Beyond Meat (BYND) 12 May 222022 Q1 Earnings call transcript

Good day, and welcome to the Beyond Meat, Inc. 2022 First Quarter Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. to conference like Kutua. to now would turn over the Lubi I go Please ahead.

afternoon welcome. you. and Thank Good

www.beyondmeat.com. Joining Meat's today's Chief is This Chief access release Executive Relations Treasurer. me filed President Investor now, available to Officer; website Founder, on By of the quarter section and in call the are today Company's the Phil earnings should after document Hardin, everyone Financial at first and Brown, Officer Beyond have Ethan press and closed. market

cause we that And on described the management Before note management's statements. federal laws. today's call expectations within course and and call, and presented actual statements please in differ beliefs the could risks results from information the statements materially these based begin, securities all this meaning to forward-looking is during may These forward-looking those of the on unaudited. current involve make that are of uncertainties

the comments to the reference differ not measure. note which for on financial make December today, as for management to XXXX, today. Please earnings X, release, and XX-K results made discussion detailed a issued will unfold. today's release of be in we call, that to SEC from other Forward-looking non-GAAP annual Company's is XXXX, the quarter to ended adjusted as cause press a today any the Form on call, only the the Company's or refer the Please actual implied XX-Q April be that statements with filed and this XX, with statements those SEC also quarterly made EBITDA, may on filings events forward-looking report Form risks ended could expressed on year the in of that the today's updated with report for along are materially

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everyone. you, and the the encouraging growth. growth strong significant progress we long-term saw are navigated Lubi, Thank to of strategy good scaling and first we afternoon, nature, challenges launches temporary for Though resumed product which of our in strategic cost relate majority of XXXX, in quarter and against signs made

with Turkey change with we plus. of Two, expectations. limited initial our do Turkey, exceeding McPlant global on product noting fluctuations, market Hut in partnerships. Chicken Beyond three engaged regard PepsiCo. of PLANeT U.K. conducted our activity more and resulted across success continued while added targets nationwide other U.S., see a margin the item Ireland Brands restaurants that conducted the than XX% SKUs our for we significant joint Pizza permanent tests McDonald's U.S., Canada, a Yum! QSR any cost-down Three, a per short-term launch across the offering been across Sales Austria. not Meat despite since its the in progress our KFC in unit. Meat in our Turkey in adjusted made of to KFC's history. And program fundamental media with launched of Beyond and material we currently, trials First, And long-term to launch venture of recently in cost have launch added resounding we menu in Beyond offering as time any Partnership, Beyond Fried Meat continued the impressions all

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the product and launch in market. Turkey, company's my nationwide manufacturing using in launch our new successfully with an cost of biggest of higher Beyond executed terms initially network history product breadth, Second, we the

very pleased As half with clear and transitioning economics efficiency I the a production year. this of improved have second we now into mentioned, in initial sales sight higher unit we're results, line to operations the and of are greatly

which While in of to we net longer-term revenue future to we saw now XXXX. in do in saw net robust through in by In a Company are increase not results. U.S. value take XX% well driven actions, short-term discounts, of positioning the offset lightly per a mix the Overall, retail, XXXX decrease We decreases we pounds impact confident in by these in an we the X% We revenue. pound, in capture QX of euro price X.X% dollar. to revenue increase XX% net investments, growth. turn net QX trade rising sold, list solid was of EU growth products of year-over-year, the and changes sales strategic partially margin reductions posted these we the that and revenue are of increased relative

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period to & Natural X% MULO. in declined category Specialty year-over-year compared X.X% the total context, during sales a For increase in XX-week

plant-based refrigerated part Second, plus frozen heavily refrigerated shift down consumption meats, saw but and the in across X.X%. meats change X.X% were plant-based Natural from Specialty, increased where plant-based in reflects frozen consumer frozen plant-based of are beef SPINS in from frozen. channels, the section in chicken versus up This MULO represented, we purchase section. refrigerated Refrigerated a to we were

competition are Beyond encouraged Nonetheless, number the brand we we category. Third, in that refrigerated Meat in increased the remains plant-based meats. one faced

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to to price our continues for However, the by own be strategic price with the cost-down main goals, parity driver us informed aforementioned program. regard

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XX.X%, Purchase reflecting an Numerator penetration letter rate to frequency pricing Beyond likely pleased year-over-year, strong, year-over-year users, points XX even declined basis well repeat as penetration respectively, see of year-over-year overall in as According points XX.X%. and these user are XXX the basis expand. rate to buy X% first that quarter on data as by latter increased increase We stood while the our continues healthy reduced of and to measures brand Meat brand through at the case. in the XX%, household for our given new household our remains base health to XXXX, increase based

