BEYOND MEAT INC

Previous wording

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

Current wording

We sell a range of plant-based meat products across our three core platforms of beef, pork and poultry. As of December 2024, Beyond Meat branded products were available at approximately 129,000 retail and foodservice outlets in more than 65 countries worldwide, across mainstream grocery, mass merchandiser, club store and natural retailer channels, and various food-away-from-home channels, including restaurants, foodservice outlets and schools. The number of retail and foodservice outlets where Beyond Meat branded products are available was derived from rolling 52-week data as of December 2024 and excludes outlets unique to Beyond Meat Jerky, which we discontinued in 2024 as part of our Global Operations Review.

Previous wording

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

Current wording

Net revenues decreased to $326.5 million in 2024 from $343.4 million in 2023, representing a 4.9% decrease. We have generated losses since inception. Net loss in 2024 and 2023 was $160.3 million and $338.1 million, respectively, as weak demand, driven by prolonged softness in demand in the category and for our products in certain channels and regions and increased competition, among other things, resulted in declines in our net revenues that we were unable to offset with commensurate cost reductions. Our operating environment continues to be affected by uncertainty related to macroeconomic issues, including ongoing, further weakened demand in the plant-based meat category, inflation, higher interest rates, current and proposed future tariffs, and potential recessionary concerns, among other things, all of which have had and could continue to have unforeseen impacts on our actual realized results. In recent periods, our net revenues, gross profit, gross margin, earnings and cash flows have been adversely impacted by the following, each of which may continue to impact our business and financial condition in the future:

Previous wording

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

Current wording

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

Previous wording

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

Current wording

•continued weak demand and its resultant impact on our sales due to slower category growth, particularly for refrigerated plant-based meat;

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

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

Current wording

•changes in our pricing strategy, including actions intended to improve our price competitiveness relative to competing products or to improve profitability, such as price increases of certain of our products in our U.S. retail and foodservice channels that we implemented in 2024;

Previous wording

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

Current wording

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

Previous wording

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

Current wording

In response to the difficult environment and the negative impact of certain factors on our business and the overall plant-based meat category, beginning in 2022 we pivoted our focus toward sustainable long-term growth supported by three pillars: (1) driving margin recovery and operating expense reduction through the implementation of lean value streams across our beef, pork and poultry platforms; (2) inventory reduction and cash flow generation through more efficient inventory management; and (3) focusing on near-term retail and foodservice growth drivers while supporting key strategic long-term partners and opportunities.

Previous wording

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

Current wording

To reduce operating expenses, in November 2023, we initiated our Global Operations Review, which involves narrowing our commercial focus to certain anticipated growth opportunities, and accelerating activities that prioritize gross margin expansion and cash generation. These efforts have to date included, and may in the future include, the exit or discontinuation of select product lines such as Beyond Meat Jerky; changes to our pricing architecture within certain channels; cash-accretive inventory reduction initiatives; non-cash charges such as provision for excess and obsolete inventory and potential additional impairment charges, write-offs and disposals of fixed assets, and losses on sale and write-down of fixed assets; further optimization of our manufacturing capacity and real estate footprint; planned and future reductions in our workforce; and the planned suspension of our operational activities in China.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

(1) Includes $16.5 million associated with Beyond Meat Jerky. As part of our Global Operations Review, in 2023, we made the decision to discontinue the Beyond Meat Jerky product line and discontinued it in 2024.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

We generate net revenues primarily from sales of our products to our customers across mainstream grocery, mass merchandiser, club store and natural retailer channels, and various food-away-from-home channels, including restaurants, foodservice outlets and schools, mainly in the United States, the EU and Canada. Following the initiation of our Global Operations Review, in recent periods, as part of our effort to reduce excess or obsolete inventory and generate incremental cash, we have also generated net revenues from ingredient sales.

Previous wording

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

Current wording

(1)Net revenues associated with Beyond Meat Jerky sold to the Planet Partnership, LLC (“TPP”) in the years ended December 31, 2024, 2023 and 2022 were $0, $5.3 million and $33.5 million, respectively. As part of our Global Operations Review, in 2023, we made the decision to discontinue the Beyond Meat Jerky product line and discontinued it in 2024.

Previous wording

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:

Current wording

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

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

•enhanced marketing efforts and the success thereof, as we continue to build our brand, use our portfolio and marketing to directly counter misinformation about our products and category, amplify our value proposition around taste, health and planet, serve as a best-in-class partner to both retail and foodservice customers to support product development and category management, and drive consumer adoption of our products;

Current wording

•enhanced marketing efforts and the success thereof, as we continue to build our brand, use our portfolio and marketing to directly counter misinformation about our products and the plant-based meat category, amplify our value proposition around taste, health and planet, serve as a best-in-class partner to both retail and foodservice customers to support product development and category management, and drive consumer adoption of our products;

