# BEYOND MEAT, INC. (BYND) FY 2022 MD&A

Verbatim Item 7 Management's Discussion and Analysis from BEYOND MEAT, INC.'s 10-K for fiscal year 2022.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1655210/000165521023000017/bynd-20221231.htm
Accession: 0001655210-23-000017
Filing date: 2023-03-01
Report date: 2022-12-31
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/fy2021/ (FY 2021)
Next year: /company/BYND/mda/fy2023/ (FY 2023)

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 2022 and 2021 items and year-to-year comparisons between 2022 and 2021. Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 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, 2021.

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. The success of our breakthrough innovation model and products has allowed us to appeal to a broad range of consumers, including flexitarians, those who typically eat animal-based meats, positioning us to compete directly in the $1.4 trillion global meat industry.

We sell a range of plant-based meat products across the three main meat platforms of beef, pork and poultry. As of December 2022, Beyond Meat Branded products were available at approximately 190,000 retail and foodservice outlets in more than 80 countries worldwide, across mainstream grocery, mass merchandiser, club store, convenience store and natural retailer channels, and various food-away-from-home channels, including restaurants, foodservice outlets and schools.

Net revenues decreased to $418.9 million in 2022 from $464.7 million in 2021, representing a 9.8% reduction. We have generated losses since inception. Net loss in 2022 and 2021 was $366.1 million and $182.1 million, respectively, as we pursued our long-term goal of future growth of our business, investing in innovation, people, infrastructure, product scaling and establishing strategic partnerships in the U.S., EU and China. In 2022, our net revenues were negatively affected by softness in demand in the plant-based category, macroeconomic issues, including inflation, rising interest rates and increasing concerns about the likelihood of a recession, and increased competition. Additionally, there remains uncertainty regarding the long-term effects of the COVID-19 pandemic and certain negative impacts on our business, the plant-based category, consumer and customer behavior, and demand levels.

In response to the current difficult environment and negative impact of these factors on our business and the overall plant-based category, beginning in the fourth quarter of 2022 we are pivoting 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.

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Our net revenues, gross profit, gross margin, earnings and cash flows have been and may continue to be adversely impacted in 2023 by the following:

•changes in our product mix including the launch of new products, which may carry lower margin profiles relative to existing products due in part to early cost of production inefficiencies;

•weak demand in the retail channel due to slower category growth, particularly for refrigerated plant-based meat, and increased competitive activity, including the deceleration of plant-based meat across Europe and our ability to successfully launch extended shelf-life products;

•the impact of high inflation and the plant-based meat sector’s premium pricing relative to animal protein, including causing consumers to trade down into cheaper forms of protein, including animal meat;

•our decreased revenue forecast negatively impacting capacity utilization, which could also give rise to underutilization fees and termination fees to exit certain supply chain arrangements and/or the write-off of certain equipment, driving less leverage on fixed costs and delaying the speed at which cost savings initiatives impact our financial results;

•changes in forecasted demand, particularly for Beyond Meat Jerky;

•managing inventory levels, including sales to the liquidation channel and the level of inventory reserves;

•price reductions, intended to improve price competitiveness relative to competing products;

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

•increased unit cost of goods due to inflation, rising interest rates, higher transportation, raw materials, energy, labor and supply chain costs;

•increased promotional programs and trade discounts to our retail and foodservice customers, including to bolster support for our core lines, 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;

•continued effects of the COVID-19 pandemic; and

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

In 2021, we entered into The Planet Partnership, LLC (“TPP”), a joint venture with PepsiCo, Inc., to develop, produce and market innovative snack and beverage products made from plant-based protein. In the fourth quarter of 2022, we began taking steps to restructure certain contracts and operating activities related to Beyond Meat Jerky. Such activities are expected to continue through most of 2023.

On August 3, 2022 and October 14, 2022, we announced reductions-in-force affecting approximately 4% and 19%, respectively, of our global workforce. These decisions were based on cost-reduction initiatives intended to reduce operating expenses as the Company focuses on a set of key growth priorities. We may not be able to fully realize the costs savings and benefits initially anticipated from these actions, and the expected costs may be greater than expected. See Part I, Item 1A, Risk Factors—Risks Related to Our Business—Our strategic initiatives to reduce our cost structure towards cash flow positive operations could have long-term adverse effects on our business, and we may not realize the operational or financial benefits from such actions and Our inability to streamline operations and improve cost efficiencies could result in the contraction of our business and the implementation of significant cost cutting measures.

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Impact of COVID-19 on Our Business

The COVID-19 pandemic has had a significant impact on our business over the last three years, but as we moved through 2022 we saw consumers start to return to more normalized routines; more social gatherings, going out to bars and restaurants and returning to offices, which impacted demand. We have also seen a normalization of supply chains across the food and beverage industry that is reducing the disruption of the supply from many protein suppliers and increasing choice for consumers.

In the United States, we have transitioned back to normal operating procedures with a heightened awareness of maintaining a healthy workplace and work environment. At all of our facilities, we follow current guidelines from local departments of public health and have implemented comprehensive preventative hygienic measures to support the health and safety of our employees.