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strategic reflecting EU. net incentive primarily in actions reductions the Although revenues X% and were down year-over-year, price

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global Before macro issues. concluding, let on briefly me some touch

commodity conflict is As disrupting in the recent widely ongoing reported, and Ukraine key markets.

our detail to direct it supply in for of avoid the portions outlook these through sell us amounts. that, to increased through commodities have we disruption first our point, walk the for year. transportation and don't this to seen has use At will chain. results plus in that relatively supply quarter sold significant Some balance or any issues, and Though costs small the few through a prices of have and on higher to financial are Russia these Phil indirectly we in Ukraine, small working disruptions managed scarcity pricing we indirect to into we and impact and of operations. greater a due fuel only our team quantities turn have With I increased a over the distributor

declines achieved million in We Ethan. retail in net in The partially the increase quarter the compared growth channel, sales of first representing revenues by first offset other quarter by X.X% driven net of $XXX.X in the an XXXX, of to was revenues channels. of increase U.S. XXXX. Thanks, our

reductions, pound per expected For pound QX average was trade of list net and primarily driven $X.XX, reductions by $X.XX impact mix ahead QX a XXXX, foreign in exchange. strategic price per discounts, XXXX, changes revenue from down in negative increased cost from

as QX net to during $XXX,XXX was profit. XX.X% or gross or million down XXXX of QX revenues to $XX.X XXXX. revenues Gross net X.X% of of the P&L in compared profit Moving

infancy, further scale dedicated with and products we launch at customer expand unprecedented The of to all in large headwind an costs performance To profitability Meat of of of with fees streamlined its processing and We expensive the different and distribution the end so to a While process, retail a eclipsing we good are response, May. path production this us, be processed gross XX,XXX thrilled points headwind approximately launch establishment facilities, of step to scale at quarter. transportation Jerky to other a Beyond gross early and expected Beyond our its approximately the across single each Jerky and such this first-time our at quarter manufacturing, to combined current inefficient locations distribution do sales Meat manner. and strong initial In of batch for significant by some to to incurring journey. cases, the current basis in a still our finished XXX prior XX,XXX the the requires U.S. product estimate locations own margin. for the is already was had

as remainder As will we on get year, we we the mentioned better. look the last toward call, of the expect this

the We that a consolidate one and have thereby processing for Jerky with already recently need to locations, the operations improvements produce contract equipment, multiple as secured, a manufacturer automated initiatives can lowering signed reducing more we with costly multiple third-party reducing underway with fees transportation. shuttle largest of

capacity expect mid-QX in We of come this online to XXXX.

bean key secured underway. on We one in of to already reduced locking the ingredients in and recently other we mung efforts also forward look pricing Jerky, protein,

increased and $X.XX depreciation accounting Jerky by $X.XX, sold for primarily and as being reserves inventory relative partially approximately as QX reduced and to in addition to and the per up costs, and reflecting with We including created in well approximately estimate write-offs expensive revenue depreciation and higher transportation by warehousing accounted pound, year, net higher costs, In manufacturing per depreciation, $X.XX other $X.XX cost driven offset decrease period. per remainder improved remainder primarily year unit. Manufacturing the the fixed were pound including and per with overhead pound, increased in COGS QX per ago Jerky the for through costs, material inventory prior versus the pound year-over-year.

non-Jerky our impacted volumes costs improved the although network, still based on each The where improving. overall by initially variability and For in economics. products, inventory on but is stabilize costs inventory to produce the later QX, across of lower that and quarter anticipated still optimized we an foodservice than in needs we production SKU the that new product trajectory matched manufactured production result launches, the we as reflects a elevated demand is best labor

XXXX Coast facility in QX For goods were cost than our finished lower XX% XXXX. conversion East example, in of QX

process are RFP running we We in tolling third-party fee that also an will currently with expect our manufacturers savings. result

