BEYOND MEAT, INC. 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," of our 2021 10-K and Part II, Item 1A , "Risk Factors" and "Note Regarding Forward-Looking Statements" included in this report and those discussed in other documents we file from time to time with theSEC . The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes and other financial information included in this quarterly report and our audited consolidated financial statements and notes thereto included in our 2021 10-K. Our historical results are not necessarily indicative of the results to be expected for any future periods and our operating results for the three and six months endedJuly 2, 2022 are not necessarily indicative of the results to be expected for the fiscal year endingDecember 31, 2022 or for any other interim period or for any other future year or period.
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 commitment, 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 protein, 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 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 ofJune 2022 ,Beyond Meat branded products were available at approximately 183,000 retail and foodservice outlets in more than 90 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. The condensed consolidated financial statements for the period endedJuly 2, 2022 include the accounts of the Company and its foreign subsidiaries,Beyond Meat EU B.V. ,BYND JX and Beyond Meat Canada Inc. All inter-company balances and transactions have been eliminated. We operate on a fiscal calendar year, and each interim quarter is comprised of one 5-week period and two 4-week periods, with each week ending on a Saturday. Our fiscal year always begins onJanuary 1 and ends onDecember 31 . As a result, our first and fourth fiscal quarters may have more or fewer days included than a traditional 91-day fiscal quarter. For the three months endedJuly 2, 2022 , our retail and foodservice channels accounted for approximately 69.7% and 30.3% of our net revenues, respectively. For the three months endedJuly 3, 2021 , our retail and foodservice channels accounted for approximately 70.8% and 29.2% of our net revenues, respectively. For the six months endedJuly 2, 2022 , our retail and foodservice channels accounted for approximately 72.9% and 27.1% of our net revenues, respectively. For the six months endedJuly 3, 2021 , our retail and foodservice channels accounted for approximately 72.5% and 27.5% of our net revenues, respectively. For the three months endedJuly 2, 2022 , ourU.S. and international channels accounted for approximately 69.5% and 30.5% of our net revenues, respectively. For the three months endedJuly 3, 2021 , ourU.S. and international channels accounted for approximately 67.7% and 32.3% of our net revenues, respectively. For the six months endedJuly 2, 2022 , ourU.S. and international channels 29 --------------------------------------------------------------------------------
accounted for approximately 72.5% and 27.5% of our net revenues, respectively.
For the six months ended
In the three and six months endedJuly 2, 2022 , net revenues from international foodservice channel sales increased while net revenues from international retail channel sales decreased as compared to the prior-year periods. Despite increased pounds of product sold, international net revenues decreased 7.2% and 7.1% in the three and six months endedJuly 2, 2022 , respectively, as compared to the prior-year periods primarily due to decreased revenue per pound driven by recent pricing actions, a softening in the Euro vs theU.S. dollar and increased trade discounts. In the three and six months endedJuly 2, 2022 ,U.S. retail channel net revenues increased as compared to the prior-year periods, partially offset by a decease inU.S. foodservice channel net revenues, resulting in a 1.1% and 2.4% increase inU.S. net revenues, respectively. However, this increase was more than offset by the decrease in international net revenues, resulting in a 1.6% and 0.4% decrease in net revenues in the three and six months endedJuly 2, 2022 , respectively, as compared to the prior-year periods. AtJuly 2, 2022 , our inventory balances increased 5% compared to the levels atDecember 31, 2021 , due to increases in all the three categories of inventories. The increase in finished goods inventory includes the effect of higher capitalized direct labor and production overhead costs.
In addition to the impact of COVID-19 on our business discussed below under "Impact of COVID-19 on Our Business," our net revenues, gross profit, gross margin, earnings and cash flows may be adversely impacted in 2022 by the following:
•changes in our product mix including the launch of new products (especially Beyond Meat Jerky), 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 acrossEurope 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;
•our decreased revenue forecast negatively impacting capacity utilization, which could also give rise to 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 forecast demand, particularly for Beyond Meat Jerky;
•effectively managing inventory levels, including sales to the liquidation channel and the level of inventory reserves;
•price reductions, primarily in the retail channel in
•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 and the supply chain more generally caused by distribution and other logistical issues; and
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--------------------------------------------------------------------------------•labor needs at the Company as well as in the supply chain and at customers.
In
Impact of COVID-19 on Our Business
The COVID-19 pandemic has had, and we expect will continue to have, certain negative impacts on our business. In response to the COVID-19 pandemic, governments and other authorities around the world implemented significant measures intended to control the spread of the virus, including social distancing measures, business closures or restrictions on operations, quarantines, lockdowns and travel bans. While some of these restrictions were lifted or eased in many jurisdictions as the rates of COVID-19 infections have decreased or stabilized and as various COVID-19 vaccines have become more widely available, a resurgence of COVID-19 and the impact of variants of the virus that causes COVID-19 in some markets, includingChina , has slowed the reopening process. The COVID-19 pandemic continues to impact the global economy. We have established a cross-functional task force that meets regularly and continually monitors and tracks relevant data, including guidance from local, national and international health agencies. This task force works closely with our senior leadership and is instrumental in making critical, timely decisions and is committed to continuing to communicate to our employees as more information is available to share. In response to COVID-19, we have taken, and continue to take measures to support the health and safety of our employees as well as the communities in which we operate. It is challenging to estimate the extent of the adverse impact of the COVID-19 pandemic on our results of operations due to continued uncertainty regarding the duration, spread and intensity of the COVID-19 pandemic. While the ultimate health and economic impact of COVID-19 continues to be highly uncertain, our business operations and results of operations, including our net revenues, gross profit, gross margin, earnings and cash flows, may be adversely impacted in 2022, including as a result of: •variability of demand in the foodservice channel due to the ongoing impact of COVID-19, including the resurgence of COVID-19 and the appearance of variants of the virus, despite the resumption of customer traffic in some foodservice establishments;
•potential disruption or closure of our facilities or those of our suppliers or co-manufacturers due to employee contraction of COVID-19;
•potential shortages in raw materials caused by the conflict in
•the timing and success of strategic QSR partnership launches and resumption of any expansion plans for our product lines for those QSR customers who are in trial or test phase; •reduced consumer confidence and consumer spending, including spending to purchase our products, and negative trends in consumer purchasing patterns due to consumers' disposable income, credit availability, debt levels, inflation and rising interest rates;
•reduced confidence by our foodservice partners due to the resurgence of COVID-19, as well as reimplementation of safety measures in certain jurisdictions and its potential impact on customer demand levels;
•further foodservice customer closures (including re-closures in connection with resurgences of COVID-19) or further reduced operations;
•our ability to introduce new foodservice products as QSR and other partners look to simplify menu offerings as a result of the pandemic;
•uncertainty in the length of recovery time for the
•disruptions in our ability to expand to new international locations.
