Beyond Meat - Q4 2023
February 27, 2024
Transcript
Operator (participant)
Good afternoon, and welcome to the Beyond Meat 2023 fourth quarter conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Paul Sheppard, Vice President, FP&A, and Investor Relations. Please go ahead.
Paul Sheppard (VP of Financial Planning and Analysis and Investor Relations)
Thank you. Good afternoon, and welcome. Joining me on today's call are Ethan Brown, Founder, President, and Chief Executive Officer, and Lubi Kutua, Chief Financial Officer and Treasurer. By now, everyone should have access to the company's fourth quarter and full year 2023 earnings press release filed today after market close. This document is available in the investor relations section of Beyond Meat's website at www.beyondmeat.com. Before we begin, please note that all the information presented on today's call is unaudited and that during the course of this call, management may make forward-looking statements within the meaning of the federal securities laws. These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements.
Forward-looking statements in today's earnings release, along with the comments on this call, are made only as of today and will not be updated as actual events unfold. We refer you to today's press release, company's quarterly report on Form 10-Q for the quarter ended September 30th, 2023, and to the company's annual report on Form 10-K for the fiscal year ended December 31st, 2023, to be filed with the SEC, along with other filings with the SEC, for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. Please also note that on today's call, management may reference adjusted EBITDA, which is a non-GAAP financial measure.
While we believe this non-GAAP financial measure provides useful information for investors, any reference to this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Please refer to today's press release for a reconciliation of adjusted EBITDA to its most comparable GAAP measure. With that, I would now like to turn the call over to Ethan Brown.
Ethan Brown (Founder, President, and CEO)
Thank you, Paul, and good afternoon, everyone. I will begin my comments by briefly reviewing the 5 priorities we anchored our activities around in Q4 2023 and then turn to our 5 forward priorities for 2024. In both instances, these steps are intended to serve and accelerate our progress towards sustainable operations and return to growth. In Q4 2023, we executed across the following actions. One, we sought to accelerate our transition to a leaner operating structure. As part of these efforts, we established a minimum of $70 million in cuts from our operating budget for 2024. We recorded approximately $95.6 million in non-cash charges, primarily relating to inventory and assets now deemed to be in excess or no longer consistent with our path to profitability and continued to consolidate our production footprint.
Two, in U.S. retail, we put the finishing touches on a multi-year renovation of certain core platforms, including Beyond Burger and Beyond Beef. We believe this renovation further positions the brands to overcome misinformation regarding the nutritional and health profile of our products while providing strong support for certain pricing actions. Three, we conducted extensive pricing analysis and, as discussed momentarily, are now preparing to implement pricing changes to support gross margin expansion. Four, throughout the quarter, we continued to use inventory management to free up working capital. Five, we maintained our investment focus in Europe and served our strategic customers in this important market for plant-based meats, including continued traction with McDonald's across countries such as Austria, Germany, Ireland, the Netherlands, U.K., Malta, Portugal, Slovenia, and Switzerland.
Turning to 2024, a pivotal year for Beyond Meat, we are pursuing the following five priorities, several of which simply represent a transition from 2023 planning to 2024 implementation. One, we are beginning 2024 by executing within a leaner operation, consistent with substantially reduced 2024 planned OpEx and cash use. Part and parcel with this leaner operation is our ongoing tightening of focus relating to portfolio, markets, and consumer. We are, as just one example, discontinuing our Beyond Meat Jerky product line, despite its number one position in the plant-based jerky category. These refinements allow focus and resources to be put against our latest product platform renovation, Beyond IV, and other SKUs which we believe have higher profitable growth potential here in the U.S. and are consistent with my intention to focus more resources against key markets and customers in Europe.
Two, we will be rolling out Beyond IV in U.S. retail and view this renovation as an important and potentially transformative moment for our brand and category. Iron sharpens iron, and we've certainly experienced this ancient metaphor firsthand. Specifically, the current climate of misinformation and efforts by incumbents, including, sadly, pharmaceutical interests, to poison the plant-based meat well, push us to accelerate gains in the health profile of our product platforms.
To be clear, as I've often repeated, likely to the point of boredom of listeners, we are proud of the health benefits available through our current products, including, for example, those documented in the SWAP-MEAT StudySWAP Meat Study, published in the American Journal of Clinical Nutrition, where participants experienced a meaningful drop in LDL or bad cholesterol, as well as a decline in TMAO, a compound in the gut associated with heart disease, after switching from animal-based meats to Beyond Meats across eight-week intervals. And we are proud of the certifications associated with our existing product lines, such as the American Heart Association's Heart-Check Program certification of our Beyond Steak and Beyond Beef Crumbles. However, as we have also oft repeated, we are chasing a perfect build of meat from plants, and this goal encompasses sensory as well as nutritional characteristics.
On the latter, our job is to deliver as much of the nutritional benefits of plant-based eating as we can in the familiar and satiating form and taste of meat. Over the years, we've surrounded ourselves with a broad ecosystem of doctors, registered dietitians, and leading health institutions to guide us in this effort. Combination of this extensive input and the talent and expertise of our research and development team is what led to what I believe is a significant breakthrough in the Beyond IV platform. If you come to our facilities in Los Angeles, you will see that one of the analytical areas that we emphasize is the structure, interplay, and distribution of plant-based proteins and fats.
In Beyond IV, the team was able to blend high-quality proteins from fava beans, red lentils, peas, and brown rice together, with fats from avocado oil in a way to deliver superior nutrition and sensory outcomes. The nutritionals are clear and compelling, including high levels of plant-based protein, 21 g, specifically, with just 2 g of saturated fat, which is 75% less saturated fat than a typical 80/20 animal beef patty. Avocado oil has been identified as potentially beneficial across a range of health outcomes, including reducing the risk of various chronic diseases, among them heart disease, as well as potentially helpful with eye and skin health, reflecting its composition of monounsaturated fats, antioxidants, and other plant compounds. The critics will undoubtedly continue to agitate.
A favorite target is sodium levels, and the sleight of hand employed is to compare the Beyond Burger, which is seasoned, to an unseasoned ground beef burger. Keeping in mind that the current Beyond Burger contains 17% of the daily recommended value of sodium, which, when appropriately compared to seasoned beef burgers, often means less, not more sodium. Nevertheless, Beyond IV achieves a 20% reduction in the amount of sodium, with the sodium content now registering at 14% of daily values. Quick math reveals that even if you were to have seven of the Beyond IV burgers in a single day, this consumption alone would not exceed the daily recommended value of sodium. And here's the thing, we're not done.