The including Finally, as and QX increased to logistics $X.XX pound year-over-year saw Northern transportation estimate you The to Jerky, freight year-over-year. pound. mile And into use for Warehouse uptick this internal other rates this improvement Note, with pound increased in is materials also of we're further may similar expedited due year-over-year in cost our and expense. before have QX grilling to our cost sequential area, driving customers, from $X.XX and miles recall, In material million trucks. implying the implementing as secure and XXXX. $X.XX an transportation versus in goods $XXX saw a increased changes cost increase season account per per per QX to per XXXX warehousing this pound per approaches, year-over-year increase established warehousing experienced improved between in selling lanes, all to which and was our expect Logistics associated in Jerky XXXX, from in in we both excludes increase costs, from and in cost $X.XX we attributable shipping a the In inventory to a QX revenue RFP QX costs million. $XXX a driven in included per with on primarily increased those we represented a taking costs transportation, finished primarily we an costs. in increased year, of leverage per associated a SG&A outbound reduce from Similar we as in drag, to underway QX the pound further aggregate, our Hemisphere headwinds products. pound benefit increased basis. XXXX, we costs. continued

key eliminating As isolates ongoing part for decreasing multiple one and in utilize costly seen straight ingredient manufacturer and area we making more material progress us, PPI. is less underway the to pricing, protein We've cost using and or streamline of the program, our ingredients efforts especially negotiate are and a excited recent a distributor our cost-down success expensive to less favorable focus going from further in packaging. we by are pea have

previously success sourcing suppliers seeing through secured we PPI multiyear greater our from contract, of qualifying a have disclosed we in expensive from strategic While less supply and PPI stemming utilizing are proportions efforts.

costs our migrate promising. Our focused exclusive to in are are of efforts rounds ingredients these of current to use allowing on down testing and lower-cost area initial this on looking us

with pound represented to Lastly, the versus per despite COGS, respect $X.XX reserves pound period, per a ago a XXXX $X.XX changes year QX inventory drag in from benefit in Jerky.

million, costs. the year-over-year outbound down mainly by were XXXX by $XX.X from freight expense was agreements marketing, million expenses, driven headcount QX increases driven driven selling in for up OpEx, The QX XXXX. primarily in consulting and G&A operating to higher P&L ongoing increase increased expenses nonproduction $XX.X by Moving

highlights. our cash flow Turning sheet balance and to

debt cash Inventory to and April of total million, at and equivalents increased was from million, cash balance as end up QX $XXX.X was $X.X of outstanding $XXX.X the X, $XXX.X Our million billion XXXX. approximately XXXX.

recorded prepaid $XX.X net used in $XX.X million the in activities totaled In months ended terms $XX.X $XXX.X three contributed year cash first was compared the cash towards headquarters in XXXX ago in the expenditures L.A. the quarter. area, XXXX, the in period. flows, in rent Capital to approximately million Note, cash contained our million of in in we of period. new build-out was for our million operating QX and ago facility $XX to X, April here year million the operating innovation which flow compared

Next, I about will outlook. XXXX commentary provide our some

growth XXXX, by in net to last the to range growth million to to we uptick year-over-year XX% continue million, followed in accelerated we availability the XXXX, second of year EU, result expect product similar corresponding fiscal XX%. driven new of In launches expected $XXX shelf the year, of expect and half gains, what be U.S. to life markets distribution both acceleration net year-over-year QX extended the in price the and between to a and anticipated revenues resets we QSR international launches recent in $XXX as revenues in in and sequential abroad. For a experienced of by year, products trials the broader

we part be cycling In addition, of will easier year-on-year this comparisons in latter year. the

are we margins. for Although this XXXX did margin to at guidance additional we some QX time, not providing specific want provide our context

back We headwind Meat expect higher Beyond QX, well expect continued we in QX low Jerky QX. will to later in with high XXXX in and QX, but a margins albeit in historical accelerated the of The point QX in year. the still margins cost continue were below economics levels, unit in improvement 'XX, progress be Jerky into substantial

we continue million, up previously is noted. our in expectation and the you. questions. in $XXX incur for Thank of as over our back $XXX.X XX-K, complete approximately QX, look $XX open as your we innovation will turn it down by I'll million headquarters which million XXXX, in call of facility of Also, be to build-out already to of we this $XX for will XXXX, current the operator existing reduce assets. our With that, although anticipate increasing our the center contributed to to million further contributions our the efficiency CapEx from XXXX, to For in roughly to we disclosed opportunities

We Galbo session. the will Instructions] The with America. from today first now question-and-answer comes [Operator Please Bank begin Peter question go of ahead.

on ask clarifying QX margin. comments wanted just I Phil, to gross some the

in some of that not the seems basis like into that Jerky it's points from think I helpful maybe it headwind continues all. but XXX QX, QX,

think just assuming of to I you XQ kind of of of other QX can the inflationary bit So any of that a in pressures, be big from aside the what margin margins surprise to downside? So you're that that will from range is just hit -- the us number Jerky QX there. given in of help a just all kind help a more kind to the might was set because

Sure. Sure.