As a result of China’s lifting of its zero COVID policies, our facilities in China no longer require visitors and personnel to obtain a 72-hour swab test results. However, at our R&D center and Jiaxing factory, visitors are still required to pre-register their personal details and record their temperature. Those who record symptoms relating to a fever or report cough symptoms are not allowed to enter these two facilities.

Future events and effects related to COVID-19 cannot be determined with precision and actual results could significantly differ from estimates or forecasts.

Environmental, Social and Governance

As a disruptive leader in the food industry, we have established ourselves as a leading producer of plant-based meat products that deliver a reduced environmental footprint and mitigate the social and welfare issues associated with the conventional production and consumption of animal protein. In order to continue that work and position ourselves as a leader in the integration of environmental and social change, we have committed to developing a comprehensive ESG program. As part of the development of our ESG program, we have conducted a materiality analysis to determine which ESG issues are relevant to our business (the “ESG Materiality Analysis”). The term “materiality analysis” is common in the discussion of such assessments; however, the ESG Materiality Analysis was not designed to identify “material” issues for the purposes of financial reporting, or as defined by the securities laws of the United States. While the environmental impacts of our products, climate change management, the safety and quality of the products we produce and how we manage our supply chain were all identified as priority topics in our ESG Materiality Analysis, our discussion of these and other ESG matters herein or elsewhere may include information that is not necessarily “material” for SEC reporting purposes, and is informed by various ESG standards and frameworks (including standards for the measurement of underlying data), and the interests of various stakeholders. Much of this information is subject to assumptions, estimates or third-party information that is still evolving and subject to change. For example, our disclosures based on any standards may change due to revisions in framework requirements, availability of information, changes in our business or applicable government policies, or other factors, some of which may be beyond our control. We continue to work on leveraging the ESG Materiality Analysis to inform our strategy and actions under our commitment to promoting responsible and sustainable business practices within our organization.

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, convenience store and natural retailer channels, and various food-away-from-home channels, including restaurants, foodservice outlets and schools, mainly in the United States.

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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"],["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]]

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, convenience store and natural retailer channels, and our foodservice channel, including increased desire by foodservice establishments, including large FSR and/or global QSR customers, to add plant-based products to their menus and to highlight 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;

•distribution expansion, increased sales velocity, household penetration, repeat purchases, buying rates (amount spent per buyer) and purchase frequency across our channels;

•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 ability to accurately forecast demand for our products and manage our inventory;

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

•our continued innovation and product commercialization, including enhancing existing 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 as we continue to build our brand, 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;

•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 and speed with which we can get our products to customers internationally.

As we seek to grow our net revenues, we face several challenges, including any lasting effects from COVID-19, which are difficult to quantify, global events such as the conflict in Ukraine and their impact on availability of raw materials, broad macroeconomic headwinds including elevated levels of inflation, waning consumer confidence and recessionary concerns, increasing competition in the plant-based meat category, and softening in demand of the plant-based meat category overall, particularly in the refrigerated subsegment among others.

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

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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 for estimated sales discounts that have been incurred but not paid which totaled $4.6 million and $3.6 million as of December 31, 2022 and 2021, respectively. We expect to face increasing competition across all channels, especially as additional plant-based meat product brands continue to enter the marketplace and as consumers trade down among proteins in the context of significant inflationary pressure. In response, we anticipate providing heavier discounting and promotions on some of our products from time to time. Although these actions are intended to build brand awareness and increase consumer trials of our products, they have had and are likely to continue to have a negative impact on our net revenues, gross margin and profitability, impacting period-over-period results.

In addition, because we do not have any purchase commitments from our distributors or customers, the amount of net revenues we recognize will vary 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 the 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. For example, in the third quarter of 2022, a combination of overall weaker than expected demand in the category and certain customer and distributor changes and buying patterns, such as reducing targeted inventory levels, among other factors, contributed to the decline in net revenues across markets and channels compared to the prior-year period.

Our financial performance also depends on our operational effectiveness and ability to fulfill orders in full and on time.

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 summer grilling season. In 2022 and 2021, U.S. retail channel net revenues during the second quarter were 16% and 21% higher than the first quarter, respectively. We expect to continue to see additional seasonality effects, especially within our retail channel, with revenue contribution from this channel generally tending to be greater in the second and third quarters of the year, along with increased 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 addition, in an environment of uncertainty from recessionary and inflationary pressures, general softness in the plant-based category, competition and other factors impacting our business, including uncertainty around the long-term impacts of COVID-19, we are unable to assess the ultimate impact on the demand for our products as a result of seasonality.

Gross Profit

Gross profit consists of our net revenues less cost of goods sold. Our cost of goods sold primarily consists of the cost of raw materials and ingredients for our products, co-manufacturing fees, direct and indirect labor and certain supply costs, in-bound and internal shipping and handling costs incurred in manufacturing our products, warehouse storage fees, plant and equipment overhead, depreciation and amortization expense, cost of packaging our products, inventory write-offs and reserves. Under certain circumstances, our cost of goods sold may also include underutilization and/or termination fees associated with our co-manufacturing

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agreements. Over time, we expect our cost of goods sold in absolute dollars to increase as a result of anticipated growth in our sales volume.