As the critics position, talk, post, and lobby, we will keep chasing our own true north, that perfect build of meat from plants, and you can expect even lower sodium levels in subsequent generations. These and other advances in Beyond IV have earned recognition from important members of the health and nutrition community. This includes the American Heart Association's Heart-Check Program certification of a series of heart-healthy recipes featuring the Beyond IV Beef and Burger, the placement of the American Diabetes Association seal on our Beyond IV Beef and Burger packaging, as both products meet the nutritional guidelines of the American Diabetes Association's Better Choices for Life program, and the Clean Label Project certification of the Beyond IV Beef and Burger.
Moreover, in a survey of registered dietitians at a recent conference, 94% of these dietitians answered that they enjoyed the taste of the new Beyond Burger, viewed it as healthful and would recommend it, while broader consumer testing scored favorably across the taste, juiciness, and texture relative to our existing burger. Three, we are implementing changes to our U.S. trade and pricing programs, effective in early Q2. Though varied across channels and product lines, we expect the overall impact of these pricing changes to meaningfully impact margin across the balance of the year. This change in strategy does not reflect an abandonment of our long-sought price parity goal, which we in fact achieved in certain very specific offerings. Rather, the change reflects three main factors.
One, we clearly need to restore our margins, and this, coupled with a network consolidation I discussed momentarily, are expected to aid greatly toward this end. Two, the broad pricing programs we put in place over the last 18 months simply didn't accomplish the goal of crossing from early adopters into the mainstream. In retrospect, the noise and swirl surrounding the category reached decibels that were perhaps sufficient to drown out pricing and other messages. Three, given the aforementioned margin objectives, as well as the inclusion of certain premium ingredients in the Beyond IV platform, our pricing architecture is putting far more deliberate emphasis on tiered pricing across our product lines. Four, as referenced above, we are nearing the completion of what has been a very difficult but highly worthwhile consolidation of our production network.
Though we undertook these changes for myriad reasons, depending on the site and partner, we expect this right sizing to substantially contribute to margin. To give a sense of the magnitude of this restructuring effort, it helps to consider that in the last two years, we've contracted our production network from as many as 13 co-packers in North America to just one today. This consolidation, coupled with an emphasis on internal production, has obvious benefits relating to overhead absorption as well as logistics and quality control. Five, we are continuing to invest in our European business and related strategic customers. In a recent trip to the U.K., I was struck by what I am personally certain is the future of plant-based meat. That is, a growing ubiquity.
I was able to, within a radius of no more than 3 blocks, enjoy delicious Beyond Meat offerings at McDonald's U.K., Pizza Hut U.K., and Starbucks U.K. More generally, I routinely enjoy watching with much interest, the reaction of visitors at our headquarters in Los Angeles when they taste the McPlant nugget, which is now available in Germany. Almost universally, it is viewed as indistinguishable from its animal protein equivalent. Similar to the delicious aforementioned products at Pizza Hut U.K. and Starbucks U.K., this outcome reflects years of development and investment that helps separate Beyond Meat. Before moving on from Europe, I should note that across 2024, we look forward to a more fulsome entry into the German retail market, given our recent satisfaction of local shelf life requirements. In closing my comments, I want to properly frame the state of our business.
Over the last 12-18 months, we spent considerable time, energy, and resources reorienting Beyond Meat's trajectory amidst changing and challenging conditions, with an eye towards sustainable operations and a return to growth. To reiterate, these major steps include a potential leap forward in the value proposition of our core product lines, a steep reduction in our operating costs and cash use as we continue to implement lean management principles, the contraction of our production network to achieve quality and margin gains, and the implementation of pricing changes, also in support of margin expansion. As we look forward, we expect the early results from this extensive spade work, together with specific actions we plan to pursue to bolster our balance sheet, to make 2024 an important, promising year for the Beyond Meat story.
With that, I'll turn it over to Lubi, our Chief Financial Officer and Treasurer, to walk us through our fourth quarter and full year 2023 financial results in greater detail, as well as provide our outlook for 2024.
Lubi Kutua (CFO and Treasurer)
Thank you, Ethan, and good afternoon, everyone. Before diving into the components of our fourth quarter P&L, let me provide some color more broadly on the significant non-cash charges you will have seen in our press release today. You'll recall we announced in November 2023 that we were initiating a review of our global operations spanning five areas. First, the potential exit of select product lines. Second, changes to our pricing architecture within certain channels. Third, accelerated cash accretive inventory reduction initiatives. Fourth, further optimization of our manufacturing capacity and real estate footprint. And lastly, fifth, a review and potential restructuring of our operations in China. We recorded $67.5 million in non-cash charges in cost of goods sold this quarter in connection with our global operations review.
These charges consisted of a few different items, including the provision for certain inventory now deemed to be excess or obsolete, given changes to our strategic priorities, as well as more limited internal resources following our November 2023 reduction in force. We also recorded a significant charge representing accelerated depreciation expense on certain fixed assets determined to be non-core to our strategic priorities within the foreseeable horizon, but for which no recovery or sale value could be reasonably expected. Also, in connection with the global operations review, we recorded a non-cash write-off to cost of goods sold associated with a prepaid option to purchase certain raw material ingredients, which we no longer expect to exercise.
Within operating expenses, we recorded a non-cash charge of $17.6 million, reflecting the write down to estimated fair value of certain production and R&D fixed assets, which we now intend to sell. Of note, $16.3 million of the non-cash items recorded in cost of goods sold, and $3.6 million of the non-cash items recorded in operating expenses related to Beyond Meat Jerky, which we have made the decision as part of our global operations review to discontinue. Let me now briefly review our fourth quarter financial results before turning to our 2024 outlook. Net revenues decreased 7.8% to $73.7 million in the fourth quarter of 2023, compared to $79.9 million in the year ago period.