can a greater hand and who take detail. approach then high-level I'll give to Phil, So over it

first we long-term the I up my around will think and that manage business longest to to from growth theme we open continue outcomes the foremost, be the and here comments underlying can. best

be we though when to we this, did of as challenging term, because so in margins pursue like going we're better year in have somewhat And that opportunities line sight going them, much a the to near even to Jerky they're progresses. the and of clear here

framework have, so not some we're more we process need front case, at able that the of bringing to bit production. we whereby opportunities bit some steady-state higher-priced the quarter continued look pressure detail some were that for opportunities. was And in now but from state year, And it in the again, back that. through area fulfill production the other away reorient too we'll But that And from decision in give those we to selling can a this on inventory we Phil on that some relaunching cost progressed. was see pressure longer. was long-term and toward that that margin, to be much around the steady as for a And more this

can we so we our this ability But the And differently. XX% of longer we line a period. we if to maximize to would didn't over restoring good to as feel margins we of longer period much of addressable to feel want plus market total a had grab try over sight time,

year. a color The we in expect add I'll Phil. unit on later is come bulk is the of basis, this So, additional per will the the improvement

pound given similar for look So may Jerky, QX. of QX, a fairly to

are a somewhere makes and one things should that guidance -- there difficult. of not So pieces be more the the headwind of lot concrete giving moving

jerky cost of incurred of we the the on obviously, We this sell, we market sheet. some balance left pounds a lower there on lot. of So wasn't pretty were number to very small a jerky so also clean based quarter,

this will pound, improving cost come facility new QX the to And expect so to begin amount, with we but factor into more the those per online. expected total things that's in

model, So Ethan of but the of fair -- I kind a and to per as there pound. think themes economics touched I on you similar type it's big think assume

it. at probably as follow-up, cash last are start also quarter, quarter. cash from in just down a guys, working burn think to future needs for number a to being And for then $XXX I convert the Got with accounting current state as challenged XQ, Okay. million you about the CapEx rate capital mean the of starting growth from when year? close steady kind how you the

sure. Sure,

ahead the it same and over go to follow give I'll Phil, but comments. some to sequence So quick wanted hand then

wouldn't just cash I based that then of kind out that. quarter's So play and of we're assume cash consumption out it this and take on

taking are there's OpEx and this cash growth QX at high particularly the But areas of at reducing quarter. look look QX, We measures OpEx substantially did cash in and if certain you to continue reduce we the to overall OpEx, consumption to we as slow consumption progresses. year rate several

coming also a a into here that. continue build the at XXXX side, ways are also inventory. to up lot of one Second, the on we inventory But have the is looking reduction link did season. to from trim CapEx and summer bigger We

of improving course year lot the across cash. of and a progresses. see then we as We that expect year, wind will bit to the a that generate of quite the And do down margin

materialize that in cash continue way again, bit we've pattern start to growth, latter And of consumption. here see that kind to bigger of But happens, And So of quarterly starting should coming in out the seeing caution then also as more a this the a lastly, favorable in we of for been help year. pandemic. half we obviously resumption some are the that although, and will holding that we contribute. will

manage We a So where now, it comfortable. feel to plan we we have feel cash good look where right at our do that. about about good feel we a is. And runway But point, to through point we'll up. that

thing remainder of our include in you the only count of with expectation associated We at in prepaid the other that only year operating The the about R&D our million be headquarters cash a to that add should Ethan, QX. build-out leasing is is I'll and million $XX the that Yes. which they contributed expense, line totality. a look for facility. if flows, $XX to for

loaded costs this And the of front-end very so, quarter. we're on some

question Credit comes Moskow Robert with next go Please ahead. The Suisse. from

growth little does about -- March about the it the include A about a I March for February offers? don't foodservice mean, in question it's limited why unclear from that? these EU Or your wanted -- you begin. extended but number. shelf-life sales, EU not then And doing in that Is extended Can think or the benefits you from to to shelf talked life to I I've time reasons U.S.? from about in where run XX% I reductions. A big rate? any regular price And talk heard burgers know the March

Sure.

whack Robert, the first this. at take So I'll

-- think the on a back think March, are and we're the question in I coming coming the So I shift and in people about fundamental hopefully back consumer just brand. seeing behavior into

we'll hit onetime think any year don't us. were that and kind there's we encouraging for a that But the of very keep happy that to that. monitoring as progresses. So was driving sign is that, I

the that relative more with life, do has where grocery in those. shelf extended we to there requirements are and the On to

what there extending meet were by so previously. versus we to of more it, doing norm the And it's

a what's So in it's typical strategy to extend Beyond the not EU.