Subject to the recessionary and inflationary pressures, competition, general softness in the plant-based category and other factors impacting our business, we continue to expect that gross profit and gross margin improvements will be delivered primarily through:

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

•improved volume leverage and throughput;

•reduced manufacturing conversion costs driven in part by 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;

•tolling fee efficiencies;

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

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

•diversification of our core protein ingredients;

•product and process innovations and reformulations;

•cost-down initiatives through ingredient and process innovation; 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 does not meet our expectations, investments in our production infrastructure across the U.S., EU and China in advance of anticipated demand, investing in production personnel, partnerships and product pipeline, aggressive pricing strategies and increased discounting, increases in inventory reserves and potentially increased sales to the liquidation channel, changes in our product and customer mix, expansion into new geographies and markets where cost and pricing structures may differ from our existing markets, and underutilization fees and termination fees to exit certain supply chain arrangements, driving less leverage on fixed costs and delaying the speed at which cost savings initiatives impact our financial results. Gross margin improvement may also be negatively impacted by the impact of lower demand forecast, 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 expect research and development expenses in 2023 to decrease from the levels in 2022 as a result of the reduction in force implemented in October 2022 and as we focus on reducing and optimizing operating expenses more broadly. Given our intention to reduce overall operating expenses and cash expenditures,

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subsequent to the year ended December 31, 2022, on February 14, 2023, we terminated the lease of our Commerce, California commercialization center.

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, 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 expect SG&A expenses in 2023 to decrease from the levels in 2022, 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.

On August 3, 2022, we announced a reduction-in-force affecting approximately 4% of our global workforce. This reduction-in-force is expected to result in total annualized savings of approximately $8 million, excluding one-time separation costs of approximately $1 million, which we recorded in the third quarter of 2022 and reflected within the SG&A and Research and Development expenses in the consolidated statement of operations. On October 11, 2022, our Board of Directors approved a plan to reduce our workforce by an additional approximately 200 employees, representing approximately an additional 19% of our total global workforce, based on cost-reduction initiatives intended to reduce operating expenses. We incurred one-time cash charges of approximately $4 million in connection with the reduction in force of October 2022, primarily consisting of notice period and severance payments, employee benefits and related costs. The majority of these charges were incurred in the fourth quarter of 2022, and the reduction-in-force was substantially completed by the end of 2022.

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 statements of operations for the periods presented:

[[GREPCENT_TABLE]]
[["","","","","Year Ended December 31,"],["(in thousands)","","","","","","2022","","2021","","2020"],["Net revenues","","","","","","$","418,933","","","$","464,700","","","$","406,785"],["Cost of goods sold","","","","","","442,676","","","347,419","","","284,510"],["Gross profit","","","","","","(23,743)","","","117,281","","","122,275"],["Research and development expenses","","","","","","62,264","","","66,946","","","31,535"],["Selling, general and administrative expenses","","","","","","239,505","","","209,474","","","133,655"],["Restructuring expenses","","","","","","17,259","","","15,794","","","6,430"],["Total operating expenses","","","","","","319,028","","","292,214","","","171,620"],["Loss from operations","","","","","","$","(342,771)","","","$","(174,933)","","","$","(49,345)"]]
[[/GREPCENT_TABLE]]

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

[[GREPCENT_TABLE]]
[["","","","","","","Year Ended December 31,"],["","","","","","","2022","","2021","","2020"],["Net revenues","","","","","","100.0","%","","100.0","%","","100.0","%"],["Cost of goods sold","","","","","","105.7","","","74.8","","","69.9"],["Gross profit","","","","","","(5.7)","","","25.2","","","30.1"],["Research and development expenses","","","","","","14.9","","","14.4","","","7.7"],["Selling, general and administrative expenses","","","","","","57.2","","","45.1","","","32.9"],["Restructuring expenses","","","","","","4.1","","","3.4","","","1.6"],["Total operating expenses","","","","","","76.2","","","62.9","","","42.2"],["Loss from operations","","","","","","(81.9)","%","","(37.7)","%","","(12.1)","%"]]
[[/GREPCENT_TABLE]]

Year Ended December 31, 2022 Compared to Year Ended December 31, 2021

Net Revenues

[[GREPCENT_TABLE]]
[["","","","","","","Year Ended December 31,","","Change"],["(in thousands)","","","","","","","","","","2022","","2021","","Amount","","%"],["U.S.:"],["Retail","","","","","","","","","","$","234,744","","","$","243,360","","","$","(8,616)","","","(3.5)","%"],["Foodservice","","","","","","","","","","69,289","","","76,475","","","(7,186)","","","(9.4)","%"],["U.S. net revenues","","","","","","","","","","304,033","","","319,835","","","(15,802)","","","(4.9)","%"],["International:"],["Retail","","","","","","","","","","$","60,907","","","$","81,483","","","$","(20,576)","","","(25.3)","%"],["Foodservice","","","","","","","","","","53,993","","","63,382","","","(9,389)","","","(14.8)","%"],["International net revenues","","","","","","","","","","114,900","","","144,865","","","(29,965)","","","(20.7)","%"],["Net revenues","","","","","","","","","","$","418,933","","","$","464,700","","","$","(45,767)","","","(9.8)","%"]]
[[/GREPCENT_TABLE]]

Net revenues in the year ended December 31, 2022 decreased by $45.8 million, or 9.8%, as compared to the prior year primarily due to a 10.2% decrease in net revenue per pound including the impact of unfavorable changes in foreign exchange rates, increased sales to liquidation channels and list price reductions in the U.S. and EU. Net revenues from foodservice channel sales decreased 11.9%,with a greater portion of the decrease from international foodservice channel sales. Net revenues from retail channel sales decreased 9.0% primarily due to reduced pricing, higher trade discounts, unfavorable changes in foreign exchange rates and lower overall demand as a result of a deceleration in growth of the plant-based meat category.