The decrease in net revenues was driven by a 14.6% decrease in net revenue per pound, partially offset by an 8% increase in volume of products sold. The decrease in net revenue per pound was mainly driven by changes in product sales mix and increased trade discounts, partially offset by favorable impact from foreign exchange rates. The increase in volume sold was primarily driven by sales in our international business, where we continue to see solid growth across our retail and food service channels. However, this was partially offset by softness in our U.S. business, where volumes declined in both our retail and food service channels, due mainly to continued category weakness and the lapping of certain business in our food service channel that did not repeat in Q4 2023. Turning to gross profit and gross margin.
Gross profit in the fourth quarter of 2023 was a loss of $83.9 million, compared to a loss of $2.9 million in the year ago period, which included the negative impact of non-cash charges totaling $78 million, taken in the fourth quarter of 2023. Of the aforementioned amount, $67.5 million was associated with strategic decisions arising from our global operations review, and $10.5 million was due to other special items, driven mainly by additional reserves for inventory associated with a large QSR customer and the write-off of a prepaid fee resulting from the termination of a co-manufacturing agreement in Q4 2023. Excluding the aforementioned charges, gross profit and gross margin were also impacted by lower net revenue per pound, partially offset by reduced logistics costs per pound compared to the year ago period.
Operating expenses were $76.9 million in the fourth quarter of 2023, compared to $62.8 million in the year-ago period. The increase in operating expenses included non-cash charges totaling $17.6 million associated with our global operations review, which I described a moment ago. Excluding these charges, operating expenses also reflected reduced non-production headcount expenses, lower restructuring expenses, reduced scale-up expense and lower selling expenses, partially offset by higher consulting fees compared to the year-ago period. Moving down the P&L, total other income net of $5.7 million was lower by approximately 1.2 million compared to the year-ago period, reflecting decreased, realized, and unrealized foreign currency gains.
Losses related to the company's joint venture with PepsiCo, the PLANeT Partnership, decreased by approximately $8 million year-over-year, reflecting the reduced scale of our jerky business versus the year ago period. Overall, net loss in the fourth quarter of 2023 was $155.1 million, or $2.40 per common share, compared to net loss of $66.9 million, or $1.05 per common share in the year ago period. Net loss in the fourth quarter of 2023 included non-cash charges totaling $95.6 million, as previously described. adjusted EBITDA was a loss of $125.1 million in the fourth quarter of 2023, compared to an adjusted EBITDA loss of $56.5 million in the year ago period. Turning now to our balance sheet.
The company's cash and cash equivalents balance, including restricted cash, was $205.9 million, and total outstanding debt was $1.1 billion as of December 31st, 2023. Net cash used in operating activities was $107.8 million in the year ended December 31st, 2023, compared to $320.2 million in the year ago period. Capital expenditures totaled $10.6 million in the year ended December 31st, 2023, compared to $70.5 million in the year ago period. Let me now turn to our full year 2024 outlook. We expect net revenues to be in the range of to $345 million, and net revenues for the first quarter of 2024 are expected to be in the range of approximately $70 million-$75 million.
Gross margin is expected to be in the mid- to high-teens and is expected to be higher in the second half of the year relative to the first half, reflecting the timing of anticipated pricing actions and further production insourcing activities. Operating expenses are expected to be in the range of $170 million-$190 million, weighted slightly more towards the first half of the year, and capital expenditures are expected to be in the range of $50 million-$25 million. Finally, in 2024, we plan to bolster our liquidity and potentially restructure our balance sheet. And with that, I'll conclude my remarks and turn the call over to the operator to open it up for your questions. Thank you.
Operator (participant)
We will now begin the question-and-answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Andrew Strelzik with BMO. Please go ahead.
Daniel Gold (Equity Research Associate)
Hi, thanks for taking my question. This is Daniel Gold on for Andrew.
Ethan Brown (Founder, President, and CEO)
Hi, Daniel.
Daniel Gold (Equity Research Associate)
When will the Beyond IV be rolled out, and will that be a phased rollout? And is pricing going to be rolled out alongside it? And what's the magnitude of pricing you plan on taking? And kind of what channels and geographies is that planned for?
Ethan Brown (Founder, President, and CEO)
Thank you for the question. So, we're very excited to have the Beyond IV come out. It will be shipping next month and probably start to gain broader distribution, April timeframe, and into May. And that'll be in U.S. retail. On pricing, there are two kind of separate issues. You know, the Beyond IV, as I mentioned in my remarks, was many years in the making, and we were able to get it out as we roll into the summer season this year. But it does coincide well with some pricing changes that we have to take.
And so, they will be largely coincident. And certainly it helps that there's some premium ingredients in the Beyond IV, and I think an enhanced value proposition in the Beyond IV to help support that pricing. In terms of the magnitude, we should probably talk with retailers first before getting into the specific details on that.
But, you know, the entire effort is really around making sure that we get back to very healthy margins. And we did a tremendous amount of work on this question around elasticity, worked with an external firm and looked across our portfolio at where we thought pricing, you know, had some headroom, or room rather, for growth. And so I think we've made the right decisions here and just look forward to rolling it out.
But it is really part, if I could just reiterate some of the things that I was saying on our introductory remarks, it's part of an entire effort to really reset the business after, you know, about 12-18 months of effort, to reorient what we're doing from a much more growth at all cost focused operating model, to one now that is highly focused on sustainability and profitability. And so the pricing increase is just one of those things. But if you look at all of the changes we're making, whether it's a substantial reduction in operating budget, we'll be down significantly from 2023 if we execute according to our 2024 plan, as well as a very substantial reduction in cash use.
If you look at the global staff cuts we've made over the last several years, you know, the one that we did in November was not insignificant at about 19%. And so I think we're—we've really right-sized the business, to—for the size of the current opportunity and the growth that we want to create ahead. Pricing, you know, is a very significant tool in restoring margin, but it's not the only one. We're also well underway in terms of production efficiencies that we've been chasing. And, you know, if you think about the magnitude of the effort over the last several years to put the business into a footprint that's consistent with the current opportunities, you know, we're going from 13 manufacturing locations that are external to our company, down to one.
And bringing a lot of that production in-house, to benefit from much higher overhead absorption and some material flow efficiencies and things of that nature, reduce logistic costs, so on and so forth. So it's really part and parcel with an entire effort to reorient the business towards sustainable and then profitable organizations. I think I mentioned in the opening remarks that, you know, we're gonna be discontinuing jerky. It's the same idea there. And then this last, you know, global business review to take out some of the excess inventory and assets that we have from a write-down perspective, and then be able to monetize those, less pressure on us.