Future events and effects related to COVID-19 cannot be determined with precision and actual results could significantly differ from estimates or forecasts.
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--------------------------------------------------------------------------------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 inherent to
the 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 ("ESG
Materiality Analysis"). 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 . 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 highly
relevant as a result of the ESG Materiality Analysis. We continue to work on
leveraging the ESG Materiality Analysis to create comprehensive ESG goals that
will assist us with our commitment to ensuring 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 inthe United States . We present our net revenues by geography and distribution channel as follows: Distribution Channel DescriptionU.S. Retail Net revenues from retail sales to the U.S. market and sales to our joint venture, thePlanet Partnership, LLC 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, includingCanada International Foodservice Net revenues from restaurant and foodservice sales to international markets, includingCanada 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 duration, magnitude and effects of COVID-19 and other challenges as 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 largeFull Service Restaurant 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;
•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 continue 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;
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•our continued innovation and product commercialization, including enhancing
existing products and introducing new products, such as Beyond Meatballs, Beyond
Breakfast Sausage Patties, Beyond Breakfast Sausage Links, the latest iteration
of our Beyond Burger and the recent launches of Beyond Chicken Tenders and
Beyond Meat Jerky, 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 sustainability, serve as a best-in-class
partner to strategic and other QSR customers to support product development and
category management, and drive consumer adoption of our products, including for
example, our billboard campaign, food truck tours in selected cities, our first
Reddit AMA, our presence on TikTok , our NBA Twitter campaign during the NBA
finals, mobile pop-ups in select U.S. cities to give consumers an exclusive
first taste of our latest innovative products ahead of in-store availability,
increased social media and digital activity to build consumer awareness and
excitement, shopper marketing programs to incentivize consumer trial, and a
robust Spotify podcast campaign around the launch of the latest iteration of our
Beyond Burger;
•overall market trends, including consumer awareness and demand for nutritious, convenient and high protein plant-based foods; and
•increased production levels as we invest in production infrastructure and scale production to meet demand for our products across our distribution channels both domestically and internationally. In addition to the factors and trends above, we expect the following to positively impact net revenues going forward, subject to the ultimate duration, magnitude and effects of the COVID-19 pandemic and other challenges discussed above: •expansion of our own internal production facilities domestically and abroad to produce our woven proteins, blends of flavor systems and binding systems, and finished goods, while forming additional strategic relationships with co-manufacturers; and
•localized production and third-party partnerships to increase the availability and speed with which we can get our products to customers internationally.
As we seek to continue to grow our net revenues, we face several challenges. The extent of COVID-19's effect on our operational and financial performance will depend on future developments, including the duration, spread and intensity of the pandemic (including any additional resurgences), impact of variants of the virus that causes COVID-19, the widespread distribution and public acceptance of the various COVID-19 vaccines and their efficacy against COVID-19 and variants of the virus, labor needs at the Company as well as in the supply chain and at customers, compliance with government or employer COVID-19 vaccine mandates and the resulting impact on available labor, and the level of social and economic restrictions imposed onthe United States and abroad in an effort to curb the spread of the virus, and the impact on consumer behavior, all of which are uncertain and difficult to predict considering the rapidly evolving landscape. For example, the impact of COVID-19 on any of our suppliers, co-manufacturers, distributors or transportation or logistics providers may negatively affect the price and availability of our ingredients and/or packaging materials and impact our supply chain. Labor shortages at retail and foodservice customers may impact our ability to launch new products or planned promotions, or may have other negative effects on customer demand. Additionally, if we are forced to scale back hours of production or close our production facilities or our Manhattan Beach Project Innovation Center in response to the pandemic, we expect our business, financial condition and results of operations would be materially adversely affected. In addition, our growth strategy to expand our operations internationally may be impeded. The uncertainty created by COVID-19 significantly increases the difficulty in forecasting operating results and strategic planning. As a result, it is not currently possible to ascertain the overall impact of COVID-19 on our business, results of operations, financial condition or liquidity. However, the pandemic has had, and we expect may continue to have, a material adverse impact on our business, results of operations, financial condition and cash flows and may adversely impact the trading price of our 33 -------------------------------------------------------------------------------- common stock. Future events and effects related to the COVID-19 pandemic cannot be determined with precision and actual results could significantly differ from estimates or forecasts. 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 we will need to continue to offer more trade and promotion discounts to both our retail and foodservice customers, to drive increased consumer trial, in response to COVID-19 and in response to 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$5.2 million and$3.6 million as ofJuly 2, 2022 andDecember 31, 2021 , respectively. We expect to face increasing competition across all channels, especially as additional plant-based protein product brands continue to enter the marketplace and as consumers trade down among proteins in the context of significant inflationary pressures. In response, we anticipate providing heavier discounting and promotions on some of our products. 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 margins 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. Our financial performance also depends on our operational effectiveness and ability to fulfill orders in full and on time. For example, in the third quarter of 2021 we experienced challenges in operations that led to unfulfilled orders, primarily due to severe weather resulting in the temporary loss of potable water in onePennsylvania facility and water damage to inventory in another. Further, we may not be able to recapture missed opportunities in later periods, for example if the opportunity related to a significant grilling holiday likeMemorial Day weekend, theFourth of July , orLabor 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,U.S. retail channel net revenues during the second quarter were 16% higher than the first quarter. In 2021,U.S. retail channel net revenues during the second quarter were 21% higher than the first quarter. We continue to see additional seasonality effects, especially within our retail channel, with revenue contribution from this channel 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 an environment of uncertainty from the impact of COVID-19, inflationary pressures 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. 34 --------------------------------------------------------------------------------
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, direct and indirect labor and certain supply costs, co-manufacturing fees, 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, as well as inventory write-offs and reserves. In anticipation of future growth, we have had to very quickly scale production and expand our sources of supply for our core protein inputs such as pea protein.
