non-cash lease expense, unrealized loss on foreign currency transactions and amortization of debt issuance costs.

Depreciation and amortization expense was $48.1 million and $32.6 million in 2023 and 2022, respectively. Depreciation expense in 2023 includes accelerated depreciation on planned write-offs and disposals of fixed assets primarily recorded in cost of good sold as a result of our Global Operations Review.

Net Cash Used in Investing Activities

Net cash used in investing activities primarily relates to capital expenditures to support our investments in property, plant and equipment and investment in TPP, offset by proceeds from sales of certain fixed assets.

In 2023, net cash used in investing activities was $9.5 million and consisted of $10.6 million in cash outflows to support maintenance and our investments in property, plant and equipment, and $3.3 million for investment in TPP that was previously committed, partially offset by $4.3 million in proceeds from sales of certain fixed assets.

In 2022, net cash used in investing activities was $87.5 million and consisted of $70.5 million in cash outflows for purchases of property, plant and equipment, primarily driven by continued investments in production equipment and facilities related to our capacity expansion initiatives and international expansion, and $13.3 million for investment in TPP.

Net Cash Provided by Financing Activities

In 2023, net cash used in financing activities was $0.6 million which consisted of $0.5 million in payments of minimum withholding taxes on net share settlement of equity awards and $0.2 million for payments under finance lease obligations, partially offset by $0.2 million in proceeds from stock option exercises.

In 2022, net cash provided by financing activities was $0.3 million primarily from $1.6 million in proceeds from stock option exercises, partially offset by $1.1 million in payments of minimum withholding taxes on net share settlement of equity awards and $0.2 million in payments under finance lease obligations.

Contractual Obligations and Commitments

Convertible Senior Notes

In March 2021, we issued a total of $1.15 billion aggregate principal amount of Notes. The proceeds from the issuance of the Notes were approximately $1.0 billion, net of capped call transaction costs of $84.0 million and debt issuance costs totaling $23.6 million. See Note 7, Debt, to the Notes to Consolidated Financial Statements included elsewhere in this report.

Leases

In 2021, we entered into the Campus Lease with HC Hornet Way, LLC, a Delaware limited liability company (the “Landlord”), to house our Campus Headquarters. Although we are involved in the design of the tenant improvements of the Campus Headquarters, we do not have title or possession of the assets during construction. In addition, we do not have the ability to control the leased Campus Headquarters until each phase of the tenant improvements is complete. We contributed $4.2 million and $55.1 million in payments towards the construction of the Campus Headquarters in the years ended December 31, 2023 and 2022, respectively. These payments are initially recorded in “Prepaid lease costs, non-current” in the Company’s

77

consolidated balance sheet and will ultimately be recorded as a component of a right-of-use asset upon lease commencement for each phase of the lease. As of December 31, 2023, the Company has recognized a right-of-use asset and lease liability for Phase 1-A and Phase 1-B in its consolidated balance sheet. Aggregate payments towards base rent over the initial lease term associated with the remaining phases not yet delivered to the Company are approximately $79.4 million.

Concurrent with our execution of the Campus Lease, as a security deposit, we delivered to the Landlord a letter of credit in the amount of $12.5 million, which amount will decrease to: (i) $6.3 million on the fifth (5th) anniversary of the Rent Commencement Date, which amount will decrease to: (i) $6.3 million on the fifth (5th) anniversary of the Rent Commencement Date (as defined in the Campus Lease); (ii) $3.1 million on the eighth (8th) anniversary of the Rent Commencement Date; and (iii) $0 in the event the Company receives certain credit ratings; provided the Company is not then in default of its obligations under the Campus Lease.

The letter of credit is secured by a $12.6 million deposit reflected in our consolidated balance sheet as “Restricted cash, non-current” as of December 31, 2023 and 2022. See Note 4, Leases, and Note 10, Commitments and Contingencies, to the Notes to Consolidated Financial Statements included elsewhere in this report.

China Investment and Lease Agreement

In 2020, we and our subsidiary, BYND JX, entered into an investment agreement with the Administrative Committee (the “JX Committee”) of the Jiaxing Economic & Technological Development Zone (the “JXEDZ”) pursuant to which, among other things, BYND JX has agreed to make certain investments in the JXEDZ in two phases of development, and we have agreed to guarantee certain repayment obligations of BYND JX under such agreement.

During Phase 1, we agreed to invest $10.0 million as the registered capital of BYND JX in the JXEDZ through an intercompany investment in BYND JX and BYND JX agreed to lease a facility in the JXEDZ for a minimum of two years. In connection with such agreement, BYND JX entered into a factory leasing contract with an affiliate of the JX Committee, pursuant to which BYND JX agreed to lease and renovate a facility in the JXEDZ for a minimum of two years. In 2022, we amended the lease to extend the term for an additional five years without rent escalation. In the fourth quarter of 2021, BYND JX leased an approximately 12,000 square foot facility in Shanghai, China, for a period of eight years, which is used as a local research and development facility to support the local manufacturing operations.

As of December 31, 2023, we had invested $22.0 million as the registered capital of BYND JX and advanced $20.0 million to BYND JX. See Note 10, Commitments and Contingencies, to the Notes to Consolidated Financial Statements included elsewhere in this report.