So all these things, again, we were at one size, and needed to get a little bit leaner. I think we've done that now, and so in 2024, I very much look forward to a lot of this coming to fruition and this reset beginning to really show.
Daniel Gold (Equity Research Associate)
That's very helpful. Thank you. Just one more from me. Can you speak to your confidence in the gross margin guide?
Ethan Brown (Founder, President, and CEO)
I'll give that to Lubi, but I think the two main features that I just referenced, one is the pricing change, as well as this consolidation of our production network and the increased or continuing rather COGS reductions that you see throughout the last 12 months. Those will, I think, help significantly, and then also clearing out of some of the higher reserve levels we've had. But Lubi?
Lubi Kutua (CFO and Treasurer)
Yeah, you know, not a whole lot to add to that, but, you know, I think just generally in speaking to sort of our confidence level, we feel pretty good about it, right? And so, you know, we did say in the guidance that we provided, that we expect gross margins to be higher in the back half relative to the first half, and that's related to, you know, some of the timing around some of these actions. You know, Ethan already discussed the pricing. You know, one thing that we have communicated on prior calls as well, is that we are, you know, rolling back to some degree, right, the level of promotions, you know, that we've done.
You know, we really did some aggressive promotions in 2023 as a means of trying to draw more consumers into the category. We're taking a little bit of a different approach this year. You know, the insourcing of finished goods production, you know, is something that I think, you know, should not be underestimated. As Ethan said, it really gives us an opportunity to sweat our assets more and benefit from the fixed cost absorption. You know, as well as the fact is, it helps us from a logistics cost perspective as well, right?
You can imagine if you have 8 or 10 different co-manufacturers in your network, you know, you're, you're transporting ingredients and, you know, work in process items to multiple locations, that starts to have a, you know, detrimental effect on your logistics costs. And so all of these, these things combined, I think, give us, you know, pretty, pretty good confidence that we should be able to achieve the, the margin targets that we're, that we're, we're seeking.
Operator (participant)
The next question is from Adam Samuelson with Goldman Sachs. Please go ahead.
Adam Samuelson (VP)
Yes, thank you. Good afternoon, everyone.
Lubi Kutua (CFO and Treasurer)
Good afternoon.
Ethan Brown (Founder, President, and CEO)
Good afternoon.
Adam Samuelson (VP)
Hi. So, I just wanna—Lubi, Ethan, I wanna just make sure I'm thinking about the 2024 outlook pieces correctly. Given the revenue outlook you've given, given the gross margin outlook for kind of mid to high teens, the operating expenses, and there's some non-cash in stock comp, so it's not all cash, but there's also the CapEx. It would still look like the cash burn based on the gross margin, less the OpEx, less the CapEx, add back some non-cash in stock comp, you would still have a cash burn from operations in 2024 of $100 million+. And am I missing something in terms of the non-cash expenses in there?
Because I'm just trying to think about that level of cash burn in 2024 relative to an ending cash balance in 2023 of, I think, $205 million, arguably kind of expecting to burn half or more of your cash balance in 2024 before further liquidity actions.
Ethan Brown (Founder, President, and CEO)
Yeah, I can. I'll answer that at a high level, then hand it over to Lubi. I do think we should probably, after the call, work through this with you on some of the puts and takes. We're pretty comfortable that it's gonna come in at a reasonable number and, you know, lower than 100, certainly at the midpoint. But Lubi can get that as well.
Lubi Kutua (CFO and Treasurer)
Yeah. So Adam, I, I'm not sure, you know, what the, what assumptions you're baking in there in terms of, you know, some of the, the non-cash, add backs. But, you know, I, I think the, the number that you're, you're sort of, you know, that you referenced there, roughly $100 million, you know, I think if you just, looked at sort of, you know, if you, you look at some of the big non-cash items, the depreciation and stock comp from last year and factor that in, and, and then just take our guidance, you know, I, I... That, that would put us sort of right at the range that you're, you're talking about. You know, obviously, we expect to do better in, in certain areas. The other thing that's not, baked into those numbers, right?
We did you know, part of the reason why we have these significant non-cash charges is we're writing down, you know, certain fixed assets, right, to estimated fair value so that we can sell them and start to monetize some of those assets. Doing the same thing on the inventory side, and so that should, you know, provide some benefit to cash as well. We you know we did talk about we're looking to bolster our liquidity. So look, we're doing everything that we need to do to fix sort of the fundamentals of the business so that we are fundamentally a lower cash consumption business, right? With a longer term goal, obviously, of getting to sustained free cash flow positive.
But, you know, we're being responsible as well. And, you know, this is why, you know, one of our objectives for 2024 is to bolster the balance sheet. But, you know, like I said, there's other puts and takes that, you know, just our guidance alone on its face would not necessarily consider, but we think will provide a little bit of upside relative to the number that you were estimating.
Adam Samuelson (VP)
Okay. All right, that's helpful. Let me take that offline. If I could ask a follow-up just on the outlook for revenues, which you have down 8%, so it's a roughly flat year-over-year for 2024. What are volumes assumed in that at this juncture? I'm just trying to get a sense of how much price elasticity you really think would come from the higher price increases, the higher prices, particularly in U.S. retail.
Lubi Kutua (CFO and Treasurer)
Yeah. So we don't necessarily guide to, you know, to volume, right? So we gave you the revenue dollar projection. But what I can say is, we looked at price elasticities very deeply as part of this exercise, and we're looking at our pricing, and it is going to vary by channel and region, et cetera. But, you know, we believe and we feel pretty confident, right, that some, in some of the areas where we are looking to take pricing, that the, you know, elasticity, you know, with the changes in price will offset or more than offset the, you know, anticipated loss of volume as a result of the price increase. So I don't wanna get too specific on volume numbers, but you know, generally speaking, right, we would expect the elasticity to be less than one.
Adam Samuelson (VP)
Okay, so just to be clear there, if you're still having revenue dollars down, but the price increase is offsetting the volume declines, is the revenue declines, the dollar declines, a function of exiting product lines or regions? Or what then would be driving—what would be underpinning the revenue dollar decline expectation?
