Q4 2023 Oatly Group AB Earnings Call

February 15, 2024

Operator: Good day, and welcome to the Oatly fourth quarter 2023 earnings conference call. All participants will be in a listen-only mode.

Good day and welcome to the elderly fourth quarter 2023 earnings conference call, all participants will be listen only mode.

Operator: 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 the star key, then 1 on a touch-tone phone.

Do you need assistance. Please signal a conference specialist by crashing Dave Starkey followed by zero.

After todays presentation better if you had an opportunity to ask a question.

To ask a question you May press Star then one on a touchdown fun. So it's they're all your question. Please press Star then two.

Operator: To withdraw your question, please press star, then 2. Please note, this event is being recorded. I would now like to turn the conference over to Brian Kearney, VP of Investment Relations. Please go ahead, sir.

Please note. This event is being recorded I would now like to turn the conference over to Brian Kearney that.

VP of Investor Relations. Please go ahead Sir.

Brian Kearney: Good morning, and thank you for joining us today on Oatly's fourth quarter 2023 earnings conference call. On today's call are our Chief Executive Officer, Jean-Christophe Platon, our Chief Operating Officer, Daniel Ordonez, and our Chief Financial Officer, Mauricio Saiz, W. Before we begin, please review the disclaimer on slide three. During this call, management may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our future results of operations and financial position, industry and business trends, business strategy, market growth, and anticipated cost savings. These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could differ materially from actual events or those described in these forward-looking statements. Please refer to the documents we have filed 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.

Good morning, and thank you for joining us today on <unk> fourth quarter 2023 earnings conference call.

On today's call are Chief Executive Officer, John Kristoff.

Our chief operating officer, Daniel or don't Yes, and our Chief Financial Officer, or you just say.

Before we begin please review the disclaimer on slide three during.

During this call management may make forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995, including statements regarding our future results of operations and financial position industry and business trends business strategy market growth and anticipated cost savings.

These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could differ materially from actual events or those described in these forward looking statements.

Please refer to the documents we filed 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.

Brian Kearney: (Inaudible) While the company believes these non-IFRS financial measures will provide useful information, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with IFRS. Please refer to today's release for a reconciliation of non-IFRS financial measures to the most comparable measures prepared in accordance with IFRS. In addition, Oatly has posted a supplemental presentation on its website for reference. I'd like to now turn the call over to John Kristof. Thank you, Brian. And good morning, everyone.

Also please note on today's call management will refer to certain non <unk> financial measures, including EBITDA adjusted EBITDA constant currency revenue and free cash flow.

Company believes these non <unk> financial measures will provide useful information and the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with IRS.

Please refer to today's release for a reconciliation of non <unk> financial measures to the most comparable measures prepared in accordance with IRS.

In addition, only has posted a supplemental presentation on its website for reference.

I'd like to now turn the call over to John Kristoff.

Thank you, Brian and good morning, everyone.

Jean-Christophe Platon: Slide 5 has the key messages that I want you to take away from today's presentation. First, 2023 was a pivotal year for the company, where we focused on stabilizing and recalibrating our business. We achieved a lot last year, including fully funding our business plan by raising $465 million, Conditioning our senior leadership team, taking actions to right-size our SG&A structure, doubling down on our asset-light supply chain strategy by entering a long-term strategic partnership with Yaya Foods, as well as discontinuing the construction of production facilities in the US and the UK, both of which will help us better focus our operations while adding appropriately timed expansion and And we have also increased our focus on the most profitable parts of our business to ensure that our goals will be profitable and sustainable.

Slide five as the key messages that I want you to take away from today's presentation.

First 2023 was a pivotal year for the company.

We focused on stabilizing and Recalibrating our business.

We have achieved a lot last year, including <unk>.

Fully funding our business plan by raising 465 million.

Transitioning our senior leadership team taking.

Taking actions to right size, our SG&A structure.

Doubling down on our asset light supply chain strategy by entering a long term strategic partnership with <unk> foods as well as deep continuing the construction of the production facilities in the U S and the U K, both of which will help us better focus on operations.

While adding appropriately timed expansion and capital efficiency.

And we also increased our focus on the most profitable parts of our business to ensure that our goals will be profitable and sustainable.

Jean-Christophe Platon: We did this all while improving our financial profile, and we ended 2023 with a solid fourth quarter where both top and bottom line results exceeded our expectations. As we look forward to 2024, our financial guidance reflects solid top-line goals while delivering significant bottom-line improvements as we maintain our focus on driving this business towards profitable goals. Specifically, for the Food Year 2024, we are guiding to the following constant currency revenue growth in the range of 5 to 10 percent and adjusted BDA losses in the range of $35 to $60 million, and for capital expenditure to be below $75 million. Slide six gives you an overview of the progress that we have been making on moving each region towards consistent, profitable growth. You may recall that we began with the EMEA segment, where we prepared for goals by taking clear strategies for our team. We also increased the simplicity of the region by reducing the spans and the layers in order to enable them to move quickly.

We did this all while improving our financial profile and we ended 2023 with a solid fourth quarter with both top and bottom line results exceeded our expectations.

As we look forward to 2024, our financial guidance reflects solid top line goals, while delivering significant bottom line improvement as we maintained our focus on driving this business towards profitable goals.

Specifically for the full year 2024.

We are guiding to the following.

Constant currency revenue growth in the range of 5% to 10%.

And adjusted EBITDA loss in the hedge of $75 million to $16 million.

And for capital expenditure to be below $75 million.

Slide six gives you an overview of the progress that we have been making on moving each region towards consistent profitable goals.

You may recall that we began with the EMEA segment, where we prepare for growth by taking clear strategy for our teams.

We also increased the simplicity of the region by reducing the spans and layers in order to enable them to move quickly.

Jean-Christophe Platon: Now, the business is driving consistent profitable growth while reinvesting in brand building and innovation. We have since applied this same simple framework to the Americas and Asia, setting clear strategies and right-sizing these organizations in order to increase focus and agility. These two regions have improved their profitability through this combination of cost discipline and mixed management.

Now the business is finding consistent profitable goals, whilst reinvesting behind the brand building and innovation.

We have seen supplied the same simple framework to the Americas, and Asia, setting clear strategies and the right sizing these organizations.

To increase focus and agility.

These two regions have improved their profitability through this combination of cost discipline and mix management.

Jean-Christophe Platon: And I am happy to report that the American segment reported its first month of positive adjusted EBITDA during the fourth quarter, and that the Asia segment is making very good progress. We still have a lot of work to do in order to get them both to consistent profitable growth, which is why those segments do not yet have their last checkmarks on our dashboard slide. On slate 7.

And I am happy to report that the Americas segment reported its first months of positive adjusted EBITDA during the fourth quarter.

And that the ACS segment is making very good progress.

We are still a lot of work to do in order to get them both to consistent profitable goals, which is why those segments do not kept up their last check marks on them.

Our dashboard slides.

On slide seven.

Jean-Christophe Platon: You can see the financial results of our actions; both our gross margin and adjusted BDA have improved as we have moved through the year, just as one example of how much progress we have made in such a short amount of time. For example, the midpoint of our guidance range for the full year 2024 adjusted EBITDA is better than what we reported in the second quarter of 2023 alone. We are clearly making good progress.

You can see the financial results of our actions.

Both our gross margin and adjusted EBITDA of improved as we've moved through the year.

Just as one example of how much progress we have made in such a short amount of time.

The midpoint of our guidance range for the full year 2020 full adjusted EBITDA is better than what we reported in the second quarter of 2023 alone.

We are clearly making good progress.

Yeah.

Jean-Christophe Platon: Now that we believe a big part of the heavy lifting of recalibrating and stabilizing our business is behind us, our teams are excited to refocus their energy on growing the business and continuing to drive results. In 2024, our top priority remains driving profitable growth. The entire organization is focused on driving the business towards structural, consistent, and profitable goals. We have made progress on improving our profitability, and we will continue to do so. To drive towards profitability, we must bring the Oatly magic to more people. We have a terrific brand that resonates with consumers around the world, and we believe our products are second to none. (Inaudible) Each region will execute this slightly differently.

Now that we believe a big part of the heavy lifting of Recalibrating and stabilizing our business is behind US. Our teams are excited to refocus their energy on growing the business and continuing to drive results.

In 2020 full our top priority remains driving towards profitable growth.

The entire organization is focused on driving the business towards cultural consistent profitable goals.

We have made progress on improving our profitability and we will continue to do so.

Two the highest profitability, we must bring be oddly magic to more people.

We have a terrific brand.

<unk> with consumers around the world and we believe our products are second to none.

In 2020, full we will be stepping up our efforts to bring the Ot magic to even more consumers.

Each region with executives slightly differently.

Jean-Christophe Platon: But whether we are launching new products, expanding with new channels, or activating the brands in our unique Oatly voice, the overall goal is to bring our products to more consumers. We must continue to work on the calibration of our resources. This calibration includes work on our supply chain as well as support functions in the supply chain. This includes completing our work on discontinuing the construction of our Americas and EMEA production facilities, as well as the evaluation of our Asian supply chain for support functions. This includes delivering on our SG&A cost reduction program, which remains on track. Finally, the entire organization will also continue to focus on strong execution to make sure that we meet the expectations of our customers and consumers. As we execute in 2024, we will be true to our mission and keep our eyes on our long-term opportunity. The World Meteorological Organization has confirmed that 2023 was the warmest year in history.

But whether we are launching new products, expanding with new channels or activating the bands in a unique OTT voice. The overall goal is to bring our products to more consumers.

Next we must continue to work on the calibration of our resources.

This calibration includes work on our supply chain as well as support functions.

On the supply chain. This includes completing our work on discontinuing the construction nickel Americas and EMEA production facilities as.

As well as the valuation of our Asian supply chain.

On the support functions. This includes delivering on our SG&A cost reduction program we.

<unk> remains on track.

Finally, the entire organization, but also continue to focus on strong execution to make sure that we meet the expectations for customers and consumers.

As we execute in 2020 full we will be true to our mission and keep our eyes on our long term opportunity.

The World Meteorological organization confirmed that 'twenty, two 'twenty three loved the warmest year in history.

Jean-Christophe Platon: Given that our food systems are responsible for one-third of total human-caused global greenhouse gas emissions, we, as a society, need to drive a shift in our food system. And we, at Oatly, intend to lead that shift by making it easier for consumers to make more sustainable choices. The opportunity is massive. Global dairy retail sales are projected to reach nearly $660 billion in 2023, and food service sales would make that number even bigger. Converting consumers from dairy products to oat milk products will drive a reduction in carbon emissions, and we are working to convert those consumers to our product, as well as to reduce the carbon footprints of our own products.

Given that our food systems are responsible for one third of total human caused global greenhouse gas emissions.

We as a society need to drive a shift in our foot system.

And we only intend to lead up shifts by making it easier for consumers to make more sustainable choices.

The opportunity is massive.

Global dairy retail sales were nearly 660 billion in.

In 2023.

And foodservice sales would make that number even bigger.

Converting consumers from daily products to <unk> products.

We'll drive a reduction in carbon emissions and we are working to convert those consumers to our products as well as reduce the carbon footprint of our own products.

Jean-Christophe Platon: Sustainability sits at the heart of Oatly and is a core component of our mission. Recently, we have made some modifications to our organization in order to bring our sustainability experts closer to the business in order to increase their impact. As part of this evolution, I will be assuming the responsibilities of being the company's chief sustainability officer. We also know that we must continue to balance purpose and performance, as Weinstein believes performance without purpose is meaningless. I also know that purpose without performance is not possible.