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 ultimate duration, magnitude and effects of COVID-19, inflationary pressures and other factors impacting our business, we continue to expect that gross profit improvements will be delivered primarily through improved volume leverage and throughput, reduced manufacturing conversion costs, greater internalization and geographic localization of our manufacturing footprint and finished goods, materials and packaging input cost reductions, 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. We are also working to improve gross margin through ingredient cost savings achieved through scale of purchasing and through negotiating lower tolling fees. We intend to pass some of these cost savings on to the consumer as we pursue our goal to achieve price parity with animal protein in at least one of our product categories by the end of 2024. Margin improvement may, however, continue to be negatively impacted by our focus on investing heavily in our business, including launching new products with manufacturing processes that may initially be inefficient, establishing infrastructure in theU.S. , EU andChina , investing in personnel, partnerships and product pipeline, investing in our facilities, growing our customer base, volume deleveraging, aggressive pricing strategies and increased discounting, increased sales to the liquidation channel and inventory reserves, our product and customer mix, expanding into new geographies and markets, enhancing our production infrastructure, improving our innovation capabilities, enhancing our product offerings and increasing consumer engagement to apply increasing pressure on the three key levers of taste, health and cost that we believe are critical for mass adoption. 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, and depreciation and amortization expense on research and development assets. We are beginning to incur research and development expenses in the form of rent associated with our newCommerce, California commercialization center. Design work for the build out of the commercialization center is underway, however, we have currently delayed the anticipated commencement of operations. Our research and development efforts are focused on enhancements to our product formulations and production processes in addition to the development of new products. We expect to continue to invest substantial amounts in research and development, 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 rapidly innovate in order to continue to capture a larger market share of consumers who typically eat animal-based meats. Over time and subject to the duration, magnitude and effects of the COVID-19 pandemic, inflationary pressures and other factors impacting our business, we expect these expenses to increase in absolute dollars, but to decrease as a percentage of net revenues as we continue to scale production volume. 35 --------------------------------------------------------------------------------
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 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 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 for the remainder of 2022 to decrease from the levels in the first half of 2022, as we focus on reducing and optimizing non-people expenses. OnAugust 3, 2022 , we announced a reduction-in-force affecting approximately 4% of our global workforce. The 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 expect to incur in the third quarter of 2022. Over time, our administrative expenses are generally expected to increase in absolute dollars with increased personnel to support various functions, including among others, operations and supply chain, accounting, finance, legal, IT and compliance-related functions, but to decrease as a percentage of net revenues.
Restructuring Expenses
InMay 2017 , management approved a plan to terminate an exclusive supply agreement with one of our co-manufacturers. For a discussion of these expenses, see Note 3 , Restructuring, and Note 10 , Commitments and Contingencies, to the Notes to Unaudited Condensed Consolidated Financial Statements, included elsewhere in this report. Results of Operations
The following table sets forth selected items in our condensed consolidated statements of operations for the respective periods presented:
Three Months Ended Six Months Ended
July 2, July 3, July 2, July 3,
(in thousands) 2022 2021 2022 2021
Net revenues $ 147,040 $ 149,426 $ 256,495 $ 257,590
Cost of goods sold 153,202 102,074 262,467 177,530
Gross (loss) profit (6,162) 47,352 (5,972) 80,060
Research and development expenses 16,202 13,823 35,880 29,748
Selling, general and administrative
expenses 63,015 48,286 138,129 87,240
Restructuring expenses 4,302 3,844 7,328 6,318
Total operating expenses 83,519 65,953 181,337 123,306
Loss from operations $ (89,681) $ (18,601) $ (187,309) $ (43,246)
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The following table presents selected items in our condensed consolidated
statements of operations as a percentage of net revenues for the periods
presented:
Three Months Ended Six Months Ended
July 2, July 3, July 2, July 3,
2022 2021 2022 2021
Net revenues 100.0 % 100.0 % 100.0 % 100.0 %
Cost of goods sold 104.2 68.3 102.3 68.9
Gross (loss) profit (4.2) 31.7 (2.3) 31.1
Research and development expenses 11.0 9.3 14.0 11.5
Selling, general and
administrative expenses 42.9 32.3 53.9 33.9
Restructuring expenses 2.9 2.6 2.9 2.5
Total operating expenses 56.8 44.2 70.8 47.9
Loss from operations (61.0) % (12.5) % (73.1) % (16.8) %
Three and Six Months Ended
Net Revenues Net revenues decreased by$2.4 million , or 1.6%, in the three months endedJuly 2, 2022 , as compared to the prior-year period primarily due to a decrease in net revenue per pound of approximately 14.2%, partially offset by a 14.6% increase in total pounds sold. The decrease in net revenue per pound was primarily attributable to changes in price, including the impact of sales to liquidation channels and list price reductions in the EU implemented in the first quarter of 2022, changes in foreign exchange rates, and increased trade discounts.