Net revenues from U.S. retail sales in the year ended December 31, 2022 decreased $8.6 million, or 3.5%, as compared to the prior year. Total pounds sold increased 0.5%, offset by a decrease of 4.0% in net revenue per pound attributable to lower pricing, including the impact of increased sales to liquidation channels, strategic but limited list price reductions and higher trade discounts. By product, the decrease in U.S. retail channel net revenues was primarily due to reduced sales of Beyond Burger and Beyond Dinner Sausage, partially offset by sales to TPP of Beyond Meat Jerky introduced in the first quarter of 2022, which contributed $33.5 million in net revenues.

Net revenues from U.S. foodservice sales in the year ended December 31, 2022 decreased $7.2 million, or 9.4%, as compared to the prior year primarily driven by a decrease of 7.5% in net revenue per pound and a

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2.0% decrease in total pounds sold. The decrease in net revenue per pound was primarily due to higher trade discounts and changes in sales mix. By product, the decrease in sales was primarily due to reduced sales of Beyond Burger and Beyond Breakfast Sausage driven by the discontinuation of distribution at a certain customer, partially offset by increased sales of chicken products, including sales to a large QSR customer and sales of Beyond Chicken Tenders and Beyond Sausage. Beyond Meat branded products were available at approximately 78,000 U.S. retail outlets and 43,000 U.S. foodservice outlets as of December 2022.

Net revenues from international retail sales in the year ended December 31, 2022 decreased $20.6 million, or 25.3%, as compared to the prior year primarily driven by a 21.5% decrease in net revenue per pound and a 4.9% decrease in pounds sold. The decrease in net revenue per pound was primarily due to list price reductions in the EU implemented in the first quarter of 2022, impact of unfavorable foreign exchange rates, increased trade discounts and changes in sales mix. By product, the decrease in sales was primarily due to decreases in sales of Beyond Burger, Beyond Sausage and Beyond Beef, partially offset by increases in sales of chicken products, including Beyond Chicken Tenders, and Beyond Breakfast Sausage.

Net revenues from international foodservice channel sales in the year ended December 31, 2022 decreased $9.4 million, or 14.8%, as compared to the prior year primarily due to a 21.5% decrease in net revenue per pound, partially offset by an 8.6% increase in pounds sold. The decrease in net revenue per pound was mainly due to changes in sales mix, impact of unfavorable foreign exchange rates and increased trade discounts. By product, the decrease in sales was primarily due to decreases in sales of Beyond Burger, Beyond Beef Crumble and Beyond Beef, partially offset by increases in sales of chicken products, including Beyond Chicken Tenders. Beyond Meat branded products were available at approximately 35,000 international retail and 34,000 international foodservice outlets as of December 2022.

The following table presents volume of our products sold in pounds:

[[GREPCENT_TABLE]]
[["","","","","","","Year Ended December 31,","","Change"],["(in thousands)","","","","","","","","","","2022","","2021","","Amount","","%"],["U.S.:"],["Retail","","","","","","","","","","44,784","","","44,568","","","216","","","0.5","%"],["Foodservice","","","","","","","","","","12,786","","","13,047","","","(261)","","","(2.0)","%"],["International:"],["Retail","","","","","","","","","","13,435","","","14,120","","","(685)","","","(4.9)","%"],["Foodservice","","","","","","","","","","13,951","","","12,848","","","1,103","","","8.6","%"],["Volume of products sold","","","","","","","","","","84,956","","","84,583","","","373","","","0.4","%"]]
[[/GREPCENT_TABLE]]

Cost of Goods Sold

[[GREPCENT_TABLE]]
[["","","","","","","Year Ended December 31,","","Change"],["(in thousands)","","","","","","","","","","2022","","2021","","Amount","","%"],["Cost of goods sold","","","","","","","","","","$","442,676","","","$","347,419","","","$","95,257","","","27.4","%"]]
[[/GREPCENT_TABLE]]

Cost of goods sold increased by $95.3 million, or 27.4%, in 2022 as compared to the prior year. As a percentage of net revenues, cost of goods sold increased to 105.7% of net revenues in 2022 from 74.8% of net revenues in the prior year. The increase in cost of goods sold was primarily due to increased cost per pound and, to a lesser extent, increased pounds sold. The increase in cost per pound was primarily due to higher manufacturing costs including depreciation, increased logistics costs, higher inventory reserves and write-offs, and increased materials costs. In addition, the introduction of Beyond Meat Jerky in the first quarter of 2022 negatively impacted cost per pound in 2022 compared to the prior year. Cost of goods sold in 2022 included underutilization fees and one-time termination costs associated with certain co-manufacturing

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agreements in the amount of $9.1 million, in aggregate, as compared to amounts which were immaterial in the prior year.