what your the surprised in follow-up been traditional I'm getting of of guess that, mean, price And that closer strategy to and my is more hasn't the reduce I And burgers. for U.S. consumers unprecedented reductions meat. brought time conventional in about to plant-based category. kind broader in Okay. yet question meat. to a prices in a has And the we're I price is inflation about

that So is confirms -- to drive be I'm repeat? will that price the that any the there could factors that price the be and you've research going indicate the to if that wondering trigger increases other Or be done this? trial

some the terrific coming taste to to it's innovation I which about really need a years. lot have continue really the Well, later do year. do this things One three talked I've is think and profile, over drive we

price and But using Second market all new sector in entrants And is we then in to these you QSR feel of health overall the the as see on price. is the value the grocery them consumer communicate And which way these extent, and happening to are very to price. focused in, environment. many capture lesser coming share. particularly environments, proposition, to a to is early to then what's third continue in around is a try

do protein been while the has the pricing we our had -- increase so industry to essentially animal And in the volume, not able to have substantially that. opportunity reductions offset significant to in sector,

basis, that's XX%, But the competitive, sales pricing it's at not you offset. that's retail, on because showing being been so if certainly up we're up, year-over-year case. has volume And right? So in a look our

environment a we're on, unsustainable category. behaviors the still where lot there's brand weather think, pricing We're the one an number I fine. weathering of, it's So in retail and going we'll that

at turns covered. plant-based X.Xx average. the roughly velocity brands highest the meat of that category all It's XX are Our

fact it's And we've on up not we this. us to withstand so pricing been just the good entirely feel to that But things. able really about these

rates But not competitive time, remain parity environment. in roll reduction. through get to to have to discounting drive over to We is that to our cost continue our approach

done the launch and Jerky, decided reasons. than retail XX,XXX which that biggest products. to was And we've program, the We long-term launch through at we've of There's those. costs ever our again, larger look reduce if strategic noise footprint currently material existing cost growing, to for ton been a quarter-to-quarter, so other to stores all is in cost our that our able among in you our

on it's efficient, out So it production expensive network that to now And spot, scale we endeavor more which a we're right which our those thing that's one a and a single of there. facilities to toward to reorienting is do. production did get up versus the very

up strategic QSRs, cost launched from up went And so we steady-state which structure for also drove as we away production. pricing our

parity the system. cost But that years program I all taking this hit down seriously, will three in ago. at is noise So, this now very we and we if goal look doing, this we're what you set price are

see it. we in And the clear to more jerky have wouldn't you with we we line you sight you'll of in to are if we Jerky. look pricing get want. about have But margins the of two if do get fact, years the We marketplace, look already and at that average at that didn't the price parity at jerky to our

growth some lot bit not noise that. to sense wringing comfortable longer feel that with And and a these a longest-term catch of their we're waving These managing near growth looking global time. with the to want soon I will market about in And hand with all this don't think to XX,XXX period with feel Jerky, business quarterly it's regarding make for just term. So things doing business brands. of do deviate of think we a into are launching And whether I create right, expand are going of are. going with where the I Yum! good over it's little protein the the know down, from and to results. our investors and hands some that. we there's it's will trials to globally that, pricing, to different of And is up across turn whether that on opportunity. is company stores generate But a to be that do opportunities continue the a it's But we're what whether McDonald's, would us I trials continuing

with The ahead. Ben Barclays. next question comes from go Please Theurer

like it three been results, international in important, amongst sure. because at is maybe starts price That's bit stunning you and that's X%. on the the business, then to between if Just the expand markets understanding a all little for be what's able taste kind international stay in that we the growth in wanted volume going obviously, retail things, XX%. international or felt it within take to discrepancy topic it wasn't growth, a with. was it and in foodservice, but big, significantly in look what But of of to then down then were by But were U.S., revenues up sales the it XX% to ultimately, volume the that i.e., see the how

FX? bit elaborate international? How a much into little of little in activities, So how much service? that was pricing and just bit And of a was what's could much about And maybe currency? you pricing food been a maybe how promotioning driving give to within try or strategies was local strategy kind in the clarity, retail shift

Yes.