The Planet Partnership

In 2021, we entered into TPP, a joint venture with PepsiCo, Inc., to develop, produce and market innovative snack products made from plant-based protein. In 2023 and 2022, we recognized our share of the net losses in TPP in the amount of $3.9 million and $18.9 million, respectively. For the years ended December 31, 2023 and 2022, we contributed our share of the investment in TPP of $3.3 million and $13.3 million, respectively. As of the year ended December 31, 2022, we had contributed our share of the investment in TPP in the amount of $24.3 million. In 2023, we contributed an additional $3.3 million as our share of an additional investment in TPP resulting in a total contribution of $27.6 million as of December 31, 2023. See Note 2, Summary of Significant Accounting Policies, Note 10, Commitments and Contingencies, and Note 13, Related Party Transactions, to the Notes to Consolidated Financial Statements included elsewhere in this report.

In 2023, we continued the process of renegotiating certain contracts and changing operating activities related to Beyond Meat Jerky and assumed sales and distribution responsibilities associated with Beyond Meat Jerky in the fourth quarter of 2023. As part of our Global Operations Review, we made the decision to discontinue the Beyond Meat Jerky product line. For a discussion of the risks associated with our assumption of

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the distribution responsibilities for Beyond Meat Jerky, see Part I, Item 1A, “Risk Factors—Risks Related to Our Investments—Joint ventures may not operate according to their business plans if our partners fail to fulfill their obligations, which may adversely affect our results of operations and compel us to dedicate additional resources to these joint ventures.

Purchase Commitments

In 2022, we entered into a co-manufacturing agreement (“Agreement”) with a co- manufacturer to manufacture various products. The Agreement included a minimum order quantity commitment per month and an aggregate quantity over a five-year term. On November 21, 2023, we terminated the Agreement because the co-manufacturer failed to meet its obligations under the Agreement and recorded $4.4 million in termination-related charges. As of December 31, 2023 and December 31, 2022, we had $0 and $84.6 million, respectively, in fee commitments related to the Agreement. See Note 10, Commitments and Contingencies, to the Notes to Consolidated Financial Statements included elsewhere in this report.

In 2022, we entered into an agreement to purchase certain property on a neighboring site to our manufacturing facility in Europe located in Enschede, the Netherlands, for cash consideration of approximately €6.3 million, of which a €0.9 million deposit was made during 2022. Given our intention to reduce our overall operating expenses and cash expenditures, subsequent to the year ended December 31, 2023, on February 2, 2024, we terminated the purchase agreement and entered into a lease agreement with the subsequent purchaser of the property to lease the approximately 114,000 square foot property. The original security deposit was returned to us and was paid to the purchaser as a prepaid lease payment. See Note 14 Subsequent Event, to the Notes to Consolidated Financial Statements included elsewhere in this report.

On July 1, 2023, we and Roquette Frères entered into a second amendment (the “Second Amendment”) to our existing pea protein supply agreement dated January 10, 2020, as amended by the first amendment dated August 3, 2022 (the “First Amendment”). Pursuant to the Second Amendment, the terms of the agreement and existing purchase commitments set forth in the First Amendment were revised and extended through December 31, 2025. Pursuant to the Second Amendment, the purchase commitment was revised such that we have committed to purchase pea protein inventory totaling $10.9 million in 2024 and $17.1 million in 2025. In 2023, as a result of our Global Operations Review, we wrote off $5.0 million in prepayments for an option to purchase pea protein inventory in the future that we estimated that we may not be able to use.

In addition, as of December 31, 2023, we had approximately $9.2 million in outstanding purchase order commitments for capital expenditures primarily to purchase machinery and equipment. Payments for these purchases will be due within twelve months of December 31, 2023.

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The following table summarizes our significant contractual obligations as of December 31, 2023:

[[GREPCENT_TABLE]]
[["","Payments Due by Period"],["(in thousands)","Total","","Less Than One Year","","1-3 Years","","3-5 Years","","More Than Five Years"],["Operating lease obligations(1)(2)","$","129,500","","","$","8,360","","","$","16,094","","","$","16,506","","","$","88,540"],["Financing lease obligations(3)","495","","","208","","","250","","","37","","","\u2014"],["Convertible debt(4)","1,137,542","","","\u2014","","","\u2014","","","1,137,542","","","\u2014"],["Purchase commitments\u2014inventory(5)","27,942","","","10,859","","","17,083","","","\u2014","","","\u2014"],["Purchase commitments\u2014assets(6)","9,151","","","9,151","","","\u2014","","","\u2014","","","\u2014"],["Purchase commitment\u2014Enschede facility(7)","5,911","","","5,911","","","\u2014","","","\u2014","","","\u2014"],["Total","$","1,310,541","","","$","34,489","","","$","33,427","","","$","1,154,085","","","$","88,540"]]
[[/GREPCENT_TABLE]]

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(1)Includes lease payments for our former Manhattan Beach Project Innovation Center, obligations under the Campus Lease relating to Phase 1-A and Phase 1-B, our manufacturing facilities in Columbia, Missouri and all other operating lease obligations.