Cost of goods sold in 2022 included $22.6 million in write off 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 2021 included $12.5 million in write off of excess and obsolete inventories and $0.8 million in write down of inventory to lower of cost or net realizable value.

Gross Profit and Gross Margin

[[GREPCENT_TABLE]]
[["","","","","","","Year Ended December 31,","","Change"],["(in thousands)","","","","","","","","","","2022","","2021","","Amount","","%"],["Gross (loss) profit","","","","","","","","","","$","(23,743)","","","$","117,281","","","$","(141,024)","","","(120.2)","%"],["Gross margin","","","","","","","","","","(5.7)","%","","25.2","%","","N/A","","N/A"]]
[[/GREPCENT_TABLE]]

Gross profit in 2022 was a loss of $23.7 million, or 5.7% of net revenues, as compared to gross profit of $117.3 million, or 25.2% of net revenues, in the prior year, a decline of $141.0 million. Gross margin in the year ended December 31, 2022 decreased to a negative gross margin of 5.7% from a positive gross margin of 25.2% in the prior year. Despite a 0.4% increase in total pounds sold, gross profit and gross margin decreased primarily as a result of increased cost per pound of approximately $1.10 and decreased net revenue per pound of approximately $0.56 in the year ended December 31, 2022 compared to the prior year. Beyond Meat Jerky negatively impacted gross profit by approximately $19.3 million in the year ended December 31, 2022. Sales of Beyond Meat Jerky and sales into the liquidation channel were both headwinds to gross profit compared to the prior year. Approximately $9.1 million, in aggregate, of the underutilization fees and one-time termination costs associated with certain co-manufacturing agreements, including $4.1 million associated with Beyond Meat Jerky, negatively impacted gross profit in the year ended December 31, 2022. Gross profit per pound and gross margin declined primarily due to decreased revenue per pound due to changes in product mix and higher trade discounts, combined with increased manufacturing costs per pound including depreciation, higher logistics costs and materials cost. 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)","","","","","","","","","","2022","","2021","","Amount","","%"],["Research and development expenses","","","","","","","","","","$","62,264","","","$","66,946","","","$","(4,682)","","","(7.0)","%"]]
[[/GREPCENT_TABLE]]

Research and development expenses decreased $4.7 million, or 7.0%, in 2022, as compared to the prior year. Research and development expenses decreased primarily due to $7.1 million in lower scale-up expenses compared to the prior year, partially offset by higher facility lease-related costs.

SG&A Expenses

[[GREPCENT_TABLE]]
[["","","","","","","Year Ended December 31,","","Change"],["(in thousands)","","","","","","","","","","2022","","2021","","Amount","","%"],["Selling, general and administrative expenses","","","","","","","","","","$","239,505","","","$","209,474","","","$","30,031","","","14.3","%"]]
[[/GREPCENT_TABLE]]

SG&A expenses increased by $30.0 million, or 14.3%, in 2022, as compared to the prior year. The increase was primarily due to $12.8 million in higher marketing programs-related expenses including advertising costs incurred to raise awareness of our products both domestically and internationally; $11.2 million in higher

64

salaries and related expenses resulting from a higher headcount through the first three quarters of 2022 and severance-related expenses in the fourth quarter of 2022 associated with the October 2022 reduction in force; and $5.6 million in higher product donations.

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 restructuring expenses of $17.3 million and $15.8 million in 2022 and 2021, respectively, primarily related to legal and other expenses associated with the dispute. As of December 31, 2022 and 2021, there were $0.7 million and $2.7 million, respectively, in accrued unpaid liabilities associated with this contract termination primarily representing legal fees. 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.

Loss from Operations

Loss from operations in 2022 was $342.8 million compared to loss from operations of $174.9 million in the prior year. In addition to the decline in gross profit, the increase in loss from operations was also driven by higher SG&A and restructuring expenses, partially offset by lower research and development expenses.

Total Other Expense, Net

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 amortization of debt issuance costs and $4.9 million in foreign currency transaction losses, partially offset by $4.5 million in interest income. Total other expense, net in the year ended December 31, 2021 of $4.1 million consisted primarily of $3.6 million in interest expense from amortization of debt issuance costs, $1.0 million in loss on extinguishment of debt and $0.2 million in foreign currency transaction losses, partially offset by $0.2 million in interest income and $1.1 million in subsidies received from the Jiaxing Economic Development Zone Finance Bureau related to our investment in our subsidiary, Beyond Meat (Jiaxing) Food Co., Ltd. (“BYND JX”).

Income Tax Expense

For 2022 and 2021, we recorded an income tax expense of $32,000 and $60,000, 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 $366.1 million in 2022 compared to $182.1 million in the prior year. This increase in net loss was driven by the year-over-year decrease in gross profit and increase in operating expenses.

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.