Lubi Kutua (CFO and Treasurer)
Yeah, so some of it, like, so there is some exit of product lines. You know, we talked about jerky as an example. The other thing is, you know, the reality is our U.S. retail business, right, continues to be challenged, and so there is some assumption in there, which, you know, we hope will turn out to be conservative. But nonetheless, you know, we've seen baseline velocity erosion in U.S. retail channel. And so we're trying to factor that in, you know, particularly on the downside. So, you know, those are sort of the key drivers, I guess, when you look at the lower end of the range.
Ethan Brown (Founder, President, and CEO)
I think that's right. The continued kind of vulnerability in U.S. retail is something that just as you do your models, as we do our models, right, we didn't want it too rosy a picture around. I think the general notion here is that we're doing a massive product launch that's you know, I think transformative in terms of what we've done over the last eight years. It's probably the most important renovation we've done since the Beyond Burger. And then we're also taking price. So the two of those make it very hard to predict with a ton of certainty any type of growth. We just don't know. So we wanted to come in with something that was reflected kind of current information and hope to change it and have a better outcome.
Adam Samuelson (VP)
Okay. I appreciate all that color. I'll pass it on. Thank you.
Operator (participant)
The next question is from John Baumgartner with Mizuho. Please go ahead.
John Baumgartner (Managing Director)
Good afternoon. Thanks for the question.
Ethan Brown (Founder, President, and CEO)
Sure.
John Baumgartner (Managing Director)
Wanting to stick with the guidance for next year and specifically the OpEx. I mean, the midpoint you're guiding to, it's about like a 25% drop from, you know, your recent sort of run rates. The global force reduction announced last quarter, I guess, explains a small part of it. But I'm trying to understand the rest of that decline, especially in the context of what I guess seems to be more reinvestment in marketing and brand building at this point.
Ethan Brown (Founder, President, and CEO)
So I think I've said this before, but, you know, one of the things I like to say about marketing is that, you know, marketing is a lot easier when it's true. And, what that really gets to is, you know, you got to have a great product. And I think Edwin Land said it in an even more pointed way, which was, "Marketing is what you do when your product's no good." And you know, what we have to do, right, is reengage the consumer, into this entire category with products that are really delivering value to them in a way that they understand. And so for us, that's, you know, really about continuing to improve the taste, which I think we've done with Beyond IV, but also addressing this fundamental issue around health.
You know, as I said in my prepared remarks, you know, we, we really do have a set of products that today can deliver fantastic health outcomes. I've seen it in my own life, in my family's. I've seen it in, you know, studies we've done with Stanford, which I won't belabor today, and others. But, what we wanted to do was take it another level, and we wanted to continue this march toward that perfect build. And I think we've, we've taken a really big step here. It is not just an iteration, it's, it's something that's more transformative than that.
And so to be able to have these products where you're enjoying the satiating experience of having a burger or having a bolognese or whatever you decide to do with it, and yet having an oil that, for example, many in the nutrition community and medical community would characterize as heart healthy, is something that is new. And it's something that changes the dynamic of the decision. You know, this went from 5 g to 2 g of saturated fat. And it's not just the composition of. Sorry, it's not just the level of the fat in our product, it's the fact that it now comes from a source that I think is very well identified as delivering benefits, not just because of the low levels, but because of what's in it.
So this is things like polyphenols, antioxidants, and other plant compounds that, you know, depending on what study you want to look up, you know, people have attributed to, you know, being helpful in the area of cardiovascular disease or dementia or you know the health of your eyes or skin, whatever it is, there's a lot of benefit here. We've also been able to reduce the sodium, which, as I said before, is a red herring, but it's still there, and something we have to address. And so at 14% of daily value now, you know, that's a significant improvement. And then you look at the proteins, you know, whether we're using not just pea protein, but by going with red lentils and fava beans and brown rice, we've increased the protein amount.
So you have a product that fundamentally delivers a stronger value proposition, and you'll certainly get a market around that, but there's also word of mouth in this community, and there's a strong desire, whether it's the health community or the environment community or the animal welfare community, for these products in this category to come back. And so I think we're going to leverage that, and you'll see us work, you know, a lot with registered dieticians and nutritionists in the medical community, as well as with these very large health organizations. I mentioned American Heart Association, American Diabetes Association. In fact, the American Diabetes seal will be on the package itself, Clean Label Project and others.
So, you know, we're going to have to market for sure, but we're also going to do it in a way that, look, this is a fundamental shift in the value proposition. It's enhanced, it's increased, and I think people will begin to realize that. So this use of grassroots marketing, this use of institutions that are standing behind this, I think will allow us to do it much more efficiently. And so some of the costs we've cut out of the business, you know, I think only help us to become profitable more quickly versus hurt us from a marketing perspective.
John Baumgartner (Managing Director)
Okay, I don't know if-
Lubi Kutua (CFO and Treasurer)
No, I think you covered it.
John Baumgartner (Managing Director)
Okay, then to follow up on the gross margin guidance for 2024, the improvement there, how much does that rest on the price increases? I mean, I guess it sounds as though you're not building in much operating leverage from new volume growth. The Coleman consolidation, I think, has been accruing sort of quietly all along. And then with the China anti-dumping duties and the pea protein, I imagine input costs can't be all that beneficial this year. So it feels like the gross margin expansion in the guide, a fair amount of it just boils down to the price increases. Is that right? I guess, can you walk through kind of the relative contribution and magnitude there for the drivers?
Ethan Brown (Founder, President, and CEO)
So I think, you know, you, you hear me talk a lot about, how proud I am of the research and development team here. And, I often, spend more time on it than I do on the operations team. And one of the things that I have felt hasn't been fair, not fair, but just has been unfortunate, is that, you know, they're doing a really good job driving our fundamental cost structure down, right? Whether it's our facilities in Pennsylvania or Missouri, I mean, these are great operators that are really driving, efficiency.
And every quarter we have something that comes up, you know, whether it's we're dislocating from one co-packer and there's some fees or, you know, some high reserves coming in from legacy products or partnerships that have kind of disrupted that, right, and have not allowed them to shine publicly, although I see what they're doing. And so as we steady and kind of bring in the production network, I think some of those savings that we're achieving in our facilities will start to come through a little bit better. And an example of that is just the, you know, as we're taking production out of external networks and into internal, the utilization rates in our facilities are significantly improving. Overhead absorption is significantly improving.