The following table presents our net revenues by channel in the three months
ended
Three Months Ended Change
July 2, July 3,
(in thousands) 2022 2021 Amount %
U.S. :
Retail $ 78,861 $ 77,195 $ 1,666 2.2 %
Foodservice 23,389 23,961 (572) (2.4) %
U.S. net revenues 102,250 101,156 1,094 1.1 %
International:
Retail 23,692 28,544 (4,852) (17.0) %
Foodservice 21,098 19,726 1,372 7.0 %
International net revenues 44,790 48,270 (3,480) (7.2) %
Net revenues $ 147,040 $ 149,426 $ (2,386) (1.6) %
Net revenues from U.S. retail channel sales in the three months ended July 2,
2022 increased $1.7 million , or 2.2%, primarily due to sales to TPP of Beyond
Meat Jerky introduced in the first quarter of 2022, which contributed $15.9
million in net revenues, and, to a lesser extent, by chicken products including
Beyond Chicken Tenders, partially offset by decreases in sales of other
products. Beyond Meat branded products were available at approximately 78,000
U.S. retail outlets as of June 2022 .
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Net revenues from U.S. foodservice channel sales in the three months ended
July 2, 2022 decreased $0.6 million , or 2.4%, primarily due to discontinued
distribution at a certain customer which was included in the year-ago period,
partially offset by increases in sales of Beyond Sausage and chicken products
including Beyond Chicken Tenders. Beyond Meat branded products were available at
approximately 41,000 U.S. foodservice outlets as of June 2022 .
Net revenues from international retail channel sales in the three months ended
July 2, 2022 decreased $4.9 million , or 17.0%, primarily driven by a 21.7%
decrease in net revenue per pound, partially offset by a 6.0% increase in pounds
sold. The decrease in net revenue per pound was primarily due to list price
reductions in the EU, unfavorable foreign exchange rate impact and increased
trade discounts. By product, the decrease in sales was primarily due to
decreases in sales of Beyond Sausage and Beyond Beef. Beyond Meat branded
products were available at approximately 33,000 international retail outlets as
of June 2022 .
Net revenues from international foodservice channel sales in the three months
ended July 2, 2022 increased $1.4 million , or 7.0%, primarily due to a 37.5%
increase in pounds sold, partially offset by a 22.2% decrease in net revenue per
pound due to changes in sales mix, unfavorable foreign exchange rate impact and
increased trade discounts. By product, the increase in sales was primarily due
to increases in sales of Beyond Burger and chicken products including Beyond
Chicken Tenders. Beyond Meat branded products were available at approximately
31,000 international foodservice outlets as of June 2022 .
Net revenues decreased by $1.1 million , or 0.4%, in the six months ended July 2,
2022 , as compared to the prior-year period, primarily due to a decrease in net
revenue per pound of approximately 12.3%, partially offset by a 13.7% increase
in total pounds sold. The decrease in net revenue per pound was primarily
attributable to changes in sales mix, price, including the impact of sales to
liquidation channels and list price reductions in the EU implemented in the
first quarter of 2022, increased trade discounts, and changes in foreign
exchange rates.
The following table presents our net revenues by channel in the six months ended
Six Months Ended Change
July 2, July 3,
(in thousands) 2022 2021 Amount %
U.S. :
Retail $ 147,121 $ 141,021 $ 6,100 4.3 %
Foodservice 38,882 40,703 (1,821) (4.5) %
U.S. net revenues 186,003 181,724 4,279 2.4 %
International:
Retail 39,829 45,743 (5,914) (12.9) %
Foodservice 30,663 30,123 540 1.8 %
International net revenues 70,492 75,866 (5,374) (7.1) %
Net revenues $ 256,495 $ 257,590 $ (1,095) (0.4) %
Net revenues from U.S. retail channel sales in the six months ended July 2, 2022
increased $6.1 million , or 4.3%, as compared to the six months ended July 3,
2021 . The increase in U.S. retail channel net revenues was primarily due to
sales to TPP of Beyond Meat Jerky introduced in the first quarter of 2022, which
contributed $26.6 million in net revenues, and, to a lesser extent, by chicken
products including Beyond Chicken Tenders, partially offset by decreases in
sales of other products.
Net revenues from U.S. foodservice channel sales in the six months ended July 2,
2022 decreased $1.8 million , or 4.5%, primarily due to higher trade discounts.
By product, the decrease in sales was
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--------------------------------------------------------------------------------primarily due to a decrease in sales of Beyond Breakfast Sausage, partially offset by increased sales of Beyond Sausage and chicken products including Beyond Chicken Tenders.