Previous wording

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

Current wording

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

Previous wording

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

Current wording

We routinely offer sales discounts and promotions through various programs to customers and consumers. These programs include rebates, temporary on-shelf price reductions, off-invoice discounts, retailer advertisements, product coupons and other trade activities. The expense associated with these discounts and promotions is estimated and recorded as a reduction in total gross revenues in order to arrive at reported net revenues. At the end of each accounting period, we recognize a contra asset to Accounts receivable for estimated sales discounts that have been incurred but not paid which totaled $6.8 million and $6.9 million as of December 31, 2024 and 2023, respectively. We continue to face increasing competition across all channels, and we expect that trend to continue, especially if consumers continue to trade down among proteins in the context of significant inflationary pressure. In response, we expect to continue to invest in promotional discounting to address the current consumer trend with more targeted key selling period activations that we expect will allow us to scale back overall trade spending and continue to build brand awareness and increase consumer trials of our products.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

Generally, we expect to experience greater demand for certain of our products during the U.S. summer grilling season. In 2023, 2022 and 2021, U.S. retail channel net revenues during the second quarter were 10%, 16% and 21% higher than the first quarter, respectively. While we expected to continue to see additional seasonality effects in 2023, as compared to 2022 and 2021, we saw more muted effects from seasonality in the third and fourth quarters of 2023 as compared to the prior-year period and the second quarter of 2023, primarily reflecting weak category demand and pricing actions. In general, any historical effects of seasonality have been more pronounced within our U.S. retail channel, with revenue contribution from this channel generally tending to be greater in the second and third quarters of the year, driven by increased levels of grilling activity, higher levels of purchasing by customers ahead of holidays, the impact of customer shelf reset activity and the timing of product restocking by our retail customers. In an environment of heightened uncertainty from recessionary and inflationary pressures, prolonged weakness in the plant-based meat category, competition and other factors impacting our business, we are unable to assess the ultimate impact on the demand for our products as a result of seasonality.

Current wording

Generally, we expect to experience greater demand for certain of our products during the U.S. summer grilling season. In 2024, 2023 and 2022, U.S. retail channel net revenues during the second quarter were 21%, 10% and 16% higher than the first quarter, respectively. While we expected to continue to see additional seasonality effects in 2024, as compared to 2023, we saw more muted effects from seasonality in the third quarter of 2024 as compared to the prior-year periods and the second quarter of 2024, reflecting, in part, pricing actions in our U.S. retail and foodservice channels. In general, any historical effects of seasonality have been more pronounced within our U.S. retail channel, with revenue contribution from this channel generally tending to be greater in the second and third quarters of the year, driven by increased levels of grilling activity, higher levels of purchasing by customers ahead of holidays, the impact of customer shelf reset activity and the timing of product restocking by our retail customers. In an environment of heightened uncertainty from potential recessionary and inflationary pressures, prolonged weakness in the plant-based meat category, competition and other factors impacting our business, we are unable to assess the ultimate impact on the demand for our products as a result of seasonality.

Previous wording

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

Current wording

Gross profit consists of our net revenues less cost of goods sold. Gross margin is gross profit expressed as a percentage of our net revenues. Our cost of goods sold primarily consists of the cost of raw materials including ingredients and packaging, co-manufacturing fees, direct and indirect labor and certain supply costs, inbound and internal shipping and handling costs incurred in manufacturing our products, warehouse storage fees, plant and equipment overhead, depreciation and amortization expense, provision for excess and obsolete inventory and impairment charges, and accelerated depreciation on write-offs and disposals of fixed assets. Under certain circumstances, our cost of goods sold may also include underutilization and/or termination fees associated with our co-manufacturing agreements.

Previous wording

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

Current wording

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

Previous wording

Gross margin improvement may, however, continue to be negatively impacted by reduced capacity utilization if demand for our products continues to decline, investments in our production infrastructure across the U.S., EU and China in advance of anticipated demand, which may not materialize within the expected timeframe, investing in production personnel, partnerships and product pipeline, aggressive pricing strategies and increased discounting, increases in inventory provision, write-down or write-off of obsolete inventory and potentially increased sales to liquidation channels at lower prices, changes in our product and customer sales mix, expansion into new geographies and markets where cost and pricing structures may differ from our existing markets, and underutilization fees, termination fees and other costs to exit certain supply chain arrangements and product lines. Gross margin improvement may also be negatively impacted by the impact of inflation, increasing labor costs, materials costs and transportation costs.

Current wording

Gross margin improvement may, however, continue to be negatively impacted by reduced capacity utilization if demand for our products continues to decline, investments in our production infrastructure in advance of anticipated demand, which may not materialize within the expected timeframe, investment in production personnel, partnerships and product pipeline, aggressive pricing strategies and increased discounting, increases in inventory provision, write-down or write-off of obsolete inventory and potentially increased sales to liquidation channels at lower prices, changes in our product and customer sales mix, expansion into new geographies and markets where cost and pricing structures may differ from our existing markets, and underutilization fees, termination fees and other costs to exit certain supply chain arrangements and product lines. Gross margin improvement is also expected to continue to be negatively impacted by the impact of inflation and increasing labor costs, materials costs and transportation costs.