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“Adjusted EBITDA” is defined as net loss adjusted to exclude, when applicable, income tax (benefit) expense, interest expense, depreciation and amortization expense, restructuring expenses, share-based compensation expense, expenses attributable to COVID-19, 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 expenses attributable to COVID-19 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.

66

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)","","","","","","2022","","2021","","2020"],["Net loss, as reported","","","","","","$","(366,137)","","","$","(182,105)","","","$","(52,752)"],["Income tax expense","","","","","","32","","","60","","","72"],["Interest expense","","","","","","3,966","","","3,648","","","2,576"],["Depreciation and amortization expense","","","","","","32,582","","","21,663","","","13,299"],["Restructuring expenses(1)","","","","","","17,259","","","15,794","","","6,430"],["Share-based compensation expense","","","","","","33,857","","","27,698","","","27,279"],["Expenses attributable to COVID-19","","","","","","\u2014","","","\u2014","","","14,137"],["Other, net(2)","","","","","","420","","","487","","","759"],["Adjusted EBITDA","","","","","","$","(278,021)","","","$","(112,755)","","","$","11,800"],["Net loss as a % of net revenues","","","","","","(87.4)","%","","(39.2)","%","","(13.0)","%"],["Adjusted EBITDA as a % of net revenues","","","","","","(66.4)","%","","(24.3)","%","","2.9","%"]]
[[/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. See Note 3, Restructuring, and Note 10, Commitments and Contingencies, to the Notes to Consolidated Financial Statements, included elsewhere in this report.

(2)Includes $4.9 million and $0.2 million in net foreign currency transaction losses in 2022 and 2021, respectively. Also includes $1.0 million in loss on extinguishment of debt associated with termination of the Company’s credit facility in 2021.

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Liquidity and Capital Resources

Convertible Senior Notes

On March 5, 2021, we issued $1.0 billion aggregate principal amount of our 0% Convertible Senior Notes due 2027 (the “Convertible Notes”) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The initial purchasers of the Convertible Notes exercised their option to purchase an additional $150.0 million aggregate principal amount of our 0% Convertible Senior Notes due 2027 (the “Additional Notes”, and together with the Convertible Notes, the “Notes”), and such Additional Notes were issued on March 16, 2021. The initial conversion price of the Notes is $206.00 per share of common stock, which represents a premium of approximately 47.5% over the closing price of the Company’s common stock on March 2, 2021. The Notes will mature on March 15, 2027, unless earlier repurchased, redeemed or converted. The Notes were issued pursuant to, and are governed by, an indenture, dated as of March 5, 2021 (the “Indenture”), between us and U.S. Bank National Association, as trustee (the “Trustee”). We used $84.0 million of the net proceeds from the sale of the Notes to fund the cost of entering into capped call transactions, described below. 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.

Capped Call Transactions

On March 2, 2021, in connection with the pricing of the offering of the Convertible Notes, we entered into capped call transactions (the “Base Capped Call Transactions”) with the option counterparties and used $73.0 million in net proceeds from the sale of the Convertible Notes to fund the cost of the Base Capped Call Transactions. On March 12, 2021, in connection with the Additional Notes, we entered into capped call transactions (the “Additional Capped Call Transactions”) with the option counterparties and used $11.0 million of the net proceeds from the sale of the Additional Notes to fund the cost of the Additional Capped Call Transactions. The Base Capped Call Transactions and the Additional Capped Call Transactions (collectively, the “Capped Call Transactions”) cover, subject to customary adjustments, the aggregate number of shares of our common stock that will initially underlie the Notes, and are expected generally to reduce potential dilution to our common stock upon any conversion of Notes and/or offset any cash payments we may make in excess of the principal amount of the converted Notes, as the case may be, with such reduction and/or offset subject to a cap, based on the cap price of the Capped Call Transactions. The cap price of the Capped Call Transactions is $279.32, which represents a premium of 100% over the last reported sale price of our common stock on March 2, 2021. The aggregate $84.0 million paid for the Capped Call Transactions was recorded as a reduction to APIC. See Note 7, Debt, to the Notes to Consolidated Financial Statements included elsewhere in this report.

Revolving Credit Facility

On March 2, 2021, we terminated our secured revolving credit agreement, dated as of April 21, 2020 (the “Credit Agreement”), among the Company, as borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., as the administrative agent, and in connection with such termination: (i) all borrowings outstanding under the Credit Agreement were repaid in full by the Company; and (ii) all liens and security interests under the Credit Agreement in favor of the lenders thereunder were released. See Note 7, Debt, to the Notes to Consolidated Financial Statements included elsewhere in this report.

Liquidity Outlook

In 2023, 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. The COVID-19 pandemic, inflation, rising interest rates, overall economic conditions and hostilities in Eastern Europe have led to increased disruption and volatility in capital markets and credit markets generally which could adversely affect our liquidity and capital resources in the future. However, based on our current business plan, we believe that our existing cash balances along with our anticipated cash flow from operations will be sufficient to finance our operations and meet our foreseeable cash

68

requirements through at least the next twelve months. In the future, we may raise funds by issuing debt or equity securities. The sale of additional equity would result in additional dilution to our stockholders. The incurrence of debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations. Our cash requirements under our significant contractual obligations and commitments are listed below in the section titled “Contractual Obligations and Commitments.” In addition, our ability to meet our cash flow positive targets is subject to a number of assumptions and uncertainties, including, without limitation, our ability to reduce costs and achieve positive gross margins; our ability to meet certain revenue and operating expense targets, which may be subject to factors beyond our control; and our ability to monetize inventory and manage working capital.

Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth; the successful implementation of the cost-reduction initiatives described elsewhere in this report; 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; the expenses associated with our marketing initiatives; any continued impacts of the COVID-19 pandemic; our investment in manufacturing and facilities to expand our manufacturing and production capacity; 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; 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.

We expect our operating expenses in 2023 to decrease from the levels in 2022, as we focus on reducing and optimizing operating expenses more broadly. We incurred one-time cash charges of approximately $4 million in connection with the October 2022 reduction in force, primarily consisting of notice period and severance payments, employee benefits and related costs. The majority of these charges were incurred in the fourth quarter of 2022, and the reduction-in-force was substantially completed by the end of 2022.

Sources of Liquidity

Our primary cash needs are for operating expenses, working capital and capital expenditures to support our business. Prior to our IPO, we financed our operations through private sales of equity securities and through sales of our products. Since our inception and through our IPO, 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. On August 5, 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 March 2021, we issued $1.2 billion in aggregate principal amount of Notes as discussed above. As of December 31, 2022, we had $309.9 million in unrestricted cash and cash equivalents and restricted cash of $12.6 million securing the letter of credit to support the development and leasing of our Campus Headquarters.

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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)","","2022","","2021","","2020"],["Cash (used in) provided by:"],["Operating activities","","$","(320,244)","","","$","(301,370)","","","$","(39,995)"],["Investing activities","","$","(87,527)","","","$","(147,479)","","","$","(74,900)"],["Financing activities","","$","276","","","$","1,022,322","","","$","(1,762)"]]
[[/GREPCENT_TABLE]]

Net Cash Used in Operating Activities

For the year ended December 31, 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 decrease in inventory. Net loss for the year ended December 31, 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.

For the year ended December 31, 2021, we incurred a net loss of $182.1 million, which was the primary reason for net cash used in operating activities of $301.4 million. Net cash outflows from changes in operating assets and liabilities were primarily due to the increase in all three classes of inventory, cash outflows associated with the escrow payments for the Campus Lease, increase in prepaid expenses and other assets and increase in accounts receivable. The net cash outflows were partially offset by an increase in accounts payable and accrued expenses. Net loss for the year ended December 31, 2021 included $60.3 million in non-cash expenses primarily comprised of share-based compensation expense, depreciation and amortization expense, non-cash lease expense, amortization of debt issuance costs and loss on extinguishment of debt.

Depreciation and amortization expense was $32.6 million and $21.7 million in the years ended December 31, 2022 and 2021, respectively.

Net Cash Used in Investing Activities

Net cash used in investing activities primarily relates to capital expenditures to support our growth and investment in property, plant and equipment.

For the year ended December 31, 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.

For the year ended December 31, 2021, net cash used in investing activities was $147.5 million and consisted of $136.0 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, $11.0 million for investment in TPP.

70

Net Cash Provided by Financing Activities

For the year ended December 31, 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 payments under finance lease obligations.

For the year ended December 31, 2021, net cash provided by financing activities was $1.0 billion primarily from the proceeds of the Notes of $1.1 billion net of purchased capped call transaction amounts and $8.1 million in proceeds from stock option exercises, partially offset by repayment of our revolving credit facility balance of $25.0 million, debt issuance costs of $23.6 million associated with the Notes, $3.1 million in payments of minimum withholding taxes on net share settlement of equity awards and payments under finance lease obligations.

Contractual Obligations and Commitments

Convertible Senior Notes

On March 5, 2021, we issued $1.0 billion aggregate principal amount of Convertible Notes and on March 16, 2021, we issued $150.0 million aggregate principal amount of Additional 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

On January 14, 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 $55.1 million and $59.2 million in payments towards the construction of the Campus Headquarters in the years ended December 31, 2022 and 2021, respectively. These payments are initially recorded in “Prepaid lease costs, non-current” in the Company’s 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. During 2022, the tenant improvements associated with Phase 1-A were completed and the underlying asset was delivered to us. As such, upon the commencement of Phase 1-A, we recognized a $64.1 million right-of-use asset, which included the reclassification of $27.7 million of the construction payments previously included in “Prepaid lease costs, non-current,” and a $36.6 million lease liability. Aggregate payments towards base rent over the initial lease term associated with the remaining phases not yet delivered to us will be approximately $118.4 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. The letter of credit is secured by a $12.6 million deposit reflected in our consolidated balance sheet as “Restricted cash” as of December 31, 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

On September 22, 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.

71

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.

In the event that we and BYND JX determine, in our sole discretion, to proceed with the Phase 2 development in the JXEDZ, BYND JX has agreed in the first stage of Phase 2 to increase its registered capital to $40.0 million and to acquire the land use right to a state-owned land plot in the JXEDZ to conduct development and construction of a new production facility. Following the first stage of Phase 2, we and BYND JX may determine, in our sole discretion, to permit BYND JX to obtain a second state-owned land plot in the JXEDZ in order to construct an additional facility thereon. See Note 10, Commitments and Contingencies, to the Notes to Consolidated Financial Statements included elsewhere in this report.