So these are things that I think even though we're gonna be using, for example, in Beyond IV, some more premium ingredients, they kind of are offset and then even driven down somewhat over time by the internalization of our production and the continued reduction in overall cost. So for the guys who are listening and the gals who are listening, appreciate it, and you know, you guys get to keep it up. We're finally gonna be able to show it.
Lubi Kutua (CFO and Treasurer)
Yeah, I would just add, you know, I think it's fair to say that, you know, the price increases are a significant factor that play into the gross margin expansion that we're targeting, for next year. But it's not just that, you know, as Ethan mentioned, right, there's a lot of stuff that's been going on, you know, just across the, you know, the production, our operations, organization, et cetera. You know, the other thing in addition to just, you know, price increases, we talked about pulling back on trade. So the combined, you know, impact of those two things, right, actually has a pretty potentially meaningful impact on overall net revenue per pound. And then, you know, you mentioned the internalization, right?
The increased insourcing of our finished good production. You know, and you mentioned that, you know, some of that has pretty much been accruing already. You know, I think that's true, but there still was a lot of noise in our cost of goods in 2023. You know, even as we were internalizing, we're still dealing with, you know, things like underutilization fees and things like that. And I think, you know, that type of stuff should be significantly reduced in 2024. And so now I think we, you know, we are in a position where we start to benefit in a much more meaningful way from bringing a lot of those production volumes in-house.
Then I mentioned a little bit earlier that, you know, there should be benefits as well from, you know, just a more streamlined network overall, in terms of logistics costs. When you look at some of these initiatives that we're targeting now to, you know, reduce overall inventory balances, that benefits, you know, warehousing costs and things like that. You know, even the, you know, reclassification of some of, you know, these fixed assets to held for sale, right, will have a beneficial impact from a depreciation perspective, right? And so, you know, you combine all of these things together and, you know, that makes us feel pretty optimistic about, where gross margins can go this year.
John Baumgartner (Managing Director)
Okay. Thanks, Lubi. Thanks, Ethan.
Lubi Kutua (CFO and Treasurer)
Sure.
Operator (participant)
The next question is from Robert Moskow with TD Cowen. Please go ahead.
Robert Moskow (Managing Director)
Hi, thanks for the question. Ethan and Lubi, it looks like the center of gravity is gonna continue to shift to international markets for your business. Can you speak to the profit margin profile of operating internationally? How is it different from domestic? Can you operate at a respectable margin overseas, or are there complicating factors that make it more difficult than here?
Ethan Brown (Founder, President, and CEO)
Thanks, Robert. It's good to hear from you. So, you know, when we think international, obviously, I've said a lot about Europe in the past, and in some sense, you know, that's becoming kind of its own operation over there. So it's not necessarily like we're shipping things from here or anything of that nature. They're driving a lot of the same cost reductions. We have a terrific partner there, who does some of our production, and is really a very good general manager there and team. So I think, you know, I don't foresee that being particularly challenged from a cost perspective.
We're still pretty nascent there, and so we do have to continue to adjust downward the cost structure, but that's possible, and it's something that we'll continue to focus on, because some of our retail pricing, for example, is just too high for those markets, and so we need to continue to adjust it. But that comes with time and further localization of our network, which is doable. We just need to take the time to do it. And then on the, you know, kind of food service side, we'll continue to drive cost out of those products and improve margin. And I think you'll start to see that come through in 2024. But Lubi?
Lubi Kutua (CFO and Treasurer)
Yeah, not, not a lot I would add to that, Rob, you know, but I think fundamentally, if you look at our international business, relative to U.S., it does skew more towards food service. And, you know, we have, we've built a pretty meaningful business now with, you know, some of the large, QSR customers in international. And so, you know, as you can imagine, the, the margin profile for that business would look somewhat different for- than on the retail side. But, you know, I guess the, the short answer to your question about, you know, the- do we, you know, have respectable margins in, in international? I would say yes, right?
But as Ethan mentioned, there's still, you know, a number of things and initiatives that we're pursuing to, you know, to bring about even further improvement in margin in the international business.
Ethan Brown (Founder, President, and CEO)
And it is striking to see, and that is not directly responsive, but just use it as an opportunity. It is, it is striking to see the difference there, in terms of uptake, of the category and products. The thing I mentioned, you know, in my prepared remarks is, is significant. You know, within a several block radius in London, you know, you're going to McDonald's and getting Beyond Burger, you're going to Starbucks, getting a Beyond Sausage, Pizza Hut and getting, you know, Beyond Pepperoni.
It's, you know, these trends tend to be stronger in Europe and then come over here, and that's certainly our hope that we'll get through the politicization of these protein choices here in the U.S. and just get back to, "Hey, let's do something that's good for our health, good for the environment.
Robert Moskow (Managing Director)
Well, Ethan, I'm very, very impressed that you're, you're going to McDonald's and, and Burger King in London when you visit there, so keep up the good fight. But-
Ethan Brown (Founder, President, and CEO)
Thanks.
Robert Moskow (Managing Director)
Yeah, but you also mentioned that pricing is too high for some of your products in the market. I think you've said that before.
Ethan Brown (Founder, President, and CEO)
Yeah.
Robert Moskow (Managing Director)
Can you be more specific as to why that is? Is it, is it more commoditized, the category in Europe, or, or how, how do I think about that?
Ethan Brown (Founder, President, and CEO)
Yeah. No, it. I'll have Lubi give the details on it. But it's, it's, I was talking about retail, and, it just, we're still, you know, thinking about Beyond Meat since 2009 here in the United States. Like, we're, we're still kind of getting going there in terms of the overall, production process and, and things of that nature, but clearly further along, than we were at that point. But Lubi can give some, some, detail.
Lubi Kutua (CFO and Treasurer)
Yeah, Rob, you know, I think one of the differences when you look at the retail landscape in the EU versus the US is they have a much larger private label presence, right? And so I think the penetration of private label in the EU is about double, you know, here in the U.S. And so there is a much broader, I guess, portfolio of items that compete in our category that at a much lower price. And you know, the consumer in the EU does seem to be, you know, a little bit more predisposed towards private label than maybe the average U.S consumer.
We, two years ago, you know, took some steps to close the price gap of our products relative to the broader competitive set in the EU. But, you know, certainly, certain product categories where we still remain at a pretty healthy premium. And I think over time, the goal would still be to try to compress that gap somewhat. You know, not necessarily, you know, I don't know that there's a need to come down to the level of private label in the region, for example, but there are areas where we think that the price gap is still wider than where it needs to be. But that's something that will occur over time. You know, I don't think it's something that we're immediately looking to, you know, to address.