Net revenues from international retail channel sales in the six months endedJuly 2, 2022 decreased$5.9 million , or 12.9%, primarily driven by a 21.6% decrease in net revenue per pound, partially offset by an 11.1% increase in pounds sold. The decrease in net revenue per pound was due to list price reductions in the EU, increased trade discounts, unfavorable foreign exchange rate impact and changes in sales mix. By product, the decrease in sales was primarily due to decreases in sales of Beyond Sausage, Beyond Burger and Beyond Beef, partially offset by increases in sales of Beyond Meatballs and Beyond Breakfast Sausage. Net revenues from international foodservice channel sales in the six months endedJuly 2, 2022 increased$0.5 million , or 1.8%, primarily due to a 34.5% increase in pounds sold, partially offset by a 24.3% decrease in net revenue per pound due to changes in sales mix, increased trade discounts and unfavorable foreign exchange rate impact. By product, the increase in sales was primarily due to increases in sales of Beyond Burger and chicken products including Beyond Chicken Tenders. The following table presents total pounds sold by channel for the periods presented: Three Months Ended Change Six Months Ended Change July 2, July 3, July 2, July 3, (in thousands) 2022 2021 Amount % 2022 2021 Amount % U.S.: Retail 16,057 13,834
2,223 16.1 % 28,510 24,962 3,548 14.2 %
Foodservice 3,965 4,002 (37) (0.9) % 6,717 6,884 (167) (2.4) %
International:
Retail 5,061 4,775 286 6.0 % 8,591 7,734 857 11.1 %
Foodservice 5,042 3,666 1,376 37.5 % 7,623 5,669 1,954 34.5 %
Total pounds sold 30,125 26,277 3,848 14.6 % 51,441 45,249 6,192 13.7 %
Cost of Goods Sold
Three Months Ended Change Six Months Ended Change
July 2, July 3, July 2, July 3,
(in thousands) 2022 2021 Amount % 2022 2021 Amount %
Cost of goods sold $ 153,202 $ 102,074 $ 51,128 50.1 % $ 262,467 $ 177,530 $ 84,937 47.8 %
Cost of goods sold increased by $51.1 million , or 50.1%, to $153.2 million , in
the three months ended July 2, 2022 as compared to the prior-year period. Cost
of goods sold as a percentage of net revenues in the three months ended July 2,
2022 increased to 104.2% from 68.3% of net revenues in the prior-year period.
The increase in cost of goods sold was primarily due to increased cost per pound
and increased pounds sold compared to the prior-year period. The increase in
cost per pound was primarily driven by increases in manufacturing costs
including depreciation, materials costs, logistics costs and inventory
write-offs and reserves. The introduction of Beyond Meat Jerky in the first
quarter of 2022 negatively impacted cost per pound in the three months ended
July 2, 2022 compared to the prior-year period. The decrease in revenue per
pound in the three months ended July 2, 2022 compared to the prior-year period
also had the effect of increasing cost of goods sold as a percentage of net
revenues.
Cost of goods sold increased by $84.9 million , or 47.8%, to $262.5 million , in
the six months ended July 2, 2022 as compared to the prior-year period. As a
percentage of net revenues, cost of goods sold in
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the six months ended July 2, 2022 increased to 102.3% from 68.9% of net revenues
in the prior-year period. The increase in cost of goods sold was due to
increased cost per pound and increased pounds sold compared to the prior-year
period. The increase in cost per pound was due to manufacturing costs including
depreciation, increased materials costs, increased logistics costs and increased
inventory write-offs and reserves. The introduction of Beyond Meat Jerky in the
first quarter of 2022 negatively impacted cost per pound in the six months ended
July 2, 2022 compared to the prior-year period. The decrease in revenue per
pound in the six months ended July 2, 2022 compared to the prior-year period
also had the effect of increasing cost of goods sold as a percentage of net
revenues.
Gross Profit and Gross Margin
Three Months Ended Change Six Months Ended Change
July 2, July 3, July 2, July 3,
(in thousands) 2022 2021 Amount % 2022 2021 Amount %
Gross (loss) profit $(6,162) $47,352 $(53,514) (113.0)%$(5,972) $80,060 $(86,032) (107.5)% Gross margin (4.2)% 31.7% (3,590) bps N/A (2.3)% 31.1% (3,340) bps N/A Gross profit in the three months endedJuly 2, 2022 was a loss of$6.2 million as compared to gross profit of$47.4 million in the prior-year period, a decrease of$53.5 million . Gross margin in the three months endedJuly 2, 2022 decreased to a negative gross margin of (4.2)% from a positive gross margin of 31.7% in the prior-year period. Despite a 14.6% increase in total pounds sold, gross profit and gross margin decreased primarily as a result of increased costs per pound of approximately$1.20 and decreased net revenue per pound of approximately$0.81 in the three months endedJuly 2, 2022 versus the prior-year period. Included in the cost and revenue per pound impacts were the impact of sales through the liquidation channel and sales of Beyond Meat Jerky. The inventory associated with the liquidation channel sales carried a cost of approximately$10.5 million and we realized revenue of approximately$1.9 million and a loss of approximately$8.7 million on the transaction. Additionally, we estimate Beyond Meat Jerky, which was introduced in the first quarter of 2022, contributed a gross profit loss of approximately$7.7 million in the three months endedJuly 2, 2022 . Gross profit in the six months endedJuly 2, 2022 was a loss of$6.0 million as compared to gross profit of$80.1 million in the prior-year period, a decrease of$86.0 million . Gross margin in the six months endedJuly 2, 2022 decreased to a negative gross margin of (2.3)% from a positive gross margin of 31.1% in the prior-year period. Despite a 13.7% increase in total pounds sold, gross profit and gross margin decreased primarily as a result of increased costs per pound of approximately$1.18 and decreased net revenue per pound of approximately$0.71 in the six months endedJuly 2, 2022 compared to the prior-year period. Sales of Beyond Meat Jerky and sales into the liquidation channel were both headwinds to gross profit compared to the prior-year period.
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 shipping and handling costs as a component of cost of goods sold.