Sustainability seats at the heart of Oakley.

These are cool complements of omission.

Recently.

We have made some modifications to our organization in order to bring our sustainability expense closer to the business in order to increase that impact.

As part of this evolution I will be assuming the responsibilities of being the company's chief sustainability officer.

We also know that we must continue to balance purples and performance.

As lifestyle belief performance without purpose is meaningless.

I also know that purpose with a performance is not possible.

Jean-Christophe Platon: As an illustration of Oatly's purpose and performance working hand-in-hand, we see a massive opportunity to continue to extend our margins as a lever to fuel our company's purpose of converting consumers to our products. Our full-year 2023 gross margin is approximately half of our long-term target of 35% to 40%. As we grow our volumes, leverage our assets, and drive additional efficiencies, we expect our margins to expand so that we can expand our impact. With that, I will now turn the call over to our Chief Operating Officer, Daniel Ordonez. Thank you, JC, and good morning, everyone.

As the Neatest station of Ot's, Purples and performance working hand in hand.

We see a massive opportunity to continue to expand our margins.

As the lever to fuel our company's purpose of converting consumers to our products.

Our full year 2023 gross margin is approximately half.

Our long term target of 35% to 40%.

As we grow our volumes leverage our assets and drive additional efficiencies, we expect our margins to expense so that we can expand our impact.

With that I will now turn the call over to our Chief operating Officer Daniel <unk>.

Thank you J T and good morning, everyone.

Daniel Ordonez: I'll begin my discussion on slide 11 with EMEA, which is our largest operating segment. The EMEA segment had a strong 2023, and it finished the year with a solid quarter. Constant currency net revenue growth was just below 12% in the quarter.

I'll begin my discussion on slide 11, with EMEA, which is our largest operating segment.

<unk> segment had a strong 2023 and <unk> finished the year with a solid quarter.

Constant currency net revenue growth was just below 12% in the quarter.

Daniel Ordonez: Some customers bought products ahead of our price increases last year, which drove a strong 11.5% volume growth in the year-ago period. This impacted year-over-year growth. But, looking through that, we continue to see this business as quite strong. And the retail scanner data I will present shortly supports exactly that view.

Some customers bought product ahead of our price increases last year, which drove a strong 11, 5% volume growth in the year ago period.

It impacted the year over year growth and however, looking through that we continue to see this business as quite strong and the retail scanner data I will potentially support exactly that view.

Daniel Ordonez: The segment's adjusted EBITDA margin improved to 15.9% in the fourth quarter, with capacity utilization just in the mid-70s in the quarter. We continue to believe this segment continues to have room to improve margins. Turning to slide 12, on the left, you can see that category growth remains healthy, with all drinks growth of 11%. On the right, you can see that throughout the year, we have steadily gained market share in our largest established market. We're very proud to say that during the second half of 2023, we achieved the number-one market share for all plant-based milks in Germany, Austria, Switzerland, and the Netherlands. This is quite a feat, given that we only sell oat milk, one crop, and not multiple crops of other plant-based milk.

The segment's adjusted EBITDA margin improved to 15, 9% in the fourth quarter with capacity utilization chest in the mid Seventy's in the quarter. We continue to believe this segment continues to have room to improve margins.

Turning to slide 12 on the left you can see that the category growth remains healthy with all drinks growth of 11%.

On the right you can see that throughout the year, we have steadily gained market share in our largest established markets.

We're very proud to say that during the second half of 2023, we have achieved the number one market share in all plant based meals in Germany, Austria, Switzerland and in the Netherlands.

It is quite a feat given that we only sell oatmeal.

One crop and not multiple crops other plant based milks.

Daniel Ordonez: On slide 13, you can see some of the progress we have made in our new markets. Our strategy is to enter these new markets by first entering the specialty coffee channel to create the oatmeal category, a phenomenon in each market. These cafes are purely focused on super-high-quality coffee and the coffee experience.

On Slide 13, you can see some of the progress we have made in our new markets.

Our strategy is to enter these new markets by first entering the specialty coffee channel to create the old mill category that phenomenon in each market.

These cafes are purely focus on super high quality coffee and the coffee experience and they are the cutting edge of the coffee culture.

<unk> demonstrated our product quality and establishing trust within each community, we build our brand credibility and value proposition.

As you can see our strategy is working.

We are already selling our products at a significant portion of these coffee specialty cafes in our new markets with most countries over 60% represented.

Daniel Ordonez: Going forward, we plan to continue nurturing these relationships while expanding beyond this channel. Now, turning to slide 14, where we will start looking ahead at our plans for the EMEA segment. In 2024, we are planning to launch several exciting new products that will help round out our coffee portfolio. A decade after the introduction of the iconic Barista Edition that defined the rules of the game in this category, we're stepping up on our mission to drive further conversion away from cow's milk and into oat milk by making it easier and more accessible for our consumers and customers with new innovations and new formats. Specifically, we're launching the following: a barista edition jigger, which is an individual portion size serving great four locations such as airplanes, trains, and cafes; an organic version of our barista products, which will perform just as well as the original version; a version of our barista designed for lighter or medium-roasted coffee and high-acidity coffee.

Going forward, we plan to continue nurturing these relationships while expanding beyond this channel.

Now turning to slide 14, where we will start looking ahead at our plans for the EMEA segment.

In 2024, we are planning to launch several exciting new products that will help round out our coffee portfolio.

A decade after the introduction of the iconic barista edition that define the rules of the game in this category, we're stepping up on our mission to drive further conversion away from cows milk and into oat milk by making it easier and more accessible for our consumers and customers with new innovations.

New formats.

Specifically, we are launching the following <unk> Giga, which is an individual portion size serving great four locations as airplanes trains and cafes.

And organic version of our barista products, which will perform just as well as the original version.

A version of our very satisfying for lighter or medium roasted coffee and high acidity coffee.

Finally, a one five liter version of our original Barista, which is focused on saving very time and minimizing packaging waste.

Be sure for us with these exciting new products at your local cafe in the air or at the rails very very soon.

Daniel Ordonez: Finally, a 1.5-liter version of our original barista, which is focused on saving baristas time and minimizing packaging waste. Be sure to see these exciting new products at your local cafe, in the air, or on the rails very, very soon. Turning to slide 15, we have had success in expanding consumers' usage of our products by offering them a range of options. We have been calling this our Go Blue strategy.

Turning to slide 15, we have had success in expanding consumers usage of our products by offering them a range of options. We have been calling these are goldbloom strategy. In 2024, we will continue rolling out the strategy to continue making the conversion from dairy to old milk easier.

Finally, we will be launching a new and improved old guard in selected geographies with current high per capita yogurt consumption.

Contains live bacteria and we believe it is the best tasting plant based yogurt on the market and it is on par with dairy yogurt, if not better.

Turning now to our Americas segment on slide 17 in.

Daniel Ordonez: In 2024, we will continue rolling out this strategy to continue making the conversion from dairy to oat milk easier. Finally, we will be launching a new and improved oatgurt in selected geographies with current high-per-capita yogurt consumption. It contains live bacteria, and we believe it is the best-tasting plant-based yogurt on the market, and it is on par with dairy yogurt, if not better.

In the fourth quarter, the Americas segments continue to improve revenue grew 2%. Despite some of topline headwinds in foodservice that I will discuss <unk>.

<unk> EBITDA continued strength to improve steadily as J P mentioned earlier, the Americas segments reported its first ever month of positive adjusted EBITDA during the quarter.

Overall, we are very pleased with the progress on executing and improving our margin mix and delivering on our cost saving actions.

On Slide 18, you can see our progress in retail on the left hand side showing that we have been steadily making progress on gaining market share in the chilled oatmeal category, while our market share is above 25% in the four weeks ending December 30th.

Daniel Ordonez: Turning now to our America segments on slide 17. In the fourth quarter, the America segments continued to improve. Revenue grew 2% despite some top-line health wins in food service that I will discuss, and adjusted EBITDA continued to improve steadily. As Jaycee mentioned earlier, the America segment reported its first ever month of positive adjusted EBITDA during the quarter.

The right hand side chart shows our chilled odneal percentage ACB.

Over the past year, we have made steady gains throughout the year enabled by our supply chain stability you can see now that the distribution gains I discussed with you over the last quarter are starting to show up in the most recent data.

Daniel Ordonez: Overall, we are very pleased with the progress on executing and improving our margin mix and delivering on our cost-saving actions. On slide 18, you can see our progress in retail on the left-hand side, showing that we have been steadily making progress on gaining market share in the chilled oatmeal category, while our market share is above 25% in the four weeks ending December the 30th. The right-hand side chart shows our chilled oatmeal percentage ACV.

As the impact of the shelf reset is starting to flow through.

It's all about those shelf resets have been reflected in the scanner data yet. So we expect this number to continue to increase.

So overall very good progress on the retail side of our business slide.

Slide 19 brings the impact of the shelf resets to life and a bit better as you can see in these pictures. We now have a good branding block on our new product unsweetened Super basics and Creamers are.

Daniel Ordonez: Over the past year, we have made steady gains throughout the year, enabled by our supply chain stability. You can see now that the distribution gains I discussed with you over the last quarter are starting to show up in the most recent data, as the impact of the shelf reset is starting to flow through. Not all of those shelf resets have been reflected in the scanner data yet, so we expect this number to continue to increase. So, overall, very good progress on the retail side of our business. Slide 19 brings the impact of the shelf resets to life and is a bit better. As you can see in these pictures, we now have a good branding block on our new product. Unsweetened, Super Basics, and Creamers are all of those on shelves.

All of those on shelf.

Our products are now showing up in more places and they are standing out better on shelf.

Turning to slide 20 on the foodservice side of the business as we discussed last quarter, we have been aggressively pursuing new customers to expand and diversify our foodservice customer base to drive better growth and better margins.

Americas segments grew its foodservice revenue by four 5% year on year in the fourth quarter.

Excluding its largest food service customer this business grew nearly 26%.

So we are clearly, making excellent progress in expanding our food service customer base to bring the utterly magic to more consumers more customers, while we are driving improved margins.

Daniel Ordonez: Our products are now showing up in more places, and they are standing out better on shelves. Turning to slide 20, on the food service side of the business. As we discussed last quarter, we have been aggressively pursuing new customers to expand and diversify our food service customer base to drive better growth and better margins. The American segment grew its food service revenue by 4.5% year-on-year in the fourth quarter.

Moving down the P&L slide 21 shows that our co packer consolidation in Americas drove solid results throughout the year.

This initiative has driven the segment's cost of goods per litre dampened by a solid 12% from quarter one to quarter. Four this was enabled by the <unk> foods transaction. We completed earlier this year as well as our strong ongoing partnership with innovation foods at our meal deal facility.

Both the <unk> foods and innovation foods have been terrific partners.

As we continue to work with them to become more and more efficient. We believe we can continue to reduce our costs going forward.

Daniel Ordonez: Excluding its largest food service customer, this business grew nearly 26%. So we are clearly making excellent progress in expanding our food service customer base to bring the Oatly magic to more consumers and more customers while we're driving improved margins. Moving down the P&L, slide 21 shows that our co-packer consolidation in America drove solid results throughout the year. This initiative has driven the segment cost of goods per liter down by a solid 12% from Q1 to Q4. This was enabled by the Yaya Foods transaction we completed earlier this year, as well as our strong ongoing partnership with Innovation Foods at our Mealville facility. Both Yaya Foods and Innovation Foods have been terrific partners.