look increase at in in where So volume for again, add have to by just and everyone here with retail while is to can offset building was the take there more get efficient. look revenue. a we to becoming year-over-year, also we that of trying what's reduction in in a you but quarter were But think -- this Europe, and this capacity XX% so we're kind more we're competitive doing, line by the we're in happening to but terms of and downstream I this, about what Phil back own again if extrusion net in XX% is step at our manufacturing out EU able pricing

be it will where get to but there. it's it not So today, needs

And to until up. set versus capacity full continue have market to share so our we grow wanted wait we

of in more even space growth go volume. foodservice, animal it's example as In competitive an dramatic, the in and to And that towards about go further the so pricing that's market, into how we -- we're get even pricing protein. XX%

right, volume, in production from will pricing. pricing a time, So, in by sense But of Europe. that infected margin the that really reduction network a we're nice in because efficiency uptick our over offset getting make in

lastly, the we as do we it doing many we're of that we to at benefits an get our then understands consume terms sure parity continues the says, can consumer below, And it think going to be or are that. not products Stanford perspective the price so that with animal good to and lever taste, from consumer be of becomes gets others. such health back products I'm if and of price if to can we protein work create make that a in the this times, can indistinguishable still here unusual And

require generate that's and They're to okay. these like, going and business, take we it's these near-term time. patience. our starts, linear steps And don't results some We're not per have going se. to things fits and But so take right to are for the and again, they'll

would exchange lower the is particularly a euro trade percentage is say are headwind, as foreign estimate that approximately prices. only which We Just versus lumpy, to other three the thing predominantly point driven. discounts is that. rolling The somewhat dollar of to some out the we're I add

so we're then in lower out already there, discounting lower price as some we're into distributor, so the the at also that you're product selling And cases, at you what's get the price.

a with different So you we'll of new little price how may trade as in And points, some doing continue which by to out. see line. that are we're lumpiness we see what review kind play the country,

learn so we we as And this be will go. something

my headwind? give there shipped capacity when marketed How within Europe Europe. Can that's particularly improve call much And still about do like production to at a over you cost or where you right Okay. expect in and little versus stand an it over to of the the follow-up around then bit packed region said now? that and level of the least us really basically available product you update is investments you domestically to the then what in needs have be broader sold

Yes.

we're nature. finished So perspective, think about to But WIP not shifting of the is think way give now on I good things And and that to point terms of quite production the EU in goods where I to production. integrating we're to back it want the it's a a end timeline shipping of process, now. over right our wouldn't the

don't off. I it's think so, And far too

good the give with so date. costs in in don't price that we about exact bringing our to And not-too-distant line reduction an I feel but future, want

with next Goldman The Ken ahead. from question comes Please go JPMorgan.

follow to case, animal-based maybe down the on like it competition is kind with levels. of loyalty you guess me. competitors your wouldn't product that you crushes reaching on I this this said to price? do degree? to many you if I number price should you your margins of Two to superior of allow kind occasions more more need If point a guess, is price a the for parity meat Ethan, consumer on retain why your have bit this? what's of that

Right.

doing Like these margin coming so have think sight One long not term, a right? this of -- impact all of our very first I think all, is I on just Ken, to down things. So we launches. is line of couple network, not constantly good

cost accelerate out basis, and material down at drive costs kind material that. the and to of a looking can think taking continue we So operating I that then of

cost side, come think, advantages it's some question opinion, fruition. products, get I you'll the to on pricing, fair But on see think in our it's a we I So, my not a that lot rankings doing and are number and should and in one, so awards that. We we're of cetera, spend be we kind et the forth. that, with And R&D. pleased

getting so this also And of in fact, mentioned, opportunity some And goal the among making are exceptional. products and have consumer year about think the we better have I'm are and this do differences closer closer. release educating I distinguished the to that we very But it I excited about brands. job to a

about us within other me where be the and to our and asking confusion still will and so addressed I'll so forth, it and minds other products on people's brands. e-mails get particularly there's brand, actually and one think I

out quite enough so the we from have distinguishing brand, think bit. of think a there's and in is at better on main point, ourselves. But And coming will pressure I to mind. that do And consumer's the of pricing a don't that help points I competitive job differentiation one the

match spending And what But think it's sales talked that some and hear about the and out the And of of point what's better SG&A world happening in your adjust it I have some you're think vision your your of in up were shareholders? Is for saying, then there which today. you shorter-term your some to to understand term. to that understand are do I SG&A think how control. the But we is some reaction as XX%. great question is, sort you the in for for maybe missing reality, are considerations making I opportunities investors think that in the I future, some ringing" in a kind about the need balancing X% -- some of you're up long increase, today? you "hammering, look, described the point guess the of the as market's question to two, long-term your was is reaction the people year-on-year investments doing quarter, And of message

mean, I reduce to absolutely. think to I continue points Yes. And OpEx. raised growth are going those in we -- around the I've

this quarter plan a ask we pretty I of don't it first course the But be that a reasonable the Inventories that current -- is to you It's long-term going will lot easy think that doing. today it's of see we're the the improving take year. are are have We persists. right best to the think long-term stuff, exactly understand right? answer. for this the And cash that value the and I I trying interesting those think question I the thing Margin, the for of not out to over unlock, next think really for that we're year, care. making be CapEx But that year. that. moves of condition

The next question with comes go Please from Alexia Howard Bernstein. ahead.