(2)Excludes obligations under Campus Lease, except for those relating to Phase 1-A and Phase 1-B. See Note 10, Commitments and Contingencies, to the Notes to Consolidated Financial Statements included elsewhere in this report.

(3)Consists of payments under various financing leases for certain equipment.

(4)Includes principal amount under our Notes issued March 2021. See Note 7, Debt, to the Notes to Consolidated Financial Statements included elsewhere in this report.

(5)Consists of commitments to purchase pea protein inventory.

(6)Consists of commitments to purchase property, plant and equipment

(7)Consists of the commitment to purchase the adjacent Enschede facility. Subsequent to the year ended December 31, 2023, on February 2, 2024, we terminated our commitment to purchase the Enschede property and entered into a lease with the subsequent purchaser. See Note 14, Subsequent Event, to the Notes to Consolidated Financial Statements included elsewhere in this report.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements or any holdings in variable interest entities.

Segment Information

We have one operating segment and one reportable segment, as our Chief Operating Decision Maker, who is our Chief Executive Officer, reviews financial information on an aggregate basis for purposes of allocating resources and evaluating financial performance.

Critical Accounting Policies and Estimates

In preparing our financial statements in accordance with GAAP, we are required to make estimates and assumptions that affect the amounts of assets, liabilities, revenue, costs and expenses, and disclosure of contingent assets and liabilities that are reported in the financial statements and accompanying disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results may differ from these estimates and assumptions. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.

We believe that the estimates, assumptions and judgments involved in the accounting policies described below have the greatest potential impact on our financial statements because they involve the most difficult, subjective or complex judgments about the effect of matters that are inherently uncertain. Therefore, we

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consider these to be our critical accounting policies. Accordingly, we evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates and assumptions. See Note 2, Summary of Significant Accounting Policies, to the Notes to Consolidated Financial Statements included elsewhere in this report for information about these critical accounting policies as well as a description of our other accounting policies.

Revenue Recognition

Our revenues are generated through sales of our products to distributors or customers. Revenue is recognized at the point in which the performance obligation under the terms of a contract with the customer have been satisfied and control has transferred. Our performance obligation is typically defined as the accepted purchase order, the direct-to-consumer order, or the contract, with the customer which requires us to deliver the requested products at agreed upon prices at the time and location of the customer’s choice. We generally do not offer warranties or a right to return on the products we sell except in the instance of a product recall or other limited circumstances.

Revenue is measured as the amount of consideration we expect to receive in exchange for fulfilling the performance obligation. Sales and other taxes we collect concurrent with the sale of products are excluded from revenue. Our normal payment terms vary by the type and location of our customers and the products offered. The time between invoicing and when payment is due is not significant. None of our customer contracts as of December 31, 2023 contains a significant financing component.

We routinely offer sales discounts and promotions through various programs to our customers and consumers. These programs include rebates, temporary on-shelf price reductions, off-invoice discounts, retailer advertisements, product coupons and other trade activities. Provision for discounts and incentives are recorded in the same period in which the related revenues are recognized. At the end of each accounting period, we recognize a contra asset to accounts receivable for estimated sales discounts that have been incurred but not paid. The offsetting charge is recorded as a reduction of revenues in the same period when the expense is incurred.

We recognize the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that we otherwise would have recognized is one year or less. The incremental cost to obtain contracts was not material.

Inventories and Cost of Goods Sold

Inventories are recorded at lower of cost or net realizable value. We account for inventory using the weighted average cost method. In addition to product cost, inventory costs include expenditures such as direct labor and certain supply and overhead expenses including in-bound shipping and handling costs incurred in bringing the inventory to its existing condition and location. Inventories are comprised primarily of raw materials, direct labor and overhead costs. Weighted average cost method is used to absorb raw materials, direct labor, and overhead into inventory. We review inventory quantities on hand and record a provision for excess and obsolete inventory based primarily on historical and forecasted demand, estimated shelf life of various raw materials and packaging, work in process and finished goods inventory, as well as the age of the inventory, among other factors.

Property, Plant and Equipment and Estimate of Useful Lives

During the first quarter of 2023, we completed a reassessment of the useful lives of its large manufacturing and research and development equipment, and determined that we should increase the estimated useful lives for certain of our equipment from a range of 5 to 10 years a uniform 10 years. The timing of this reassessment was based on a combination of factors accumulating over time, including historical useful life information and changes in our planned use of the equipment, that provided us with updated information that allowed us to make a better estimate of the economic lives of such equipment. This reassessment was accounted for as a change in accounting estimate and was made on a prospective basis effective January 1, 2023. This change in

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accounting estimate decreased depreciation expense for 2023 by $21.0 million, impacting cost of goods sold and research and development expenses by $19.0 million and $2.0 million, respectively, and decreased both basic and diluted net loss per share available to common stockholders by $0.33.

Recently Adopted Accounting Pronouncements

Please refer to Note 2, Summary of Significant Accounting Policies, to the Notes to Consolidated Financial Statements included elsewhere in this report for a discussion of recently adopted accounting pronouncements and new accounting pronouncements that may impact us.

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