In 2020 for the Americas segments, we'll look to capitalize on the progress we made in 2023 and bring the <unk> magic to lots more people. For example, we will be executing several exciting campaigns, such as partnering with James and innovations and Activations that are tailor made for the health.

And fitness community and targets automobile consumers in particular.

We will also be continuing our partnership with minor League baseball, where we have some very exciting activations planned this.

Is such a great way to expand the reach of our brands beyond the country's biggest cities. So we look forward to sharing more with you just before the 2024 season begins.

Turning now to Asia on Slide 23, as we discussed on last quarter's call. The Asia team has moved quickly to implement the first stage of their strategy reset plan on this slide you can see the impact of those actions.

Daniel Ordonez: As we continue to work with them to become more and more efficient, we believe we can continue to reduce our costs going forward. In 2024, the American segment will look to capitalize on the progress we have made in 2023 and bring the Oatly magic to a lot more people. For example, we will be executing several exciting campaigns, such as partnering with gyms and innovations and activations that are tailor-made for the health and fitness community and target almond milk consumers in particular. We will also be continuing our partnership with Minor League Baseball, where we have some very exciting activations planned. This is such a great way to expand the reach of our brand beyond the country's biggest cities.

By refocusing the business on reducing costs that has been a top line impact and a significant bottom line impact in the fourth quarter. We saw the top line trend started to stabilize.

Adjusted EBITDA improved by $10 million sequentially.

Slide 24 focuses in the supply chain.

You will recall that last quarter, we told you that in Asia the team reduced their risk it used by over 70%. This helped improved efficiency in the plants.

We have also significantly shifted our production from our hybrid facility in Singapore.

End to end facility in <unk>, China, which is closer to our distribution points.

With fewer SK used to produce the mansion facilities able to run longer product runs and therefore increase efficiency.

The combination of the Skus reduction in production shift has resulted in a reduction of our cost of goods per liter by over 30% since the first quarter of 2023.

Daniel Ordonez: So we look forward to sharing more with you just before the 2024 season begins. Turning now to Asia on slide 23, as we discussed on last quarter's call, the Asian team has moved quickly to implement the first stage of their strategy reset plan. On this slide, you can see the impact of those actions. By refocusing the business and reducing costs, there has been a top-line impact and a significant bottom-line impact. In the fourth quarter, we saw the top-line trend start to stabilize while adjusted EBITDA improved by $10 million sequentially. Slide 24 focuses on the supply chain. You will recall that last quarter we told you that in Asia, the team reduced their SKUs by over 70%.

Now turning to slide 25, while we are pleased with the progress to date, we know that we still have work to do to get the segment to where it needs to be and the team is squarely focused on achieving profitable growth.

Phase one of our reset plan was to cut back on SK <unk> drive supply chain efficiency and reduce SG&A phase III is to rebuild the foodservice business in a disciplined way.

As I mentioned on the last call our sales teams are active and energize.

Have been given the direction to continue to build the business with our core channels geographies and it skews. So our business is strong profitable and sustainable.

Maintaining a high level of channel intimacy will be important as we look to rebuild the topline and improve profitability.

We have been speaking with customers. We know we will need to round out our portfolio with additional skus that are optimized for the foodservice channel. This includes product that hit certain price points or flavorings that cater to seasonal preferences and in 2024, we plan to introduce some of.

Daniel Ordonez: This helped improve efficiency in the plan. We have also significantly shifted our production from our hybrid facility in Singapore to our end-to-end facility in Manchin, China, which is closer to our distribution point. With fewer SKUs to produce, the mansion facility is able to run longer product runs and therefore increase efficiency. The combination of the SKU reduction and production shifts has resulted in a reduction of our cost of goods per liter by over 30% since the first quarter of 2023. Now turning to slide 25.

These products, we will rebuild this business.

With that I would now like to turn the call over to our CFO, Nigel said debit and Jay.

Thank you Danielle and good morning, everyone.

Slide 27 gives you another view of the P&L for the quarter.

We reported 12 six.

6% year over year revenue growth and constant currency revenue growth of two 5%.

Yes.

Our expectations driven by outperformance in our EMEA and Americas segment.

Daniel Ordonez: While we are pleased with the progress today, we know that we still have work to do to get this segment to where it needs to be, and the team is squarely focused on achieving profitable growth. Phase one of our research plan was to cut back on SKUs, drive supply chain efficiency, and reduce SG&A.

Gross margin for the quarter was 23, 4%, which is a 750 basis point improvement.

The prior year quarter, and a 600 basis point sequential improvement from Q3.

Gross profit dollars were in line with our expectations, while the percentage margin was slightly below our expectation largely driven by and some of our mix impact.

Daniel Ordonez: Phase two is to rebuild the food service business in a disciplined way. As I mentioned on the last call, our sales teams are active and energized. They have been given the direction to continue to build the business with our core channels, geographies, and SKUs so our business is strong, profitable, and sustainable. Maintaining a high level of channel intimacy will be important as we look to rebuild the top line and improve profitability. As we have been speaking with customers, we know we will need to round out our portfolio with additional SKUs that are optimized for the food service channel. This includes products that hit certain price points or flavorings that cater to seasonal preferences.

Adjusted EBITA was a loss of $19 2 million, which was ahead of our expectations.

This was for Q1 2 million improvement versus the prior year and $16 8 million improvement versus the first quarter.

Slide 28 shows the bridging items of our quarterly revenue growth.

You can see volume increased 2% and price mix improved bank airplanes, 5% to 5% constant currency revenue growth.

Foreign exchange headwind of two 1%, resulting in $4, 6% total revenue growth for the quarter.

Slide nine shows the revenue bridge by segment.

EMEA continued to report strong growth.

One 8% constant currency revenue growth.

Daniel Ordonez: And in 2024, we plan to introduce some of these products, and we will rebuild this business. With that, I would now like to turn the call over to our CFO, Marie-Josée David. MJ

By 11, 3% price mix improvement, which was driven by the price increase we took last winter and we started to anniversary this quarter.

And Marie Jos to 4% growth was driven by nine 2% volume growth, which was ended by distribution gains and selling of our new products.

Marie-Josée David: Thank you, Daniel, and good morning, everyone. Slide 27 gives you an overview of the P&L for the quarter. We reported 4.6% year-over-year revenue growth and constant currency revenue growth of 2.5%. This was above our expectations, driven by our performance in our EMEA and Americas segments. Gross margin for the quarter was 23.4%, which is a 750 basis point improvement versus the prior year quarter and a 600 basis point sequential improvement from Q3. Gross profit dollars were in line with our expectations, while the percentage margin was slightly below our expectations, partially driven by an insurmountable mixed impact. Adjusted EBITDA was a loss of $19.2 million, which was ahead of our expectations.

Mix was a headwind of $6, 8% driven by new product related stocking as well as customer mix.

Yes, 18% constant currency decline was driven by the actions we have taken as part of this segments strategic reset plan.

Volume declined <unk>, 3%, which is a significant improvement from the FERC for to Earth, 15% decline.

Price mix declined 14, 7% largely driven by unfavorable sales mix as we have rationalized skus, that's where higher price, but similar margin.

Slide 14.

The sequential quarter over quarter gross margin bridge.

The year over year bridge is provided in the appendix of this presentation.

The largest driver of the sequential improvement in gross margin is a 490 basis point benefit from Asia strategic reset.

Daniel mentioned this is a combination of cutting low margin skus and driving increased efficiency in the supply chain.

Marie-Josée David: This was 41.2 million improvements versus the prior year and 16.8 million improvements versus the third quarter. Slide 28 shows the bridging items of our quarterly revenue growth. You can see volume increased 2% and price mix improved by 0.5% for a 2.5% constant currency revenue growth. Foreign exchange was a tailwind of 2.1%, resulting in 4.6% total revenue growth for the quarter.

Within EMEA and Americas, we saw a 60 basis point positive impact from pricing net of trade spend and that's was offset by a 250 basis points headwind primarily from customer mix.

We also saw continued benefits from supply chain efficiencies coming from absorption and Americas co Packer consolidation.

Which drove 270 basis points improvement.

Now I talked to one shows our adjusted EBITDA by segment.

And you can see each segment reported a significant improvement compared to the prior year for both the quarter and full year.

So the fourth quarter was the first time that this some.

Got all of the adjusted EBITDA for the three regions was positive.

Marie-Josée David: Slide 29 shows the revenue bridge by segment. EMEA continued to report strong growth, with 11.8% constant currency revenue growth, led by a 11.3% price mix improvement, which was driven by the price increase we took last winter and which we started to anniversary this quarter. America's 2.4% growth was driven by 9.2% volume growth, which was added by distribution gains and selling of our new products. Price mix was a headwind of 6.8%, driven by new product-related slotting as well as customer mix. Asia's 18% constant currency decline was driven by the actions we have taken as part of the Segment Strategic Reset Plan. Volume declined 3.3%, which is a significant improvement over the first quarter's 15% decline. Price mix declined 14.7%, largely driven by intravariable sales mix as we rationalized Qs that were higher priced but lower margin.

It's clear that the board strategic actions, we have been taking are driving results.

Quarter after quarter, we have been executing our plan improving the business and driving the business towards profitable growth.

Turning to our balance sheet and cash flow on slide 32.

Our liquidity position is strong and we are continuing to improve our free cash flow.

The left hand chart shows our liquidity position at the end of the quarter.

We ended the quarter with 454 million in total liquidity comprised of $249 million of cash and equivalents and 205 million of Undrawn bank facilities.

The right hand chart shows that we have made good progress in improving our free cash flow.

In the fourth quarter free cash flow was an outflow of percheron many yet.

As I have said previously improving our cash flow is a priority for me and our organization is very focused on it.

As such we expect our cash flow to continue to improve driven primarily by improvement in adjusted EBITDA and added by improvements in working capital metrics as well as <unk>.

Marie-Josée David: Slide 30 shows you the sequential quarterly-over-quarter gross margin break. A year-over-year bridge is provided in the appendix of this presentation. The largest driver of the sequential improvement in gross margin is the 490 basis point benefits from Asia's strategic reset. As Daniel mentioned, this is a combination of cutting low margin skews and driving increased efficiency in the supply chain. Within EMEA and Americas, we saw a 60-basis-point positive impact from pricing net of trade spend, and that was offset by a 250-basis-point headwind, primarily from customer mix.

<unk> capital expenditures.

So I've heard you free shows you our 2020 for guidance.

Our outlook reflects the continued impact of the actions we have been taking to build a stronger business and set ourselves as first strong sustainable long term profitable growth.

Turning to details.

We expect constant currency revenue growth in the range of 5% to 10%.

We expect currency to be a small headwind.

We expect the second half constant currency growth rate to be stronger than the first half largely driven by volume growth acceleration in each region.

Well I just of EBITDA, we expect to report a loss of between $35 million and $16 million in 2024.

Marie-Josée David: We also saw continued benefits from supply chain efficiencies coming from absorption and America's copacker consolidation, all of which drove 270 basis points of improvement. Slide 31 shows our adjusted EBITDA by segment. As you can see, each segment reported a significant improvement compared to the prior year for both the quarter and full year. Also, the fourth quarter was the first time that the sum...

The mid point.

Could be a year over year improvement of over 100 million from where we landed in 2023.

We expect this improvement to be driven by an improvement in gross profit dollars with some benefits coming from SG&A as we continue to deliver on our communicated cost for injection program.

We expect adjusted EBITDA to be stronger in the second half than in the first half.