And so, that's, you know, that's just some general fundamental differences, I think, between the trade in the EU versus the U.S.
Robert Moskow (Managing Director)
Okay, thank you.
Ethan Brown (Founder, President, and CEO)
Thank you.
Lubi Kutua (CFO and Treasurer)
Thanks, Rob.
Ethan Brown (Founder, President, and CEO)
Sure, thanks, Rob.
Operator (participant)
The next question is from Alexia Howard with Bernstein. Please go ahead.
Alexia Howard (Senior Analyst)
Thank you. Good evening, everyone.
Lubi Kutua (CFO and Treasurer)
Hi, Alexia.
Alexia Howard (Senior Analyst)
So, can we just get back to the dynamic in the U.S., and how do you go about re-recruiting lapsed consumers? If people were somehow disappointed in previous products, what propels them back into this, especially if the price gaps to animal meat products are expanding because of the price increases you're planning to take? And then specifically, I guess, linked to that, is marketing spend expected to be up or down in 2024?
Ethan Brown (Founder, President, and CEO)
I think on the question of bringing people back into the category, the biggest deterrent has been this health question, right? And, you know, you've heard me talk about it before, that there's a, you know, it's not without impetus and support from the incumbent industry. And that needs to really be looked at as well. I mean, it is. It's not just the animal protein players and their lobbyists, but it's actually the members of the pharmaceutical industry, which I find to be kind of disturbing, actually.
And so we had to write the message and, you know, we can do that by yelling from the rooftop about the benefits of our existing products, or we can just try to make them even more healthier and unassailable at some point. So that's what we've done, I think with Beyond IV. We'll continue to do it. You can expect future iterations to continue to drive improvements. And then it's linking up with associations and national institutions that really can validate what we're talking about, and they help develop these products. That's the fascinating part about this work, is that we didn't just do this, you know, with in a conference room on our own.
We were out in the community talking to doctors and nutritionists and each of these institutions. Our head of communications did an amazing job pulling together an ecosystem of doctors and nutritionists and different national health organizations, as well as universities, and we listened and we worked very closely with them. I can go back to individual conversations with individual doctors that relate to specific inputs that we used. And so I do think that there's an opportunity here for a more organic style of marketing that relies on the power of social media that relies on the fundamental truth of the products to bring people back in. This wasn't just a health upgrade. This was something that for years we've been focusing on creating much more of a neutral beef taste.
You know, as I've mentioned many times, there's over 4,000 molecules that make meat taste like meat, and our job is to use the scientific expertise we have here to match those with analogous or the same molecules and plants, and then find out what the main drivers are and incorporate those into our products. And I think the team has done an amazing job with this product, doing that. So you get a benefit in health, you get a benefit in taste, and you get the word out. And, you know, we've been very successful over the last decade in using people in a position of influence within society to carry that message because they believe in it.
And when the message is this powerful, when you have the opportunity to help people really improve their cardiovascular health, to really improve the risk outcomes that they face in their day-to-day life from a health perspective, there are folks in a position of influence that wanna talk about that. And so you're gonna see us go back to that playbook in a very big way to get this message out. And, you know, whether it's ambassadors or influencers, whether it's some of the institutions, when you're trying to do something that's good and people recognize it, and there's a lot of truth to it, you tend to get help. And I think, we're gonna get a little help from our friends on this one.
Alexia Howard (Senior Analyst)
When will it be out on shelf? Is it a national launch in the first half of the year?
Ethan Brown (Founder, President, and CEO)
Well, if that's a personal question, I can send you some.
Alexia Howard (Senior Analyst)
Okay. It's kinda, I suppose, you know, if it really is that big of a leap forward. And just coming back to the marketing spend, is that gonna be up or down this year, overall? Just and then I'll pass it on.
Ethan Brown (Founder, President, and CEO)
Okay.
Lubi Kutua (CFO and Treasurer)
Yeah, Alexia, we do expect, in aggregate, our marketing spend to be down. As you can imagine, if you look at, you know, our guidance, our OpEx guidance, and you know, what that implies in terms of a year-over-year decline, we, you know, we are taking pretty broad cuts, you know, across the organization. But I think, you know, when you start to dig down into specific areas of the business, specific departments, you know, what really matters is, you know, how that spend is going to be directed. And, you know, so Ethan, you know, touched on this, but, you know, it, it's really the mix of the marketing spend and, you know, really taking a targeted approach, being very deliberate, you know, about where we wanna spend those marketing dollars.
So in aggregate, yes, it will be lower, but,
Ethan Brown (Founder, President, and CEO)
And just one comment on pricing. You know, that you're right, that in certain areas there will be a, you know, more of a delta between animal protein and ourselves, but in others there will not be. And so this is not a kind of, you know, crude application of a price increase. You know, we have some very important partnerships and relationships where, you know, depending on the product line, there won't be much change. And so including in retail, that you'll see some products where there's really not that much change. But in the aggregate, based on the last 50 studies we did, we'll get a nice bump in terms of margin while still offering the consumer, you know, value for those that want it.
Alexia Howard (Senior Analyst)
Great. Thank you very much. I'll pass it on.
Ethan Brown (Founder, President, and CEO)
Sure.
Operator (participant)
The next question is from Peter Saleh with BTIG. Please go ahead.
Peter Saleh (Managing Director)
Great, thanks for taking the question. Sounds like you guys have done a lot of work on pricing and the level of pricing, and it sounds like it's a pretty meaningful change in your strategy. So I'm just curious, is this—are you thinking about this as a one-time price hike to kind of get you in order here? Or is this just a real meaningful change in strategy, where you're thinking, you know, this will be a hike this year or maybe two hikes this year and, you know, more price hikes as we go forward? Just trying to understand how this strategy is really evolving on pricing. And then can you just elaborate a little bit on your tiered pricing comments? Is this tiered by distribution channel, by product, are some prices coming down or are all prices going up? Just trying to understand those comments. Thanks.