Okay.

ask just burden we top back So speaking I -- because can everybody the for I'm cash to. mean, to mind obviously, that's of coming

I actually are whether through we obviously to there you've I'd in R&D this through to almost, going I as hear quarter? that. to start is burn about what QX? is that start burn you halfway be to else as of that curious might you QX, income You're prepaid very line the say leases might do be actually center get cash that the any the likely the see to it's I we net improve, inventory have go reverse? mean, And know smaller. anything that said sort for the Did read cash

question. Good Sure.

I going So guys mentioned, again, there. be seem cash would and back of the replicate probably then side, to like the the burn I some these think you'll that out. we've point. it across quarters, the taking I you that to We're steps than being inventory lower year, answer see And some But gets when are particularly sales be course persistent. up to on freed doesn't quarter's had and this my general take out give is can I say the here most bit cash lacking. not precise little a that's trend

we'll as some generate from better outcomes so that well. And operating perspective

the obviously right will. position, feel we're about and But we're our at pretty of managing it funds. feel okay careful actually we and point the we just of use cash something that it do now, So through aware we we

be switch follow-up why to the And just my Numerator. data now? from then about And Great. that? prompted would the curious transition What SPINS the

Lubi, one. is this Alexia, take I'll that

coverage generations, well we channel data, of sort does probably the which is brand. sort an our more consumer Numerator again, capture have consumers omnichannel brand. base total the actually important of our does sales, our believe So It important better for and which an demographics. more of is for demographic in we It of younger found capture think millennial some we as increasingly

made And decisions. we based on switch panel decision so to of the types those providers data

The go Peter next Saleh question ahead. Please from BTIG. with comes

wanted just back to I come conversation around gross margin. to the

if beef even the exclude you margins. Just on impact jerky the

significantly then year? third in that significant going and we of on trying gross you to inflection and inflection really eases in it's understand trying of felt margins? end the should a quarter quarter Just again? see we when the really do transitory what Should this kind understand back in fourth be pressure you the think see the quarter, to to Just

I'll Phil. is one. This that take

is a too on So about, this of perspective, very, similar if right And you ongoing. pound from now as Ethan look manufacturing sort at quarter QX. per to high talked basis very per a cost cost pound our like it's

making sell there. shift changes production. align other especially progress inventory, late We inventory the started of to QX. And so the we some of already schedules, given that for there's good some some But in changed work a location We we'll lot underway made balance the QX. in exists have, optimal the

kind what kind you of I of coming expect we net would have would a current of knowing So in of I the those it QX seeing basis start a and well know little -- we'll on out in costs. period some the see would QX trade of really as be to other We'll where improvements some see today, through what bit that, when statement. income

us. helps certainly, Now volume

QX, at a costs, And you which also quarter, a a so if depreciation should we bit typically having expect in bigger seasonally be tailwind. little of things like look QX

are trials as then just mentioned I Ethan, still would these chicken? or your current front there's side? And remarks, in follow-up, Great. the second in partners I front we share expect on don't -- we think that in of QSR new had partners? talking that you know anything terms you Are with the a more on more talking prepared be on burger helpful. Are your if quarter. can Anything

Sure.

think think the what yes, to of to partnerships year. we So for said was and mean, speak sort I our them, can't I I I roll of see activity of from I what have, the But -- half we I but meant some major out Yes. second you'll partners. continue further tests,

comes from ahead. Adam with The Goldman next go Sachs. question Samuelson Please

spend positive? you reach sales at the and on spirit the medium free see to OpEx near we EBITDA about the long-term guess to profitability I'm of you be struggling flow level profitability per Can given XX% profitability XX%, cash about actually to a to basis, of do or those on cash get pathway OpEx gross margins. EBITDA -- think EBITDA at and is talked a structure question, look today? percent maybe kind the Yes. an in absolute be What at the dollar the need pound just where on look business, really to whether the of of just you term, revenue flow I think reaching and and the I or to basis, just if

this Phil. So is

in with yes, certainly, bunch be, time, make it's what exercise that to that's we're spent multiyear first also we've an at to evaluate. all guidance about not reasons we back continue this thing the OpEx and time we've not in the get talking OpEx regard. think sure take here. have is look what that think grow the got and a line it we why a happy right giving ongoing But more now. cost I we're a us We're volume helps should and the our with And getting for And over into then spend, we to of base.