In the year ended December 31, 2022 and 2021, we received $0 and $1.1 million, respectively, in subsidies related to our investment in BYND JX from JXEDZ Finance Bureau. As of December 31, 2022, 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

On January 25, 2021, we entered into TPP, a joint venture with PepsiCo, Inc., to develop, produce and market innovative snack products made from plant-based protein. We recognized our share of the net losses in TPP in the amount of $18.9 million and $3.0 million for the year ended December 31, 2022 and 2021, respectively. For the years ended December 31, 2022 and 2021, we contributed our share of the investment in TPP of $13.3 million and $11.0 million, respectively. Subsequent to the year ended December 31, 2022, we contributed an additional $3.3 million as our share of the additional investment in TPP.

In the fourth quarter of 2022, we began taking steps to restructure certain contracts and operating activities related to Beyond Meat Jerky. Such activities are expected to continue through most of 2023.

Purchase Commitments

On July 27, 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. The purchase is expected to close in the second half of 2023.

We have a multi-year agreement with Roquette for the supply of pea protein which expires on December 31, 2023. The plant-based protein sourced under the supply agreement is secured on a purchase order basis regularly, per specified minimum monthly and semi-annual quantities, throughout the term. We are not required to purchase plant based protein in amounts in excess of such specified minimum quantities; however the Company has the option to increase such minimum quantities for delivery. The total annual amount purchased each year by us must be at least the minimum amount specified in the agreement, which totals in the aggregate $154.1 million over the term of the agreement. We also have the right to be indemnified by Roquette in certain circumstances. As of December 31, 2022, we had committed to purchase pea protein inventory totaling $40.2 million in 2023.

As of December 31, 2022, we had $84.6 million in fee commitments to manufacture products at a co-manufacturer’s facility over a 5-year term (see Note 10, Commitments and Contingencies, to the Notes to Consolidated Financial Statements included elsewhere in this report). In addition, as of December 31, 2022, we

72

had approximately $28.8 million in purchase order commitments for capital expenditures primarily to purchase machinery and equipment, including the Enschede facility. Payments for these purchases will be due within twelve months of December 31, 2022.

The following table summarizes our significant contractual obligations as of December 31, 2022:

[[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)","$","92,581","","","$","7,027","","","$","13,922","","","$","12,726","","","$","58,906"],["Financing lease obligations(3)","738","","","244","","","387","","","107","","","\u2014"],["Convertible debt(4)","1,133,608","","","\u2014","","","\u2014","","","1,133,608","","","\u2014"],["Purchase commitments\u2014inventory(5)","40,156","","","40,156","","","\u2014","","","\u2014","","","\u2014"],["Purchase commitments\u2014assets(6)","28,785","","","28,785","","","\u2014","","","\u2014","","","\u2014"],["Co-manufacturer commitments(7)","84,624","","","10,068","","","23,640","","","50,916","","","\u2014"],["TPP(8)","3,250","","","3,250","","","\u2014","","","\u2014","","","\u2014"],["Total","$","1,383,742","","","$","89,530","","","$","37,949","","","$","1,197,357","","","$","58,906"]]
[[/GREPCENT_TABLE]]

___________________

(1)Includes lease payments for our former Manhattan Beach Project Innovation Center, obligations under the Campus Lease relating to Phase 1-A, our manufacturing facilities in Columbia, Missouri, our commercialization center in Commerce, California, and all other operating lease obligations. Subsequent to the year ended December 31, 2022, on February 14, 2023, the lease on our commercialization center in Commerce, California was terminated. See Note 14, Subsequent Event, to the Notes to Consolidated Financial Statements included elsewhere in this report.

(2)Excludes obligations under Campus Lease, except for those relating to Phase 1-A. 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, including the commitment to purchase the Enschede facility.

(7)Consists of commitments to co-manufacturer.

(8)Consists of 2023 investment in TPP.

Segment Information

We have one operating segment and one reportable segment, as our CODM, 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,

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subjective or complex judgments about the effect of matters that are inherently uncertain. Therefore, we 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. The Company’s performance obligation is typically defined as the accepted purchase order, the direct-to-consumer order, or the contract, with the customer which requires the Company to deliver the requested products at agreed upon prices at the time and location of the customer’s choice. The Company generally does not offer warranties or a right to return on the products it sells except in the instance of a product recall or other limited circumstances.

Revenue is measured as the amount of consideration the Company expects to receive in exchange for fulfilling the performance obligation. Sales and other taxes the Company collects concurrent with the sale of products are excluded from revenue. The Company's normal payment terms vary by the type and location of its customers and the products offered. The time between invoicing and when payment is due is not significant. None of the Company's customer contracts as of December 31, 2022 contains a significant financing component.

The Company routinely offers sales discounts and promotions through various programs to its 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, the Company recognizes 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.

The Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company 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. The Company accounts 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. The Company reviews inventory quantities on hand and records 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.

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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