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--------------------------------------------------------------------------------Research and Development Expenses
Three Months Ended Change Six Months Ended Change
July 2, July 3, July 2, July 3,
(in thousands) 2022 2021 Amount % 2022 2021 Amount %
Research and
development expenses $ 16,202 $ 13,823 $ 2,379 17.2 % $ 35,880 $ 29,748 $ 6,132 20.6 %
Research and development expenses increased $2.4 million , or 17.2%, in the three
months ended July 2, 2022 , as compared to the prior-year period. Research and
development expenses increased to 11.0% of net revenues in the three months
ended July 2, 2022 from 9.3% of net revenues in the prior-year period primarily
due to higher headcount and higher scale-up expenses compared to the prior-year
period.
Research and development expenses increased $6.1 million , or 20.6%, in the six
months ended July 2, 2022 , as compared to the prior-year period. Research and
development expenses increased to 14.0% of net revenues in the six months ended
July 2, 2022 from 11.5% of net revenues in the prior-year period primarily due
to higher headcount and higher new product scale-up expenses compared to the
prior-year period.
SG&A Expenses
Three Months Ended Change Six Months Ended Change
July 2, July 3, July 2, July 3,
(in thousands) 2022 2021 Amount % 2022 2021 Amount %
Selling, general and
administrative expenses $ 63,015 $ 48,286 $ 14,729 30.5 % $ 138,129 $ 87,240 $ 50,889 58.3 %
SG&A expenses increased $14.7 million , or 30.5%, in the three months ended
July 2, 2022 to 42.9% of net revenues in the three months ended July 2, 2022 ,
from 32.3% of net revenues in the prior-year period. The increase in SG&A
expenses was primarily due to $6.4 million in higher salaries and related
expenses resulting from higher headcount, $4.2 million in higher consulting
fees, $2.8 million in higher advertising costs, $2.3 million in higher
share-based compensation expense, $1.2 million in increased marketing costs and
$1.0 million in higher travel-related costs, partially offset by $0.7 million in
lower outbound freight costs.
SG&A expenses increased $50.9 million , or 58.3%, in the six months ended July 2,
2022 to 53.9% of net revenues in the six months ended July 2, 2022 , from 33.9%
of net revenues in the prior-year period. The increase in SG&A expenses was
primarily due to $14.4 million in higher salaries and related expenses resulting
from higher headcount, $12.7 million in higher advertising costs, $8.5 million
in higher marketing expenses, $6.7 million in higher consulting fees, $4.3
million in higher share-based compensation expense, $2.0 million in outbound
freight costs, $1.7 million in higher product donation costs, and $1.7 million
in travel and related costs, partially offset by $0.8 million in lower product
commissions.
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 $4.3 million and $3.8 million in the three
months ended July 2, 2022 and July 3, 2021 , respectively, and $7.3 million and
$6.3 million in the six months ended July 2, 2022 and July 3, 2021 ,
respectively. The restructuring expenses were primarily related to legal and
other expenses associated with the dispute. As
41
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of July 2, 2022 and December 31, 2021 , there were $2.2 million and $2.7 million ,
respectively, in accrued and unpaid restructuring expenses. We continue to incur
legal fees and other costs in connection with our ongoing efforts to resolve
this dispute. See Note 3 , Restructuring, and Note 10 , Commitments and
Contingencies to the Notes to Unaudited Condensed Consolidated Financial
Statements included elsewhere in this report.
Loss from Operations
Loss from operations in the three months endedJuly 2, 2022 was$89.7 million compared to$18.6 million in the prior-year period. The increase in loss from operations in the three months endedJuly 2, 2022 was primarily driven by lower gross profit, growth in non-production headcount expenses, increased general and administrative expenses driven by ongoing consulting agreements, greater investment in marketing activities, higher expenses associated with production trial activities, and increased investments in innovation compared to the prior-year period. Loss from operations in the six months endedJuly 2, 2022 was$187.3 million compared to$43.2 million in the prior-year period. The increase in loss from operations in the six months endedJuly 2, 2022 was primarily driven by lower gross profit, growth in non-production headcount expenses, higher advertising costs, higher marketing-related expenses, higher consulting expenses, increased production trial activities and higher share-based compensation expense compared to the prior-year period. Total Other Expense, net Total other expense, net in the three months endedJuly 2, 2022 of$6.0 million included approximately$5.5 million in realized and unrealized foreign currency transaction losses due to unfavorable changes in foreign exchange rates of the Euro and Chinese Yuan and$1.0 million in interest expense from the amortization of convertible debt issuance costs, partially offset by$0.6 million in interest income. Total other expense of$0.8 million in the prior-year period consisted of$1.0 million in interest expense on our debt balances, partially offset by$0.2 million in foreign currency transaction gains and$0.2 million in subsidies received from theJiaxing Economic Development Zone Finance Bureau for our investment in BYND JX. Total other expense, net in the six months endedJuly 2, 2022 of$8.2 million consisted primarily of$6.6 million in realized and unrealized foreign currency transaction losses due to unfavorable changes in foreign exchange rates of the Euro and Chinese Yuan and$2.0 million in interest expense from the amortization of convertible debt issuance costs, partially offset by$0.7 million in interest income. Total other expense, net in the six months endedJuly 3, 2021 of$3.0 million consisted of$1.3 million in interest expense from the amortization of convertible debt issuance costs,$1.0 million in loss on extinguishment of debt associated with the termination of our bank credit facility,$0.1 million in foreign currency transaction losses, partially offset by$0.2 million in subsidies received from theJiaxing Economic Development Zone Finance Bureau for our investment in BYND JX. Net Loss Net loss was$97.1 million and$197.6 million in the three and six months endedJuly 2, 2022 , respectively, compared to net loss of$19.7 million and$46.9 million in the prior-year periods. Net loss during the three and six months endedJuly 2, 2022 was primarily due to lower gross profit and higher operating expenses discussed above compared to the prior-year periods.