We expect increasing gross party to be primarily driven by sales volume growth. We also expect the benefit from certain lower cost, which is partially driven by easing inflation in certain input, but also driven by our supply chain eliminating cause for productivity and efficiency.

Marie-Josée David: The total of the adjusted EBITDA for the three regions was positive. It's clear that the bold, strategic actions we have been taking are driving results. Quarter after quarter, we have been executing our plan, improving the business, and driving the business toward profitable growth. Turning to our balance sheet and cash flow on slide 32. Overall, our liquidity position is strong, and we are continuing to improve our free cash flow. The left-hand chart shows our liquidity position at the end of the quarter. We ended the quarter with $454 million in total liquidity, comprised of $249 million of cash and equivalents and $205 million of undrawn bank facilities. The right-hand chart shows that we have made good progress in improving our free cash flow. In the fourth quarter, free cash flow was an outflow of $31 million.

Program.

Why do we believe that the visa continually improved our guidance range for adjusted EBITDA is below what we were previously targeting.

That is primarily driven by more conservatism around our assumptions on new customer acquisition, and our new product launches, while continuing to prioritize brand building investment to energize that Brian.

We will continue to aggressively pursue new business and more efficient ways of working.

And we have confidence in our volume led growth in 2024.

However, we believe that it's appropriate to have a more balanced outlook at this point.

Well capex.

We are re risking our guidance of below $75 million for 2024, which continues to assume that our first Asian manufacturing facility remains and two N.

Marie-Josée David: As I have said previously, improving our cash flow is a priority for me, and our organization is very focused on it. As such, we expect our cash flow to continue to improve, driven primarily by improvements in adjusted EBITDA and enhanced by improvements in working capital metrics, as well as optimized capital expenditures. Slide 33 shows you our 2024 guidance. Our 2024 outlook reflects the continued impact of the actions we have been taking to build a stronger business and set ourselves up for strong, sustainable, long-term profitable growth. Turning to details, we expect constant currency revenue growth in the range of 5 to 10 percent. We expect currency to be a small headwind. We expect the second half constant currency growth rate to be stronger than the first half, largely driven by volume growth acceleration in each region. For adjusted EBITDA, we expect to report a loss of between $35 million and $60 million in 2024.

As a reminder, we are continuing to evaluate our options for this plan.

Laughs team.

I'd like to update you on a change we're making to our reportable segments.

FX at the beginning of fiscal 'twenty 'twenty, four we began managing our own person with slightly different reportable segments.

Europe and international.

In North America, Greater China and corporate.

The most significant change is that the worst of our China business will be separated from the Asia segment.

And the rest of the Asia business, which includes this figure for our manufacturing facility together with the current EMEA segment will constitute the new Europe and international segment.

We will also be moving R&D expenses out of corporate and into the individual segments to better align with how we allocate resources.

In the coming weeks, well provide recast financial information that is consistent with our new reporting segment structure.

We will begin to provide our financial results under the new reportable segment with our first quarter results.

This concludes our preferred remarks.

Operator, we are now prepared to take questions.

Okay.

Thank you Ware.

Now begin the question and answer session to ask a question you May press Star one on your touch standpoint, if you are using a speakerphone. Please pick up your handset before pressing the keys.

At this time your question has been address it you'll be.

We would like to withdraw your question. Please press Star then two.

Our first question comes from Michael Lavery with Piper Sandler. Please proceed.

Yeah.

Good morning, Thank you.

Okay.

You touched on it in your prepared remarks on the status of the relationship with your largest food service customer.

Americas, and how that may or may not be changing can you, maybe just give a little bit more detail there. Please.

Marie-Josée David: We also expect the benefits of certain lower costs, which is partially driven by easing inflation in certain inputs but also driven by our supply chain eliminating costs through productivity and efficiency programs. While we believe that the business continually improves, our guidance range for adjusted EBITDA is below what we were previously targeting. That is primarily driven by more conservatism around our assumptions about new customer acquisition and new product launches while continuing to prioritize brand building investments to energize the brand. We will continue to aggressively pursue new business and more efficient ways of working, and we have confidence in our volume-led growth in 2024. However, we believe that it's appropriate to have a more balanced outlook at this point.

Thank you Michael Daniel here, how are you. Thank you for joining us this morning.

Listen up.

As you know when we have said repeatedly in the last earnings.

We have only one notes start and that is profitable growth.

So we have since last earnings continued to make steady progress on channel mix in general we are actively rebalancing growth between the very important foodservice customers that are low margin.

With significant growth in higher margin channels that presented very significant growth opportunity for us.

You would have appreciated seeing that in the in the prepared remarks and in the presentation.

These channels are number one retail.

And number two the foodservice sub channels in which the brand can be experience to its fullest by customers right. Like example, universities campuses workplaces and all other iconic high street customers that you've seen in recent in recent press releases. So as you saw in the prepared remarks, we are making steady progress.

And these two domains retail and food service outside the largest customer and the headspace for growth continues to be very significant now to your question. We continue to work very well with all customers and let me underline for our largest customer is no different to that so in this in.

Marie-Josée David: [inaudible] We are reiterating our guidance of below $75 million for 2024, which continues to assume that our third Asian manufacturing facility remains at two ends. As a reminder, we are continuing to evaluate our options for this plan. Lastly, I would like to update you on a change we are making to our reportable segment. Effective the beginning of fiscal 2024, we began managing our operation with slightly different reportable segments. Europe and International, North America, Greater China, and Corporate. The most significant change is that the Western China business will be separated from the Asia segment.

In fact over the past few months.

Our conversations have become more and more constructive and.

And we believe there is a platform that is mutually beneficial.

So with regards to the 2024 outlook without giving any forecast by customer we expect less of a quarterly headwind going forward versus what we presented at the last earnings. So thank you Michael for the question.

No that's helpful.

Just given the updated thoughts on 2020 for EBITDA and the.

Progression there I know.

Slide 32, I think it is your touch on liquidity in the balance sheet, but.

Marie-Josée David: The rest of the Asia business, which includes the Singapore Manufacturing Facility, together with the current EMEA segment, will constitute the new Europe and international segment. We will also be moving R&D expenses out of corporate and into the individual segments to better align with how we allocate resources. In the coming weeks, we will provide recast financial information that is consistent with our new reporting segment structure. We will begin to provide our financial results under the new reportable segment with our first quarter results. This concludes our preferred remarks. Operator, we are now prepared to take questions. Thank you. We will now begin the question and answer session. To ask a question, you may press star 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the key.

Can you give a sense of your expectations a little bit further out.

Sure.

Or would you change now suggests that you may be coming up towards another capital raise at some point or do you have a multiyear plan that you've kept that off the table just how should we think about kind of the trajectory there and what your expectations are.

Yes, Hi, Mike This is Michael.

Let me first go back to the prepared remarks, whereas a medicine that our liquidity position is strong and we continuously improve our free cash flow.

Our <unk>.

When I say, we believe our liquidity position remains.

Strong because we are I think Courtney.

Sunday from excellent.

We have healthy cash balance.

As you know regional occur.

We are as well.

Ill stop there.

Sure.

Driving improvement.

Our free cash flow from of course, it's Tom.

You saw that that one working capital opportunity.

Note that both metrics from working capital I think is super important for me.

So we definitely are strong.

Operator: If at any time your question has been addressed, you may... would like to withdraw your question, please press star then 2. Our first question comes from Michael Lavery with Piper Sandler. Please proceed. Good morning.

We are fully funded until we've reached free cash flow.

And we continue to work on that.

That's really helpful. Thanks, so much.

Yes.

Okay.

Our next question comes from Cal meal that you're all well.

<unk> with Jefferies. Please proceed.

Hey, everybody good morning, or good afternoon.

Michael Scott Lavery: Thank you. You touched on in your prepared remarks the status of the relationship with your largest food service customer in the Americas and how that may or may not be changing. Can you maybe just give a little bit more detail there, please? Thank you, Michael. Daniel here. How are you?

Depending on where you guys, where you guys are.

Given the change in your 2024 outlook, maybe you could just provide a few more details you've mentioned some shifts on expectations on new customers expectations on innovation any more color you could provide would be useful.

Good morning, co mill Gaye to speak to you again and thank you for asking let me unpack for you with the three main drivers that shaped the designer call guidance number one I just want to reiterate the magnitude of the till now in Germany that we have.

Daniel Ordonez: Thank you for joining us this morning. Listen, as you know, and we have said repeatedly in the last earnings reports, we have only one North Star, and that is profitable growth. So we have, since our last earnings, continued to make steady progress on channel mix in general. We are actively rebalancing growth between the very important food service customers that are low margin with significant growth in higher margin channels that present a very significant growth opportunity. You would have appreciated seeing that in the prepared remarks and in the presentation. These channels are, number one, retail, and number two, the food service sub-channels in which the brand can be experienced to its fullest by customers, right? Like, for example, universities, campuses, workplaces, and all other iconic high street customers that you've seen in recent press releases.

As a reminder, in 2022, which is just 13 months ago deep business loss to about $68 million of adjusted EBITDA. In 2023 is due as you've just heard same store it for and the mobilization on profitable growth, we have reduced this loss by $110 million and when you.

Look at the midpoint of our 2020 core guidance is projecting another reduction of $110 million between 24 and 23. So the magnitude of the Sterling home to the $20 million improvement in adjusted EBITDA in two years and what it takes to achieve it.

Operationally is the first driver of our guidance.

Daniel Ordonez: So, as you saw in the prepared remarks, we're making steady progress in these two domains, retail and food service, outside the largest customer, and the headspace for growth continues to be very significant. Now, to your questions. We continue to work very well with all customers. And let me underline all

Second very clearly in profitable growth you hear goals why do I underline that.

And with Colby.

<unk> business is a massive opportunity in front of US we are convinced hence our duty is to capture the growth potential.

No.

Adjusted EBITDA guidance also reflects healthy growth investments innovation projects sloping fees from new products, New field Salesforce legal fees and of course bond investments to carry our unique brand close all of these innovative ziegler.

Daniel Ordonez: Our largest customer is no different. In fact, over the past few months, our conversations have become more and more constructive, and we believe there is a path forward that is mutually beneficial. So with regard to the 2024 outlook, without giving any forecast by customer, we expect less of a quarterly headwind going forward versus what we presented at the last earnings. So thank you, Michael, for the question. Hello, that's helpful.

And so through manner. So the second driver of our adjusted EBITDA guidance is really a reflection of the borrowings profitable goals nonstop.

Finally, as you heard we know we must all three segments.

Three very diverse situations when it comes to maturity and execution.

Some are more advanced life. Some like China. For example, just completed the first phase of their reset and therefore, our guidance needed to reflect these diversity within our segments portfolio and thus was guided our guidance.

Marie-Josée David: And just given the updated thoughts on 2024 EBITDA and the progression there, I know on slide 32, I think it is, you touch on liquidity and the balance sheet. But can you give a sense of your expectations a little bit further out? Should, would your change now suggest that you may be coming up towards another capital raise at some point? Or do you have a multi-year plan that you've kept that off the table? Just how should we think about, you know, the kind of trajectory there and what your expectations are? Yes, Michael. This is Margot Lee.

Got it. Thank you and then if I may ask you highlighted the shelf space or expected shelf space gains.

Can you again provide a bit more color is it.

10%, 20% more and then how does that translate to incremental sales.

Okay.

Coming in at Daniel Here, I guess, you are referring to the Americas in particular.

Yes, I'm, sorry, that's where you highlighted specifically from the Americas.

Well, yes, I will try my best to.