introductions How kind revenue today? than in revenues just of marketplace as then QSR half back of much guess, the guidance for can of incremental QSR contemplates of in Jerky? encompasses about the from activity year, much and the look I the the in we and new talked inclusive the trials have you kind this half activity you that product of of I new year. XXXX -- second And quarter, And maybe what's the Okay. products for incremental guidance first at how in that

sure pretty growth that not of at slower look the think of give can is a on I'm a out do that has I we revenue side reasons, of thing level the the we set to we're quarter. to quarter-over-quarter big going important it. third and for period year, have on color been for we But than variety the But want. we it to have performance as get targets to continue us for into a fourth reinforce to coming

we the about core the the see impressive second a basis do that. pretty good opportunities with half going year. to of we're and the that, And where we're not away quarter-over-quarter We of feel has that's so, for some from today. and backing growth that And that on pursuing business

of just I think So some sense immediate need term, I I to coming a part talk a intermediate there's like of here. promising. back there's think up also is my take pretty people or that about When performance step for long

business. different very the And that are bringing why to I I we So use and term have the close think perspective hands. a some less I that's

and point JV costs guess, why clarify losses is Okay. with to just that just joint trying be $XXX,XXX. an And venture for also? line that equity the Phil. or was And described The then I loss this I accounting Jerky. aren't have the I'm for And on the question wouldn't you've square to

Sure.

treat Partnership joint So PLANeT Jerky, honestly as we venture. the subsidiary or

so, And or through JV to Meat then you that loss close the from make see revenue and the profit going the costs other line. and sense? Does that Beyond the

can Okay. Yes, offline. back I can circle -- we

Bell Ryan go comes Consumer with Research. Please next The from question ahead. Edge

about the alternative need? that driver can to degree incremental value broadly mitigate of can the help uses add retail some we're traditional the push a you in category brands potential as that anything share and resist meat strength key the Are the kind of of have which and do you being of of in there do How segment commodification think overall importance towards like to to gains? seeing pricing to

question. a Yes. No, that's good

So I think it clearly just really you the are gets ingredients back around to continuing to the innovate, explain value continue using. to proposition that

process. our we're use a clean using in We simple It's pretty very So don't ingredients. genetic modification. case,

you're So, our consumer But characteristics that companies there's seeing these I we that of what our what and in differentiates pricing other don't think explaining is need sustainable. doing this brand. keep to all the terms product around again, are

this long XX% and we year the of innovate year. run. them the are publicly industry private will think after right? products we their two, will something But think the better continue that label they're at There a for is one -- deliver I success and in had be negative to as So some sure. margin, rate as long the don't persist I in reporting So, with only

major issue So far, we a be that us. seen for haven't

to Our enormous continues have recognition. brand

I think brand recently. penetration increased increased household awareness recently,

at a So it's before we serious I that question level. think long a face way

for me. And just one more

get that with specific of and rather JV category and more jerky relationship beef with standpoint or and just costs starting on a it future strategic national quickly. about something scale level, that share to your In there the that a than said with about Or it pushing that innovation, getting want within push jerky, thinking small beef to and were terms you're we're to PepsiCo? When costs? from it is your advantage focusing scale was out is sort you of you unique of there on the getting that innovations would

one a unique Sure, wanted to for product want something category and We that it sense we disruptive the be sure. in like enter think we to was when us have that shelf-stable that I that. because the No, to create done be try number a category. market, we would do never special to or

over to, in really and And to can so, made that be pretty a we been able way unique did repeatable and be scaled process it get that time, efficient. a we've

right? a had it product very one period to it right? have XX,XXX it. never had stores and in -- side years, just produced XX the short we retail XX,XXX from and into product stores did was major of on we've a was We time undertaking, with go with before on it number again over So the went a We spot regular

margins, want good Again, to and do other feel -- investors But maybe smaller a And getting for are to and out there decisions value let's on. to and very that's that. when Simultaneously, do longest-term ready do the get world. goal investor is right going with There's to this, on create taking the going the business public, the continue we're it's we set the this do question, parts or we'll to continue the run of retail our a that. approach just and that's longest-term went consistent Ken's lot decision want that for going value back will that do in at the focus we launches us I some that that. for make we're approach. a the we us level strategics that people burger to when not create So do we about say, maximizing are on to you to like

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

with Thanks. good to Just and look forward quarter questions, on to appreciate -- second results. folks the folks chatting the

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

now may You disconnect.