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
42
--------------------------------------------------------------------------------parties in evaluating companies in our industry as a measure of our operational performance. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures. In addition, these non-GAAP financial measures may not be computed in the same manner as similarly titled measures used by other companies.
"Adjusted EBITDA" is defined as net loss adjusted to exclude, when applicable, income tax expense, interest expense, depreciation and amortization expense, restructuring expenses, share-based compensation expense, 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 measure. 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.
The following table presents the reconciliation of Adjusted EBITDA to its most comparable GAAP measure, net loss, as reported (unaudited):
43
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Three Months Ended Six Months Ended
July 2, July 3, July 2, July 3,
(in thousands) 2022 2021 2022 2021
Net loss, as reported $ (97,134) $ (19,652) $ (197,592) $ (46,918)
Income tax expense 11 2 21 50
Interest expense 1,108 1,022 2,133 1,651
Depreciation and amortization
expense 7,729 4,881 14,820 9,207
Restructuring expenses(1) 4,302 3,844 7,328 6,318
Share-based compensation
expense 10,306 7,863 19,598 15,239
Other, net(2) 4,902 (180) 6,026 1,390
Adjusted EBITDA $ (68,776) $ (2,220) $ (147,666) $ (13,063)
Net loss as a % of net
revenues (66.1) % (13.2) % (77.0) % (18.2) %
Adjusted EBITDA as a % of net
revenues (46.8) % (1.5) % (57.6) % (5.1) %
____________(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
the three and six months ended
currency transaction gains and
the three and six months ended
(b) Includes
termination of the Company's credit facility in the six months ended
44
--------------------------------------------------------------------------------Liquidity and Capital Resources
Convertible Senior Notes
For a discussion about the Notes, see Note 7 , Debt, to the Notes to Unaudited Condensed Consolidated Financial Statements included elsewhere in this report.
Liquidity Liquidity Outlook In 2022, our cash from operations could be affected by various risks and uncertainties, including, but not limited to, the effects of COVID-19 and other risks detailed in Part I, Item 1A, "Risk Factors," of our 2021 10-K and Part II, Item 1A, "Risk Factors" and "Note Regarding Forward-Looking Statements" included elsewhere in this report. The pandemic, inflation, rising interest rates and hostilities inEastern 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 will be sufficient to finance our operations and meet our foreseeable cash requirements through at least the next twelve months. In the future, we may raise funds by issuing debt or equity securities. Our cash requirements under our significant contractual obligations and commitments are listed below in the section titled "Contractual Obligations and Commitments." Our future capital requirements may vary materially from those currently planned and will depend on many factors, including the impact of the COVID-19 pandemic; 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 and expanding our Manhattan Beach Project Innovation Center; the expenses associated with our marketing initiatives; 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. Sources of Liquidity Our primary cash needs are for operating expenses, working capital and capital expenditures to support the planned growth in 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. In connection with our Secondary Offering, 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. InMarch 2021 , we issued$1.2 billion in aggregate principal amount of Notes (see Note 7 , Debt, to the Notes to Unaudited Condensed Consolidated Financial Statements included elsewhere in this report). As ofJuly 2, 2022 , we had$454.7 million in cash and cash equivalents. Cash Flows In the six months endedJuly 2, 2022 , approximately$102.7 million in aggregate expenditures to purchase inventory, purchase property, plant and equipment and pay escrow payments related to the Campus Lease, and approximately$174.5 million in net cash outflows from other operating, investing and financing activities were funded with our existing cash balance.
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.
45
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Six Months Ended
July 2, July 3,
(in thousands) 2022 2021
Cash (used in) provided by:
Operating activities $ (235,690) $ (120,445)
Investing activities $ (41,988) $ (51,565)
Financing activities $ 497 $ 1,022,074 In the six months endedJuly 2, 2022 , we incurred a net loss of$197.6 million , which was the primary reason for net cash used in operating activities of$235.7 million . Net cash outflows from changes in our operating assets and liabilities were$86.2 million , primarily due to the escrow payments related to the Campus Lease (see Note 10 , Commitments and Contingencies, to the Notes to Unaudited Condensed Consolidated Financial Statements included elsewhere in this report), increase in accounts receivable balances and increase in inventory. The cash outflows were partially offset by the increase in accrued expenses and other current liabilities. Net loss in the six months endedJuly 2, 2022 included$48.1 million in non-cash expenses primarily comprised of share-based compensation expense and depreciation and amortization expense. In the six months endedJuly 3, 2021 , we recorded a net loss of$46.9 million which was the primary reason for net cash used in operating activities of$120.4 million . Net cash outflows from changes in our operating assets and liabilities were$102.6 million , primarily due to the increase in inventory, increase in accounts receivable balances and escrow payments related to the Campus Lease (see Note 10 , Commitments and Contingencies, to the Notes to Unaudited Condensed Consolidated Financial Statements included elsewhere in this report). The cash outflows were partially offset by the increase in accrued expenses and other current liabilities. Net loss in the six months endedJuly 3, 2021 included$29.1 million in non-cash expenses primarily comprised of share-based compensation expense and depreciation and amortization expense.
Depreciation and amortization expense was
Net cash used in investing activities primarily relates to capital expenditures to support our investment in property, plant and equipment.
In the six months endedJuly 2, 2022 , net cash used in investing activities was$42.0 million and consisted of cash outflows for purchases of property, plant and equipment, primarily driven by continued investments in production equipment and facilities. In the six months endedJuly 3, 2021 , net cash used in investing activities was$51.6 million and consisted of 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.