Marie-Josée David: Let me go back first to the previous remarks, where I mentioned that we have a very strong liquidity position and we continue to improve our trade. [inaudible] funded from the Venus Planet. We have Hensley Cash Finance, as well as, as you know, Revolver Bank.

To answer what's behind your question Camille we achieved solid progress.

In retail in the retail space.

And I'll try to comment in the in dividend question about shelf space, which is obviously, we're tracking and we're gaining right. Although this data is very recent.

And I won't be able to fully shared that with you today, so but as you saw in the prepared remarks Camille the team is delivering some very significant distribution gains.

Marie-Josée David: We are, as well, as we pulled out that quarter, driving improvement in our free cash flow from, of course, a stronger adjusted data, but also working capital opportunities. You know that those metrics from working capital are definitely super important. So we definitely are strong on this front. We are fully funded until we reach free cash flow positive. And we continue to work on that. That's really helpful. Thanks so much.

Consistent with the discussions we have in previous ones in previous quarters. So.

As you heard us talking about controlling the controllable we were able to drive pdp's growth above 50% five zero.

And the <unk> have grown four above 1000 basis points year on year to 43%.

And still counting so there is more room to go there in terms of Tdp's on ACD, so weighted distribution.

SaaS Camille generated the highest ever market share in old milks, you guys or trucking.

Operator: Our next question comes from Kaumil Gajrawala with Jefferies. Hey, everybody. Good morning or good afternoon, I suppose, depending on where you guys are.

The scanner data I know you are so above 25% for oat milk and 6% across all plant based drinks. So.

The traction you might have seen in the recent scanner data with solid growth in both units and dollars.

Kaumil S. Gajrawala: Given the change in your 2024 outlook, maybe we could just provide a few more details. You've mentioned some shifts in expectations for new customers and expectations for innovation. Any more color you could provide would be useful.

Core business so.

We believe yes, indeed ship share of shelf is growing distribution is growing and we see these are only the beginning.

Camille.

We are the only category pure player in oat milk.

Jean-Christophe Platon: Good morning, Kaumil. It's great to speak to you again and thank you for asking. Let me unpack for you the three main drivers that shaped the design of our guidance. Number one, I just want to reiterate the magnitude of the turnaround journey that we are driving. As a reminder, in 2022, which is just 13 months ago, this business lost $268 million of adjusted EBITDA.

And we are the brand that has proven to drive category penetration so.

Holding that unique space and with so much plenty plenty of ACB runway ahead, there is more to come and more to go with.

With supply chain.

Liability issues behind and having regained distribution, we expect steady progress on distribution and sales of <unk> to draw on our sales execution to drive further profitable growth.

Jean-Christophe Platon: In 2023, as you just heard, thanks to our effort and the mobilization around profitable growth, we have reduced this loss by $110 million. And when you look at the midpoints of our 2024 guidance, it's projecting another reduction of $110 million between 2024 and 2023. So the magnitude of this turnaround, $220 million improvement in adjusted EBITDA in two years, and what it takes to achieve it operationally, is the first driver of our guidance. Second, very clearly, when you hear the words profitable growth, you hear growth. Why do I underline that?

That answers your question on commitment.

Yes. Thank you.

Our next question comes from Andrew Lazar with Barclays.

Great. Thanks, so much good morning, everybody.

Hi, Andrew.

I think.

I guess I'm curious about the cadence of EBITDA as we move through 'twenty four.

EBITDA, obviously improve sequentially each quarter through 'twenty three.

And I guess I'm curious whether this pattern continues as we start 24 meeting sequential improvement or are there reasons that perhaps EBITA losses expand again versus the fourth quarter.

As we move into the first half and if so why because I think I heard you say that EBITDA dollars would be.

Concentrated more in the back half so maybe I've answered my own question, but I'm trying to get a sense of how you see the EBITDA cadence going as we go through the year and what the rationale behind that cadence would be.

Jean-Christophe Platon: I strongly believe that this business has a massive growth opportunity in front of us. We are convinced about that. Hence, our duty is to capture this growth potential. So, our adjusted BDA guidance also reflects healthy growth investments. Innovation projects, slurping feed for new products, new fields for results, and, of course, bond investments to carry our unique brand forward. All of this in a very rigorous and choiceful manner.

Hi, Andrew this is Dave.

I will answer that.

When he goes through our <unk>.

First one E.

What was the first 12 months right.

Establishing a foundation.

That's the reason that.

Profitable growth.

Some of that last year, we guided to for clarity.

But we still have that more now.

At 12 months establishing foundation.

That will look more at the long term time horizon.

Jean-Christophe Platon: So the second driver of our adjusted EBGA guidance is really a reflection of this balanced, profitable growth north-south. Finally, as you have heard in our remarks, our three segments are in three very diverse situations when it comes to maturity and execution. Some are more advanced, while some, like the rest of China, for example, have just completed the first phase of their reset.

Coming quarter. So this is just to meet you on a revenue on why we are not that's driving quarter over quarter anymore now.

As you mentioned and as I said in our guidance.

For the second half to be stronger than the first half.

That growth.

And this is true at West coast market.

We are not guiding for courtyard.

The first quarter as I, just said, we obviously have some dynamics such as the Chinese new year, such as from that from them for that.

Jean-Christophe Platon: And therefore, our guidance needed to reflect this diversity within our segment's portfolio. And that was the basis for our guidance. Got it.

Ferguson driving 13.

His thoughts I mean, you've heard.

Thank you back to Brian.

Also as I mentioned in the prepared remarks, right we are working on it.

Daniel Ordonez: Thank you. And if I may ask you, highlighted the shelf space or expected shelf space gains, can you again provide a bit more color? Is it 10%, 20% more? And then how does that translate to incremental sales? Kaumil, Daniel here. I guess you're referring to the Americas in particular?

Thank you Chelsea program so.

It's now my answer to your question on EBITDA.

Yes.

Our EBITDA.

Mid teens.

P 55 and <unk>.

He ended up.

We said, hey, I want to emphasize.

Year over year improvement between 98 and one.

101.

Sure.

All the leasing program just to be precise.

Daniel Ordonez: [inaudible] Yeah, well, yeah, I will try my best to answer what's behind your question, Kaumil, which is progress in retail, in the retail space. And I'll try to comment on the obvious question about shelf space, which is obviously something that we're tracking and we're gaining, right? Although the data is very recent, and I won't be able to fully share that with you today, but as you saw in the prepared remarks, Kaumil, the team is delivering some very significant distribution, consistent with the discussions we had in previous ones, in previous quarters. So,

I mean roughly.

$5 million to come from January.

As a reminder.

So the service center and we know those are tricky.

And the remaining portion of the Sydney Zhang from that with some from gross profit.

Sure.

Okay.

There is no guidance.

For over a quarter.

Is there any more.

And long term view.

Understanding as I, just said that the second half will be stronger than the first half.

He is all about.

Right.

Got it thank you for that and then I'll do it.

Okay Brad.

No I will just to make sure that answered your question.

That does thank you and then.

You talked a little about this in the prepared remarks, but I want to make sure I have it right.

A lot of the sequential progress that you clearly have been making and you've talked about.

You've pushed back the timing on getting to EBITDA positive right several times now.

Daniel Ordonez: As you heard us talking about controlling the controllables, you know, we were able to drive PDP growth above 50%, 5-0. And the ACVs have grown by about 1,000 basis points year on year to 43%, and still counting. So there is more room to go there in terms of TDPs and ACVs, so weighted distribution. This has, Kaumil, generated the highest ever market share in oat milks. If you guys are tracking the scanner data, I know you are.

And I think don't expect it this year either it would seem.

Yes, if you had to like just boil it down and sort of bucket it into maybe the top couple of things that have been the main rationale or reason for that shifting and why maybe the visibility to that hasnt been what you would have wanted it to be like what would those be what I'm trying to assess is why has it gotten pushed back.

Daniel Ordonez: So about 25% for oat milk and 6% across all plant-based drinks. And the traction you might have seen in the recent scanner data, with solid growth in both units and dollars in our core business. We believe, yes indeed, share of sales is growing, distribution is growing, and we see this only as the beginning. You know, Kaumil, we are the only category pure player in oatmeal, and we are the brand that has proven to drive category penetration, holding that unique space, and with so much plenty of ACB runway ahead, there is more to come and more to go. With supply chain reliability issues behind them and having regained distribution, we expect steady progress on distribution and sales execution to drive further profitable growth. I hope that answers your question, Kamil. Yeah, thank you.

Why would your visibility to that.

EBITDA guidance, you're providing for this year.

More solid maybe than what it's been in whatever past couple of quarters. If you kind of get my point. Thank you.

Hello, Thank you Aldo J P M.

This one.

Nearly the way we have guided to.

Dave <unk> chemical budgeting process.

If you say what have you been doing since we last spoke one of the things. We did was logistics, which is evaluating scenarios in the life of the business context.

We have the choice to go call office only but this is not in line with our North star, which is profitable growth because it could have been bear the fruits of growth potential of this business. So as I explained when we boil down to answer your question. The main drivers of this guidance first it is the leading names.

Turning on journey to reduce to below 20 million loss of adjusted EBITDA in two years.

We are really mostly to protect healthy growth investments to capture the massive growth potential that we believe we are and finally, taking into account really the driver situation of Basel III segments. So in a nutshell boiling down Dc's leftovers.

Andrew Lazar: Our next question comes from Andrew Lazar with Barclays. Great. Thanks so much.

Andrew Lazar: Good morning, everybody. I think... I guess I'm curious about the cadence of EBITDA as we move through 24. EBITDA obviously improves sequentially each quarter through 23. And I guess I'm curious whether this pattern continues as we start 24, meaning sequential improvement, or are there reasons that perhaps EBITDA losses expand again versus the fourth quarter, you know, as we move into the first half? And if so, why?

Got it thanks, so much.

Yeah.

Our next question comes from Matt worked with via to beat by Bob. Please proceed.

A man.

Hi, Thanks for the question one quickly on Americas, It sounded like foodservice and Americas revenue was up four 5%.

Total America, it's up 2% so it would imply not much growth for U S retail.

The standard at least we're seeing kind of milk business, it's up mid single digits or better in <unk> trying to make sure.

We're not missing anything in terms of non tracked channel impacts our inventory dynamics that held back U S retail revenue and <unk>.

Marie-Josée David: Because I think I heard you say that EBITDA dollars would be concentrated more in the back half. So maybe I've answered my own question, but I'm trying to get a sense of how you see the EBITDA cadence going as we go through the year and the rationale behind that cadence. Hi Andrew, this is Marie-Josée. Very nice meeting you.

Thank you Max and good morning, Daniel here, Yes.

I will I will go straight into your question. What you see is the net effect of the slotting fees in quarter four Max as you saw there is a very heavy MPD innovation agenda that the teams are working on starting.

Marie-Josée David: I will answer in two steps when you come to our meeting. So the first one is... Over the past 12 months, you know that we have established a foundation to drive a better business towards profitability. It's true that last year we guided to quarterly improvements, but we thought that it's more helpful now, out of this 12 months of establishing foundations, that we look more at the long-term time horizon than just the next. So this is just to give you an overview of why we are not driving quarter over quarter anymore. As you mentioned, our guidance calls for the second half to be stronger than the first half, on sales growth and on EBITDA. And this is true as well for our small. We are not guiding to quarters, but the first quarter, as I just said, will obviously have some dynamics, such as the Chinese New Year, such as ranges from new products, new distribution, driving, flocking, distribution, and trade to forth. I mean, you've heard us saying that a few times already.