Previous wording

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

Current wording

Research and development expenses consist primarily of personnel and related expenses for our research and development staff, including salaries, benefits, bonuses, share-based compensation, scale-up expenses, depreciation and amortization expenses on research and development assets, and facility lease costs. Our research and development efforts are focused on enhancements to our existing product formulations and production processes in addition to the development of new products. We expect to continue to invest in research and development over time, as research and development and innovation are core elements of our business strategy, and we believe they represent a critical competitive advantage for us. We believe that we need to continue to innovate in order to capture a larger share of consumers who typically eat animal-based meats. We decreased our research and development expenses in 2024 and expect research and development expenses in 2025 to decrease compared to the levels in 2024 as we continue to focus on reducing and optimizing operating expenses more broadly.

Previous wording

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

Current wording

SG&A expenses consist primarily of selling, marketing and administrative expenses, including personnel and related expenses, share-based compensation, outbound shipping and handling costs, non-manufacturing lease expense, depreciation and amortization expense on non-manufacturing and non-research and development assets, charges related to asset write-offs including loss on sale and write-down of fixed assets, consulting fees and other non-production operating expenses. Marketing and selling expenses include advertising costs, share-based compensation awards to non-employee consultants and brand ambassadors, costs associated with consumer promotions, product donations, product samples and sales aids incurred to acquire new customers, retain existing customers and build our brand awareness. Administrative expenses include expenses related to management, accounting, legal, IT and other office functions. We decreased SG&A expenses in 2024 and expect SG&A expenses in 2025 to decrease further from the levels in 2024, as we continue to 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.

Previous wording

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

Current wording

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

Previous wording

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.

Current wording

In 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, to the Notes to Consolidated Financial Statements included elsewhere in this report.

Previous wording

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

Current wording

Cost of goods sold in 2023 included $66.9 million in costs resulting from our Global Operations Review including incremental provision for excess and obsolete inventory, accelerated depreciation on planned write-offs or disposals of fixed assets, and write-off of prepaid raw materials cost. In addition, cost of goods sold in 2023 included contract termination costs associated with certain co-manufacturing agreements in the amount of $4.4 million and additional specific provision, primarily for inventory associated with a large QSR customer in the amount of $6.1 million.

Previous wording

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

Current wording

Gross profit in 2024 was $41.7 million as compared to a loss of $(82.7) million in the prior year, an increase of $124.4 million or 150.4%. Gross margin in 2024 increased to 12.8% from a negative gross margin of (24.1)% in the prior year, an improvement of 3,690 basis points from the prior year. Gross profit and gross margin in 2024 were positively impacted by a 25.5% decrease in cost of goods sold per pound and a 5.9% increase in net revenue per pound. Improvements in gross profit and gross margin in the U.S. retail and U.S. foodservice channels were, in part, due to the pricing strategy implemented at the beginning of 2024.

Previous wording

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

Current wording

SG&A expenses in 2024 decreased $50.7 million, or 23.0%, to $169.7 million or 52.0% of net revenues in 2024, from $220.3 million or 64.2% of net revenues in the prior year. The decrease in SG&A expenses was primarily due to $19.7 million lower loss on sale and write-down of fixed assets to fair value, $11.2 million in lower marketing expenses including advertising expenses, $8.5 million in lower salaries and related expenses, $5.3 million in lower share-based compensation expense, $4.6 million in lower consulting expenses, $3.5 million in lower bad debt expense, $3.4 million in lower outbound freight expenses, $3.3 million in lower general insurance expenses that included $2.0 million in business interruption insurance recovery associated with a cybersecurity incident at a supplier in 2023 and $2.3 million in lower samples expense, partially offset by $9.8 million in higher legal expenses including $7.5 million in litigation settlement expenses, $1.9 million in higher product donations, $1.8 million in higher lease expense and $1.2 million in higher supply chain expenses. In 2023, SG&A expenses included $16.6 million in non-cash charges from the loss on sale and write-down of fixed assets to fair value resulting from the Global Operations Review, which primarily included the write-down of assets held for sale to their estimated net realizable value less cost to sell.

Previous wording

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

Current wording

In 2017 we terminated an exclusive supply agreement with one of our co-manufacturers due to non-performance under the agreement. As a result, in 2024, 2023 and 2022, we recorded $0, a credit of $(0.6) million, primarily driven by a reversal of certain accruals and restructuring expenses and $17.3 million, primarily related to legal and other expenses associated with the dispute, respectively. As of December 31, 2024 and 2023, there were no accrued unpaid restructuring expenses. On October 18, 2022, the parties entered into a confidential written settlement agreement and mutual release pursuant to which the parties agreed to dismiss with prejudice all claims and cross-claims asserted in the associated cases filed in the Superior Court of the State of California for the County of Los Angeles and the United States District Court for the Central District of California. See Note 3, Restructuring, to the Notes to Consolidated Financial Statements, included elsewhere in this report.

Previous wording

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

Current wording

Loss from operations in 2024 was $156.1 million compared to $341.9 million in the prior year. The decrease in loss from operations was driven by the increased gross profit and reduced operating expenses. Loss from operations in 2024 was negatively impacted by $7.5 million in SG&A expenses related to a class action settlement agreement in connection with the settlement of certain consumer class action lawsuits that originated in 2022.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

In 2024 and 2023, we recorded income tax (benefit) expense of $(26,000) and $5,000, 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.