Net Cash Provided by Financing Activities
In the six months endedJuly 2, 2022 , net cash provided by financing activities was$0.5 million primarily from$1.3 million in proceeds from stock option exercises, partially offset by$0.8 million in payments of minimum withholding taxes on net share settlement of equity awards and payments under finance lease obligations. In the six months endedJuly 3, 2021 , net cash provided by financing activities was$1,022.1 million primarily from the proceeds of the Notes of$1,066.1 million and$6.5 million in proceeds from stock option exercises, partially offset by repayment of revolving credit facility of$25.0 million , debt issuance costs of$23.6 million associated with the Notes,$1.8 million in payments of minimum withholding taxes on net share settlement of equity awards and payments under finance lease obligations. 46 --------------------------------------------------------------------------------
Contractual Obligations and Commitments
There have been no significant changes during the six months endedJuly 2, 2022 to the contractual obligations disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations set forth in the 2021 10-K, other than the following: Leases OnJanuary 14, 2021 , we entered into the Campus Lease withHC Hornet Way, LLC , aDelaware limited liability company (the "Landlord"), to house our lab and innovation space and headquarters offices inEl Segundo, California . As ofJuly 2, 2022 , the tenant improvements associated with Phase 1-A had not been completed, and the underlying asset had not been delivered to the Company. Accordingly, there was no lease commencement during the six months endedJuly 2, 2022 . Therefore, we have not recognized an asset or a liability for the Campus Lease in our condensed consolidated balance sheets as ofJuly 2, 2022 andDecember 31, 2021 . We contributed$43.7 million and$59.2 million in payments to a construction escrow account in the six months endedJuly 2, 2022 and the year endedDecember 31, 2021 , respectively. In the three and six months endedJuly 2, 2022 , we paid$0.5 million and$0.8 million , respectively, in payments towards common area maintenance, parking, and insurance under the Campus Lease. No such payments were made in the three and six months endedJuly 3, 2021 . Concurrent with our execution of the Campus Lease, as a security deposit, we delivered to the landlord a letter of credit under the revolving credit facility in the amount of$12.5 million . Upon termination of the revolving credit facility, the letter of credit continued in effect, unsecured. See Note 10 , Commitments and Contingencies, and Note 4 , Leases, to the Notes to Unaudited Condensed Consolidated Financial Statements included elsewhere in this report.
In the three months endedJuly 2, 2022 , we amended the lease for our facility in the JXEDZ to extend the term an additional five years without rent escalation. As ofJuly 2, 2022 , we had invested$22.0 million and had advanced$20.0 million to our subsidiary, BYND JX. See Note 10 , Commitments and Contingencies, to the Notes to Unaudited Condensed Consolidated Financial Statements included elsewhere in this report.
Investment in
OnJanuary 25, 2021 , we entered intoTPP , a joint venture with PepsiCo, Inc., to develop, produce and market innovative snack and beverage products made from plant-based protein. We believeTPP will allow us to reach more consumers by entering new product categories and distribution channels, increasing accessibility to plant-based protein around the world. We recognized our share of the net losses inTPP in the amount of$1.4 million and$0.2 million for the three months endedJuly 2, 2022 andJuly 3, 2021 , respectively, and our share of the net losses inTPP in the amount of$2.1 million and$0.6 million for the six months endedJuly 2, 2022 andJuly 3, 2021 , respectively. In the three months endedJuly 2, 2022 , we also entered into an agreement for a nonrefundable up-front fee associated with our manufacturing and supply agreement withTPP that will be recognized over the estimated term of the manufacturing and supply agreement. See Note 13 , Related Party Transactions, to the Notes to Unaudited Condensed Consolidated Financial Statements included elsewhere in this report. For the year endedDecember 31, 2021 , we contributed our share of the investment inTPP ,$11.0 million , which was increased subsequent to the quarter endedJuly 2, 2022 . See Note 14 , Subsequent Events, to the Notes to Unaudited Condensed Consolidated Financial Statements included elsewhere in this report. Purchase Commitments As ofJuly 2, 2022 , we had a commitment to purchase pea protein inventory totaling$56.4 million in the remainder of 2022, which commitment schedule was amended subsequent to the quarter endedJuly 2, 2022 to purchase$16.2 million in the remainder of 2022 and$40.2 million in 2023. See Note 14 , Subsequent Events, to the Notes to Unaudited Condensed Consolidated Financial Statements included elsewhere in this report. In addition, as ofJuly 2, 2022 , we had approximately$49.3 million in purchase order commitments for capital expenditures primarily to purchase machinery and equipment and$86.7 million in fee commitments to 47
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manufacture products at a co-manufacturer's facility over a 5-year term (see
Note 10 , Commitments and Contingencies, to the Notes to Unaudited Condensed Consolidated Financial Statements included elsewhere in this report).
Subsequent to the quarter endedJuly 2, 2022 , onJuly 27, 2022 , we entered into an agreement to purchase certain real property on a neighboring site to our manufacturing facility inEurope located in Enschede,the Netherlands , for cash consideration of approximately €6.3 million. The purchase is expected to close in the second half of 2023 (see Note 14 , Subsequent Events, to the Notes to Unaudited Condensed Consolidated Financial Statements included elsewhere in this report).
Off-balance Sheet Arrangements
We do not have any off-balance sheet arrangements or any holdings in variable interest entities.
Critical Accounting Policies 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. There have been no material changes in our critical accounting policies during the six months endedJuly 2, 2022 , as compared to those disclosed in the "Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies" in the 2021 10-K other than as described in Note 2 , Summary of Significant Accounting Policies, to the Notes to Unaudited Condensed Consolidated Financial Statements included elsewhere in this report.
Recent Accounting Pronouncements
Please refer to Note 2 , Summary of Significant Accounting Policies, to the Notes to Unaudited Condensed 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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