At the end of last year, beginning of this year with some very exciting.

New listings and that the impact so.

You can see there in the in the volume growth and you can see in the very exciting market data that I'm sure you've seen them on January the 30 or so.

Listen we are seeing tdp's off the charts at 50% growth.

At 43% and growing remember a year ago, we were at 30 434.

And with growing the room to grow so record market shares and really very very nice dynamics in topline growth in our core <unk> business about 10% so.

<unk>.

Positive outlook and the net effect of the slotting fees Thats, what we can add backs.

Great makes sense and then a year ago, you laid out your expectation to achieve a high 20% gross margin. This quarter. Obviously the business has changed the strategy has changed.

Marie-Josée David: Also, as I mentioned in the previous remarks, we are working on eliminating costs for productivity and efficiency programs. So, now I answer the question on... Our EBITDA will be between $35 and $60 million, which again I want to emphasize, a year-over-year improvement of between 98 and 123 million. So, out of this improvement, just to be very precise, we are expecting roughly $20 to $25 million to come from SG&E savings. As a reminder, ACME includes distribution costs, and we know those are pretty variable. And the remaining portion of this information will come from... So, in a nutshell... The, uh, there is no guidance on Quatro or Quatro.

Looking at the bridges, you've provided over the last year. It seems like one headwind than larger than you might have expected a year ago.

The trade promotion and extra <unk> that you had it just hoping you could expand on why that played out a bit differently than expected and also what this means for gross margin and 24 I'll leave it there thanks very much.

Hi, Matt.

J D.

So look when we look at.

When we looked at where are we on this program for fleet there is no anything.

And we go now.

Either one we changed our margin guidance last quarter from high frequency because driven by the expected cost related.

Some of our reset plan.

In China, mainly from the store rationalization I think medicine combined.

From the foodservice in the U S.

So both of them that's somehow came slightly different from our forecast.

Marie-Josée David: There is more angle and long-term view. Understanding, as I just said, that the second half will be stronger than the first half and it is all about front-of-line work. Thank you for that, and then, yeah, keep going. Now, I wanted to make sure that that answered your question. Yes, it did.

It does absolutely nothing for sure here.

I mean, we said is right and wrong with us.

<unk> gross margin.

Key lever.

On our North Star and I'm very confident on that front.

Thank you Sarah.

Okay.

Oh.

Our next question comes from John Baumgartner with Mizuho Securities.

Marie-Josée David: Thank you. We talked a little about this in the prepared remarks, but I want to make sure I have it right. You know, despite a lot of the sequential progress that you clearly have been making and you've talked about.

Good morning, Thanks for the question.

Well I guess monthly score.

Good morning.

First off I wanted to come back to the impairment charge in Q4, I'm not entirely clear what what happened there. The press release noted certain events that resulted in discontinued construction can.

Can you disclose your events that happen like what drove the charge is there a pivot from here similar to another sort of <unk> agreement in your future.

Andrew Lazar: Push back the timing on getting to EBITDA positive, right, several times, and I don't expect it this year either. I guess if you had to just boil it down and sort of bucket it into maybe the top couple of things that have been the main rationale or reason for that shift and why maybe the visibility to that hasn't been what you would have wanted it to be. Like, what would those be?

Any comments would be helpful.

Thank you John Let me, let me take the contact point.

Honestly, what you've seen in the impairment charge for Q4 is only.

I insist on the execution of the discontinuation of the U S and EMEA facility, we announced in the Q3 call nothing new nothing different.

Jean-Christophe Platon: What I'm trying to assess is, why has it gotten pushed back? Why would your visibility to the EBITDA guidance you're providing for this year be more solid maybe than what it's been in the past couple of quarters, if you kind of understand my point. Thank you. Thank you, Andrew, and JC. I'll take this one.

Okay, Okay great.

Question for.

Daniel if I could going back to slide 14, and the innovation there in EMEA.

Yes, it was the jigger the many the one liter the one and a half liter it feels as though you're introducing a lot more complexity into the portfolio and I think back to the ice cream and frozen dessert strategy in Asia, and how complexity, they're impacting the business and profitability can you speak to the complex in EMEA are these products produced internally are they profitable I'm just wondering.

Jean-Christophe Platon: Clearly, the way we have guided you today is the outcome of our budgeting process, and if you say, what have you been doing since we last spoke?, one of the things we did was budgeting, which is evaluating scenarios in the light of the business context. We have the choice to go for profit only, but this is not in line with our North Star, which is profitable growth, because it could have impaired the future growth potential of this business. So as I explained, when we boil it down, to answer your question, the main drivers of this guidance, first, it is an immense turnaround journey to reduce... 220 million losses of adjusted EBITDA in two years. Second, we really wanted to protect healthy growth investments to capture the massive growth potential that we believe we have. And finally, taking into account the really diverse situations of all three segments. So, in a nutshell, boiling down, this is what drove us. Thanks so much.

At what point, the complexity becomes more of a headwind in our revenue opportunity for you.

Untested John well. Thank you that's a great question.

Waiting, which I would approach that question, Jon first from a consumer standpoint, and from a revenue pool from a growth space standpoint, we're doubling down on the range. The barista edition, which is was really pretty much define the rules of the game in plant based milk. So what you see here.

Since you made the comparison versus China. There is nothing similar to what we have reset that in China. This is doubling down vertically allow me to use these geometrical metaphor on what's working for us So it's more locations.

And more spaces and more cultural spaces for a coffee moments, that's that's incremental growth in different spaces. Jaeger you will see it in railway stations in Eric and.

In airplanes et cetera, et cetera, organic there are many customers that were not.

Prepared to welcome openly because we didn't have an organic opportunity that that's what you see from a customer consumer standpoint, and on your question on complexity had to do with the way we manage the operations in which we are relentlessly focusing on efficiency. These changes pretty much nothing to us.

Max Andrew Stephen Gumport: Our next question comes from Matt Gumport with BNP Paribas. Please proceed. Okay, thanks for the question. One quickly on America, so kind of like food service in America's revenue is up four and a half percent. Total America is up 2%, so it would imply not much growth for U.S. retail. In the scanner data, at least, we're seeing for the milk business, it's up mid-single digits or better in 4Q, so I just wanted to make sure we're not missing anything in terms of... non-trap channel impacts or inventory dynamics that held back U.S. retail revenue in 4Q. Thank you, Max, and good morning. Daniel here.

Is doubling down on the same supply chain network as we have today.

Europe is listening in and is Lance grow now more and more so more efficiency imagine from an engineering standpoint from a manufacturing standpoint, you are talking about the same pack sizes in the same pack formats, so youre doubling down on the utilization of the same line.

Okay, and then last if I could for a for guidance for 2024 I can appreciate the incremental conservatism there.

But and I think there was a mention of customer acquisition timing and some conservatism built in there I'm curious if we come back to that is that is that comment in the context of some of the volatility in the Americas foodservice with customer mix are you seeing anything at retail just given the softness in plant based beverage volumes are you seeing customers being with you.

Daniel Ordonez: Yes, I will go straight to your question. What you see is the net effect of the slotting fees in quarter four, Max. As you saw, there is a very heavy NPD innovation agenda that the teams are working on, starting at the end of last year and beginning of this year, with some very exciting new listings, and that's the impact. So you can see it in the volume growth, and you can see the very exciting market data that I'm sure you saw on January the 30th. Listen, we are seeing TDPs off the charts at 50% growth, and ACV at 43% and growing.

Less inclined to add Skus at this point any any color there would be helpful. Thank you.

No no.

Thank you Joe for the question not really know if a general assessment of adopting a conservative outlook and how we look at the business at the moment of setting the guidance.

And of course, there are multiple variables when it comes to that it's certainly not specifically related to foodservice or the largest customer as you might have in your head or the retail dynamics, which you know in the Americas, where we can discuss opposite direction.

Daniel Ordonez: Remember, a year ago, we were at 34, and with room to grow, so record market shares and really, very, nice dynamics in top line growth. In our core business, about 10%, so, you know, positive outlook and the net effect of the flocking fees, that's what we can add. Great, makes sense.

Thank you very much.

Youre welcome.

Thank you. This concludes our question and answer session I would like to turn the call for any closing remark.

Great. Thank you very much.

Marie-Josée David: And then a year ago, you laid out your expectation to achieve a high 20% gross margin. This quarter, obviously, the business has changed quite a bit, and the strategy has changed. Looking at the bridges you've provided over the last year, it seems like one headwind that's been larger than you might have expected a year ago was the trade promotion and mixed grant that you added. Just hoping you could expand on why this played out a bit differently than expected and also what this means for gross margin in 24. I'll leave it there. Hi Matt, this is MJ from Marjorie Lavery.

This concludes our our call feel free to reach out to Investor relations team, if you'd like to schedule any follow up call take care.

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

Yeah.

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Marie-Josée David: So, look, when we look at where we landed for World Profit, there is nothing structural or any cut-out. As a reminder, when we changed our margin guidance last quarter, from high 20s to mid-20s, it was driven by the expected costs related to the execution of our reset plan in China, mainly from this cure rationalization, as we mentioned, combined with the impact of the food service mix in the US. So both elements somehow came out slightly different from our process, but as I said, there is absolutely nothing structured here.

Thanks.

[music].

John Joseph Baumgartner: I mean, we said it right, and Jean-Christophe mentioned it, there is a gross margin as a key lever to deliver on our North Star, and I am very confident in 2020. [inaudible] Good morning. Thanks for the question. First off, I wanted to come back to the impairment charge in Q4. I'm not entirely clear what happened there, but the press release noted certain events that resulted in discontinued construction. Can you describe the events that happened?

Jean-Christophe Platon: What drove the charge? Is there a pivot from here similar to another ya-ya agreement in your future? Any comments would be helpful. Thank you, John.

Okay.

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John Joseph Baumgartner: Honestly, what you see in the impairment chart for Q4 is only, and I insist, only the execution of the discontinuation of the US and EMEA factory we announced in the Q3 call. Nothing new, nothing different. Okay, great. Second question for Daniel, if I could.

Daniel Ordonez: Going back to slide 14 and the innovation in EMEA, I guess it was the Jigger, the Mini, the 1L, the 1.5L. It feels as though you're introducing a lot more complexity into the portfolio. And I think that's the ice cream and frozen dessert strategy in Asia and how complexity there impacted the business and profitability. Can you speak to the complexity in EMEA? I mean, are these products produced internally?

Yes.

Okay.

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Daniel Ordonez: Are they profitable? I'm just wondering at what point complexity becomes more of a headwind than a revenue opportunity for you. Fantastic, John. Well, thank you. That's a great question.

Yeah.

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Daniel Ordonez: Well, there are two ways in which I would approach that question, John. First, from a consumer standpoint and from a revenue pool, from a growth space standpoint, we're doubling down on the range, the barista edition, which really pretty much defined the rules of the game in plant-based and in oat milk. So what you see here... Since you made the comparison versus China, there is nothing similar to what we have resettled in China. This is doubling down vertically.

Okay.

[music].

Thanks.

Yes.

Okay.

Daniel Ordonez: Allow me to use this geometrical metaphor on what's working for us. So it's more locations and more spaces and more cultural spaces for our coffee moments. That's incremental growth in different areas. Jigar, you will see in railway stations, in airplanes, etc., etc., organic.

Yes.

Hi.