Ethan Brown (Founder, President, and CEO)
Sure. Yeah, I don't think it's a change in the long-term strategy. I mean, if you think about. And this is something that I find endlessly fascinating, but won't dive into too much here. But just the incredible efficiency you have when you take a set of amino acids from plants versus, you know, waiting for the animal to process and develop them and bacteria, and turn nitrogen into protein, all that stuff, you know, it's just more efficient. And so there will be a day when, you know, this dramatically underprices animal protein, but that's not today. We did achieve price parity with certain products in certain markets recently. But yeah, in my view, and that was not a certainly a global statement at all in terms of the products.
Like, we still have a big delta for most of our products. But I will say that the pricing measures we took, I don't know they made that much difference. You know, I think, there was so much noise in the category, so much noise about the category, so much agitation outside the category with, you know, people saying negative things about the category, scaring consumers away, that pricing just wasn't that as effective a tool. And my view is we probably ended up selling a lot of our products to the same consumer at a reduced price. We learned that and moved away from it.
But I do think there's a real opportunity to continue to offer, you know, outstanding innovation year after year that does have a more premium price on it while you continue to offer some of the rest of your portfolio at a lower price. And so I do think you'll see that from us. And so when we talk about tiered, part of that is that type of dynamic. I think the other is with particular customers and channels. You know, if you think about very large strategic customers that are selling, you know, let's say, billions of burgers a day, you know, that type of customer price sensitivity is so important. And so, we'll continue to drive those type of products to parity as quickly as we can.
I hope that helps.
Peter Saleh (Managing Director)
Yeah, no, that's very helpful. And then just lastly, on my end, given all the changes you guys are making, do you expect this to have a material impact on the number of doors that you're in, in 2024?
Ethan Brown (Founder, President, and CEO)
Yeah, I think it's too early to tell. And I meant to say it's billions served, not per day. I think it's just too early. Yeah, too early to tell.
Lubi Kutua (CFO and Treasurer)
Yeah, I mean, but Peter, the one thing that I'd call out in terms of distribution outlets is, you know, we said that we are discontinuing the jerky product. And, as you know, there were, you know, there was a pretty significant distribution presence related to that product. You know, it got us into certain channels like convenience, for example, where, you know, you look at the rest of our portfolio, it doesn't really play there. And so, you know, certainly on the U.S. retail side, you know, if you include, right, the impact of jerky, that those numbers should come down. But, you know, apart from that, I think we're pretty well distributed across U.S. retail, so I wouldn't expect too much movement in those numbers.
I think we would expect over time to continue to grow our presence across U.S. food service. And then it still feels like pretty early days for us in international, quite honestly. And so I think there's room for further distribution expansion in international markets in the E.U. and other areas. And you know, even same on the international food service side.
Peter Saleh (Managing Director)
Great. Thank you very much.
Ethan Brown (Founder, President, and CEO)
Sure, sure.
Operator (participant)
The next question is from Ben Theurer with Barclays. Please go ahead.
Benjamin Theurer (Managing Director)
Yeah, thank you very much, and I'll keep it short. So thanks for squeezing me in.
Ethan Brown (Founder, President, and CEO)
Sure.
Benjamin Theurer (Managing Director)
To follow up a little bit on some of the dynamics in food service and kind of the success international versus the declining trends in the U.S., and also wanted to bring this back to some of the partnerships over the years you've laid out with Yum! Brands, with McDonald's, and so on. So I know, Ethan, you've talked a lot about the McDonald's case over in the U.K. But what are you seeing, particularly with those food service players in the U.S. as it relates to your products and the rollout of those? That any color you can share on that would be much appreciated.
Ethan Brown (Founder, President, and CEO)
Thank you very much for the question. It's a fair one. You know, as I've done in the past, I really need to let those partners, you know, comment on their view on the category versus, you know, we're just a supplier to them, so I wanna be careful on that front. I think that they look to the type of success we're having in Europe and then make decisions based on what they're gonna bring here.
But I will say the climate here has been so, I use the word politicized earlier, and clouded, you know, with just misinformation and things of that nature, that we really have to straighten that out first, from a, get the right information out there, make sure the consumer understands the value proposition, and I think the rest will follow from there. I mean, if I could, just on this Beyond IV, that we're rolling out, you know, what we're trying to do here is create a question, in the consumer's mind as to why wouldn't you do this, right? And of course, if it's too pricey, that's an answer, but we don't think it'll be prohibitive in its pricing. And the health benefits are so clearly there, the support from the medical and nutrition community is there, and, and, you know, the taste is there.
So, and obviously, environmental benefits and, and, and you know, we'll answer your question, but the ability to solve the main issue that people are wringing their hands about with climate through a change in how we get protein to the center of the plate, is absolutely phenomenal. And if you talk to people who study these issues, whether it's the gentleman at Yale that's in the video we did for Beyond IV, or folks at NYU, Matthew Hayek is one of them, who study this. And the use of land and biomass to bring carbon back out of the atmosphere, and cool our climate and to reduce methane emissions, associated livestock, et cetera, so on and so forth, it's an incredible opportunity.
So we're gonna make sure the consumers understand that, that when we're talking about healing their body and helping them to achieve better health outcomes, we're also able to do that on the planetary side. At some point, it becomes such a powerful value proposition. The consumer does come back in. We need to take it away from the politics. We need to take it away from us versus them. You know, farmers should be very much involved in this and making a great living doing it, not only growing our crops, but potentially receiving funds from the government to sequester carbon. It's a real path forward for our country and for the globe.
So I think we just have to get people excited about that concept again, and the rest of the industry will follow, in terms of, you know, restaurants and things of that nature. But, you know, for us to apply a lot of focus on that this year is probably not the right area. Let's continue to be successful with them in Europe, and then let's see what unfolds here in the U.S. in the future.
Operator (participant)
This concludes our question and answer session. I would like to turn the conference back over to Ethan Brown for any closing remarks.
Ethan Brown (Founder, President, and CEO)
Great, thank you. I would encourage folks to visit, we put it in the press release, with the video that we put together around Beyond IV. Again, to get a sense of the health benefits and to get a sense of the global environmental benefits. Both of them are very strong. I think both will bring the consumer back to this discussion. And, you know, tasting is believing. We're a try and buy type brand. And as folks taste this new iteration, I think they'll be quite pleased with it. So, you know, we're cautious in our optimism.
We've obviously had some tough years, but by making these changes and creating the sustainable baseline from which we can grow, we're gonna create some room for ourselves to execute and get back on track for growth. Thanks, everybody.
Operator (participant)
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.