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Daniel Ordonez: There are many customers that were not prepared to welcome Oatly because we didn't have an organic opportunity. That's what you see from a customer-consumer standpoint. I know your question on complexity had to do with the way we manage the operations in which we are relentlessly focusing on efficiency. This changes pretty much nothing for us. This is doubling down on the same supply chain network as we have today. In Europe, it's Vlissingen, and it's Lanz Corona, more and more.

John Joseph Baumgartner: So more efficiency. Imagine from an engineering standpoint, from a manufacturing standpoint, you're talking about the same pack sizes and the same pack formats. So you're doubling down on the utilization of the same line. And then last, if I could, for guidance for 2024, I can appreciate the incremental conservatism there. And I think there was a mention of customer acquisition timing and some conservatism built in there. I'm curious.

Yes.

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Daniel Ordonez: Can we come back to that? In the context of some of the volatility in America's food service with customer mix, are you seeing anything at retail, just given the softness and plant-based beverage volumes? Not, not, not, thank you, John, for the question. Not, not really.

Yeah.

Daniel Ordonez: No, it's a general assessment of adopting a conservative outlook in how we look at the business at the moment of setting the guidance. And, of course, there are multiple variables when it comes to that. It's certainly not specifically related to food service or the largest customer, as you might have in your head or the retail dynamics, which, you know, in the Americas, go in the exact opposite direction. Thank you very much.

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Operator: You're welcome. Thank you. This concludes our question and answer session. I would like to turn the call over to you for any closing remarks. Great, thank you very much.

Operator: This concludes our call. Feel free to reach out to the investor relations team if you'd like to schedule any follow-up calls. Take care.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Yes.

[music].

Operator: © The Ultimate Parody Site! © BF-WATCH TV 2021, ??? © BF-WATCH TV 2021, This is a production of the Center for Autism and Related Disorders The Center for Autism and Related Disorders The Center for Autism and Related Disorders The Center for Autism and Related Disorders The Center for Autism and Related Disorders The Center for Autism and Related Disorders The Center for Autism and Related Disorders ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Good day, and welcome to the Oatly Fourth Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode.

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Brian Kearney: To withdraw your question, please press star, then 2. Please note, this event is being recorded. I would now like to turn the conference over to Brian Kearney, VP of Investment Relations. Please go ahead, sir.

Jean-Christophe Platon: Good morning, and thank you for joining us today on Oatly's fourth quarter 2023 earnings conference call. On today's call are our Chief Executive Officer, Jean-Christophe Platon, our Chief Operating Officer, Daniel Ordonez, and our Chief Financial Officer, Maurice Jose W. Before we begin, please review the disclaimer on slide three. During this call, management may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our future results of operations and financial position, industry and business trends, business strategy, market growth, and anticipated cost savings. These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could differ materially from actual events or those described in these forward-looking statements. Please refer to the documents we have filed 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.

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Jean-Christophe Platon: Also, please note on today's call, management will refer to certain non-IFRS financial measures, including EBITDA, adjusted EBITDA, constant currency revenue, and free cash flow. While the company believes these non-IFRS financial measures will provide useful information, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with IFRS. Please refer to today's release for reconciliation of non-IFRS financial measures to the most comparable measures prepared in accordance with IFRS. In addition, Oatly has posted a supplemental presentation on its website for reference. I'd like to now turn the call over to John Kristof. Thank you, Brian, and good morning, everyone.

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Jean-Christophe Platon: Slide 5 has the key messages that I want you to take away from today's presentation. First, 2023 was a pivotal year for the company, where we focused on stabilizing and recalibrating our business. We achieved a lot last year, including fully funding our business plan by raising $465 million, transitioning our senior leadership team, taking actions to right-size our SG&A structure, doubling down on our asset-life supply chain strategy by entering a long-term strategic partnership with Yaya Foods, as well as discontinuing the construction of production facilities in the US and the UK, both of which will help us better focus our operations while adding appropriately timed expansion And we have also increased our focus on the most profitable parts of our business to ensure that our goals will be profitable and sustainable.

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Jean-Christophe Platon: We did this all while improving our financial profile, and we ended 2023 with a solid fourth quarter where both top and bottom line results exceeded our expectations. As we look forward to 2024, our financial guidance reflects solid top-line goals while delivering significant bottom-line improvements as we maintain our focus on driving the business towards profitable goals. Specifically, for the full year 2024, we are guiding to the following: constant currency revenue growth in the range of 5 to 10 percent, and adjusted BDA losses in the range of $35 to $60 million, and for capital expenditure to be below $75 million. Slide six gives you an overview of the progress that we have been making on moving each region towards consistent, profitable growth. You may recall that we began with the EMEA segment, where we prepared for goals by setting clear strategies for our team. We also increased the simplicity of the region by reducing the spans and the layers in order to enable them to move quickly.

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Good day and welcome to the elderly fourth quarter 2023 earnings conference call all participants will be in a listen only mode.

Should you need assistance. Please signal a conference specialist by crashing Daystar key followed by zero.

After todays presentation, there will be an opportunity to ask questions.

To ask a question you May press Star then one on the Touchstone of corn so it.

Your question. Please press Star then two.

Please note. This event is being recorded I would now like to turn the conference over to Brian Kearney.

VP of Investor Relations. Please go ahead Sir.

Good morning, and thank you for joining us today on <unk> fourth quarter 2023 earnings conference call.

Jean-Christophe Platon: And I am happy to report that the America segment reported its first month of positive adjusted EBITDA during the fourth quarter and that the Asia segment is making very good progress. We still have a lot of work to do in order to get them both to consistent profitable growth, which is why those segments do not yet have their last checkmarks on our dashboard slide. On slide seven.

On today's call are Chief Executive Officer, John Kristoff for Tom Our Chief operating Officer, Daniel or don't Yes, and our Chief financial Officer for HSA GW.

Before we begin please review the disclaimer on slide three during.

During this call management may make forward looking statements within the meaning of the private Securities Litigation Reform Act of 1095, including statements regarding our future results of operations and financial position industry and business trends business strategy market growth and anticipated cost savings.

Jean-Christophe Platon: You can see the financial results of our actions. Both our gross margin and adjusted BDA have improved as we have moved through the year, just as one example of how much progress we have made in such a short amount of time. For example, the midpoint of our guidance range for the full year 2024 adjusted EBITDA is better than what we reported in the second quarter of 2023 alone. We are clearly making good progress.

Please refer to the documents were filed 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.

Also please note on today's call management will refer to certain non <unk> financial measures, including EBITDA adjusted EBITDA constant currency revenue and free cash flow.

Jean-Christophe Platon: Now that we believe a big part of the heavy lifting of recalibrating and stabilizing our business is behind us, our teams are excited to refocus their energy on growing the business and continuing to drive results. In 2024, our top priority remains driving profitable growth. The entire organization is focused on driving the business towards structural, consistent, profitable growth. We have made progress on improving our profitability, and we will continue to do so. To drive towards profitability, we must bring the Oatly magic to more people. We have a terrific brand that resonates with consumers around the world, and we believe our products are second to none. In 2024, we will be stepping up our efforts to bring the Oatly magic to even more consumers. Each region will do this slightly differently.

While the company believes these non <unk> financial measures will provide useful information and the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with IRS.

Please refer to today's release for a reconciliation of non <unk> financial measures to the most comparable measures prepared in accordance with IRS.

In addition, only has posted a supplemental presentation on its website for reference.

I'd like to now turn the call over to John Kristoff.

Thank you, Brian and good morning, everyone.

Slide five as the key messages that I want you to take away from today's presentation.

First 2023 was a pivotal year for the company, where we focused on stabilizing and Recalibrating our business.

We have achieved a lot last year, including <unk>.

Fully funding our business plan by raising $465 million.

Transitioning our senior leadership team taking.

Taking actions to right size, our SG&A structure.

Jean-Christophe Platon: But whether we are launching new products, expanding with new channels, or activating the brands in our unique Oatly voice, the overall goal is to bring our products to more consumers. We must continue to work on the calibration of our resources. This calibration includes work on our supply chain as well as support functions in the supply chain. This includes completing our work on discontinuing the construction of our Americas and EMEA production facilities, as well as the valuation of our Asian supply chain for support functions. This includes delivering on our SG&A cost reduction program, which remains on track. Finally, the entire organization will also continue to focus on strong execution to ensure that we meet the expectations of our customers and consumers. As we execute in 2024, we will be true to our mission and keep our eyes on our long-term opportunities. The World Meteorological Organization has confirmed that 2023 was the warmest year in history.

Doubling down on our asset light supply chain strategy by entering a long term strategic partnership with <unk> foods as well as this continuing the construction of the production facilities in the U S and the U K, both of which will help us better focus on operations.

While adding appropriately timed expansion and capital efficiency.

And we also increased our focus on the most profitable parts of our business to ensure that our goals will be profitable and sustainable.

We did this all while improving our financial profile and we ended 2023 with a solid fourth quarter, where both top and bottom line results exceeded our expectations.

As we look forward to 2024.

Our financial guidance reflects solid topline goals.

While delivering significant bottom line improvement as we maintained our focus on driving this business towards profitable growth.

Specifically.

For the full year of 2024.

We are guiding to the following.

Constant currency revenue growth in the range of 5% to 10%.

And adjusted EBITDA loss in the hedge of 75 to 16 million buildup.

Jean-Christophe Platon: Given that our food systems are responsible for one-third of total human-caused global greenhouse gas emissions, we, as a society, need to drive a shift in our food system. And we, at Oatly, intend to lead that shift by making it easier for consumers to make more sustainable choices. The opportunity is massive. Global dairy retail sales are projected to reach nearly $660 billion in 2023, and food service sales would make that number even bigger. Converting consumers from dairy products to oat milk products will drive a reduction in carbon emissions, and we are working to convert those consumers to our products, as well as to reduce the carbon footprints of our own products.

And for capital expenditure to be below $75 million.

Slide six gives you an overview of the progress that we have been making on moving each region.

Consistent profitable goals.

You may recall that we began with the EMEA segment, where we prepare for growth by taking clear strategies for our teams.

We also increased the simplicity of the region by reducing the spans and layers in order to enable them to move quickly.

Now the business is driving consistent profitable goals, whilst reinvesting behind the brand building and innovation.

We have seen supplied the same simple framework to the Americas, and Asia, setting clear strategies and the right sizing these organizations.

Jean-Christophe Platon: Sustainability sits at the heart of Oatly and is a core component of our mission. Recently, we have made some modifications to our organization in order to bring our sustainability experts closer to the business in order to increase their impact. As part of this evolution, I will be assuming the responsibilities of being the company's chief sustainability officer. We also know that we must continue to balance purpose and performance. As Weinstein believes, performance without purpose is meaningless.

To increase focus and agility.

These two regions have improved their profitability for these combination of cost discipline and mix management.

And I am happy to report that the Americas segment reported its first months of positive adjusted EBITDA during the fourth quarter.

And that the Asia segment is making very good progress.

We are still a lot of work to do.

Jean-Christophe Platon: I also know that purpose without performance is not possible. As an illustration of Oatly's purpose and performance working hand-in-hand, we see a massive opportunity to continue to expand our margins as a lever to fuel our company's purpose of converting consumers to our products. Our full-year 2023 gross margin is approximately half of our long-term target of 35% to 40%. As we grow our volumes, leverage our assets, and drive additional efficiencies, we expect our margins to expand so that we can expand our impact. With that, I will now turn the call over to our Chief Operating Officer, Daniel Ordonez. Thank you, JC, and good morning, everyone.

But to get them both to consistent profitable growth, which is why those segments do not kept up their last check marks on our dashboard slides.

On slide seven.

You can see the financial results of our actions.

Both our gross margin and adjusted EBITDA of improved as we've moved through the year.

Just as one example of how much progress we have made in such a short amount of time.

The midpoint of our guidance range for the full year 2020 full adjusted EBITDA is better than what we reported in the second quarter of 2023 alone.

We are clearly making good progress.

Yes.

Now that we believe a big bulk of the heavy lifting of Recalibrating of stabilizing our business is behind us.

Teams are excited to refocus their energy on growing the business and continuing to drive results.

In 2020 full our top priority remains driving towards profitable growth.

The entire organization is focused on driving the business towards cultural consistent profitable growth.

We have made progress on improving our profitability and we will continue to do so.

To drive towards profitability, we must bring be utterly magic to more people.

Have a terrific brand.

Rates with consumers around the world and we believe our products are second to none.

In 2024, we will be stepping up our efforts to bring the Ot magic to even more consumers.

Each region with executives slightly differently.

But whether we are launching new products.

Pending with new channels or activating the brand's unique OTT voice. The overall goal is to bring our products to more consumers.

Next we must continue to work on the calibration of our resources.

These calibration includes work on our supply chain as well as support functions.

On the supply chain. This includes completing our work on discontinuing the construction nickel Americas and EMEA production facilities.

Well the valuation of our Asian supply chain.

On the support functions.

This includes delivering on our SG&A cost reduction program, which remains on track.

Finally, the entire organization, but also continue to focus on strong execution to a.

Daniel Ordonez: On slide 13, you can see some of the progress we have made in our new markets. Our strategy is to enter these new markets by first entering the specialty coffee channel to create the old mill category, a phenomenon in each market. These cafes are purely focused on super-high-quality coffee and the coffee experience.

Sure that will meet the expectations for customers and consumers.

As we execute in 2024, we will be true to our mission and keep our eyes on our long term opportunity.

The World Meteorological organization confirmed that 2023 look the warmest year in history.

Daniel Ordonez: And they are at the cutting edge of the coffee culture. By demonstrating our product quality and establishing trust within its community, we build up brand credibility and a value proposition. As you can see, our strategy is working. We are already selling our products at a significant portion of these coffee specialty cafes in our new markets, with most countries having over 60% represented. Going forward, we plan to continue nurturing these relationships while expanding beyond this channel. Now, turning to slide 14, where we will start looking ahead at our plans for the EMEA segment. In 2024, we are planning to launch several exciting new products that will help round out our coffee portfolio. A decade after the introduction of the iconic Barista Edition that defined the rules of the game in this category, we're stepping up on our mission to drive further conversion away from cow's milk and into oat milk by making it easier and more accessible for our consumers and customers with new innovations and new formats.

Given that our food systems.

As possible for one third of total human caused global greenhouse gas emissions.

As a society.

Two drivers shift FTSE Sir.

And we only intend to lift up ships by making it easier for consumers to make more sustainable choices.

The opportunity is massive.

Global dairy retail sales were nearly 660 billion.

In 2023.

Foodservice sales would make that number even bigger.

Converting consumers from daily products to <unk> products.

We'll drive a reduction in carbon emissions and we are working to convert those consumers to our products as well as reduce the carbon footprint of our own products.

Sustainability seats at the heart of <unk>.

These are key components of our mission.

Recently.

We have made some modifications to our organization in order to bring those sustainability expense closer to the business in order to increase the impact.

As part of this evolution will be assuming the responsibilities of being the company's chief sustainability officer.

Daniel Ordonez: Specifically, we're launching the following: a barista edition jigger, which is an individual portion size serving great four locations such as airplanes, trains, and cafes. An organic version of our barista products, which will perform just as well as the original version. A version of our barista designed for lighter or medium-roasted coffee and high-acidity coffee.

We also know that we must continue to balance purples and performance.

As lifestyle belief performance with purpose is meaningless.

I also know that purpose with outperformance is not possible.

As the newest station of <unk> purpose and performance working hand in hand.

We see a massive opportunity to continue to expand our margins.

Daniel Ordonez: Finally, a 1.5-liter version of our original barista, which is focused on saving baristas time and minimizing packaging waste. Be sure to see us with these exciting new products at your local cafe, in the air, or on the rails very, very soon. Turning to slide 15, we have had success in expanding consumers' usage of our products by offering them a range of options. We have been calling this our Go Blue strategy.

As the lever to fuel our company's purpose of converting consumers to our products.

Our full year 2023 gross margin is approximately half.

Our long term target of 35% to 40%.

As we grow our volumes leverage our assets and drive additional efficiencies, we expect our margins to expense so that we can expand our impact.

With that I will now turn the call over to our Chief operating Officer Daniel <unk>.

Thank you J T and good morning, everyone.

I'll begin my discussion on slide 11, with EMEA, which is our largest operating segment.

<unk> segment had a strong 2023 and <unk> finished the year with a solid quarter.

<unk> currency net revenue growth was just below 12% in the quarter. Some customers. Both product ahead of our price increases last year, which drove a strong 11, 5% volume growth in the year ago period. This impacted the year over year growth and however.

Looking through that we continue to see this business as why is strong and the retail scanner data I will potentially support exactly that view.

The segment's adjusted EBITDA margin improved to 15, 9% in the fourth quarter with capacity utilization just in the mid <unk> in the quarter. We continue to believe this segment continues to have room to improve margins.

Turning to slide 12 on the left you can see that the category growth remains healthy with all drinks growth of 11%.

Daniel Ordonez: Overall, we are very pleased with the progress on executing and improving our margin mix and delivering on our cost-saving actions. On slide 18, you can see our progress in retail on the left-hand side showing that we have been steadily making progress on gaining market share in the chilled oatmeal category, while our market share is above 25% in the four weeks ending December the 30th. The right-hand side chart shows our chilled oat milk percentage ACV.

On the right you can see that throughout the year, we have steadily gained market share in our largest established markets.

We're very proud to say that during the second half of 2023, we have achieved the number one market share in all plant based meals in Germany, Austria, Switzerland and in the Netherlands.

Is quite a feat given that we only sell oatmeal.

One crop and not multiple crops other plant based milks.

On Slide 13, you can see some of the progress we have made in our new markets.

Our strategy is to enter these new markets by first entering the specialty coffee channel to create the old mill category that phenomenon in each market.

These cafes are purely focus on super high quality coffee and the coffee experience and they are the cutting edge of the coffee culture.

<unk> demonstrated our product quality and establishing trust within each community, we build our brand credibility and value proposition.

Daniel Ordonez: So we expect this number to continue to increase. So overall, very good progress on the retail side of our business. Slide 19 brings the impact of the shelf resets to life and a bit better. As you can see in these pictures, we now have a good branding block on our new product. Unsweetened, Super Basics, and Creamers are all of those on the shelves.

You can see our strategy is working.

We are already selling our products at a significant portion of these coffee specialty cafes in our new markets with most countries over 60% represented.

Going forward, we plan to continue nurturing these relationships while expanding beyond this channel.

Now turning to slide 14, where we will start looking ahead at our plans for the EMEA segment.

In 2024, we are planning to launch several exciting new products that will help round out our coffee portfolio.

A decade after the introduction of the iconic barista edition that define the rules of the game in this category, we're stepping up on our mission to drive further conversion away from cows milk, adding two old milk by making it easier and more accessible for our consumers and customers with new innovations and new.

Format.

Specifically, we are launching the following.

Our East addition, giga, which is an individual portion size serving great four locations at airplanes trains and cafes.

Inorganic version of a barista product, which will perform just as well as the original version.

The version of our <unk> study sign for lighter or medium roasted coffee and high acidity coffee.

Finally, a one five liter version of our original Barista, which is focused on saving very time and minimizing packaging waste.

Be sure for us with these exciting new products at your local cafe in the air or at the rates very very soon.

Finally, we will be launching a new unimproved old guard in selected geographies with current high per capita yogurt consumption.

It contains live bacteria and we believe it is the best tasting plant based yogurt on the market and it is on par with dairy yogurt, if not better.

Turning now to our Americas segment on slide 17.

In the fourth quarter, the Americas segments continue to improve revenue grew 2%. Despite some top line headwinds in foodservice that I will discuss.

<unk> EBITDA continued strength to improve steadily as J P mentioned earlier, the Americas segments reported its first ever month of positive adjusted EBITDA. During the quarter. Overall, we are very pleased with the progress on executing and improving our margin mix and delivering.

Daniel Ordonez: As we discussed on last quarter's call, the Asia team has moved quickly to implement the first stage of their strategy reset plan. On this slide, you can see the impact of those actions. By refocusing the business and reducing costs, there has been a top-line impact and a significant bottom-line impact. In the fourth quarter, we saw the top-line trend start to stabilize, while adjusted EBITDA improved by $10 million sequentially. Slide 24 focuses on the supply chain. You will recall that last quarter, we told you that in Asia, the team reduced their SKUs by over 70%. This helped improve efficiency in the plant.

On our cost saving actions.

On Slide 18, you can see our progress in retail on the left hand side showing that we have been steadily making progress on gaining market share in the chilled ultimate category, while our market share is about 25% in the four weeks ending December 30th.

The right hand side chart shows our chilled oatmeal percentage ACB.

Daniel Ordonez: We have also significantly shifted our production from our hybrid facility in Singapore to our end-to-end facility in Manchin, China, which is closer to our distribution point. With fewer SKUs to produce, the management facility is able to run longer product runs and, therefore, increase efficiency. The combination of the SKU's reduction and production shift has resulted in a reduction of our cost of goods per liter by over 30% since the first quarter of 2023. Now turning to slide 25.

As the impact of the shelf reset is starting to flow through.

And I'll talk about those shelf resets have been reflected in the scanner data yet. So we expect this number to continue to increase.

So overall very good progress on the retail side of our business slightly.

Our products are now showing up in more places and they are standing out better on ships.

The Americas segments grew at foodservice revenue by four 5% year on year in the fourth quarter.

Excluding its largest foodservice customer this business grew nearly 26%.

Daniel Ordonez: As I mentioned on the last call, our sales teams are active and energized. They have been given the direction to continue to build the business with our core channels, geographies, and SKUs, so our business is strong, profitable, and sustainable. Maintaining a high level of channel intimacy will be important as we look to rebuild the top line and improve profitability. As we have been speaking with customers, we know we will need to round out our portfolio with additional SKUs that are optimized for the food service channel. This includes products that hit certain price points or flavorings that cater to seasonal preferences.

So we are clearly, making excellent progress in expanding our food service customer base to bring the <unk> to more consumers more customers, while we are driving improved margins.

Moving down the P&L slide 21 shows that our co packer consolidation in Americas drove solid results throughout the year.

This initiative has driven the segment's cost of goods can lead to them by a solid 12% from quarter one to quarter. Four this was enabled by the yoga foods transaction. We completed earlier this year as well as our strong ongoing partnership with innovation foods at our <unk> facility.

Both the <unk> foods and innovation pools have been terrific partners.

Daniel Ordonez: And in 2024, we plan to introduce some of these products, and we will rebuild this business. With that, I would now like to turn the call over to our CFO, Mary Jose David. MJ, MJ, MJ, MJ, MJ, MJ, MJ, MJ, MJ, MJ, MJ, MJ, MJ, MJ, MJ, MJ, MJ, MJ, MJ, We reported 4.6% year-over-year revenue growth and constant currency revenue growth of 2.5%. This was above our expectations, driven by our performance in our EMEA and Americas segments. Gross margin for the quarter was 23.4%, which is a 750 basis point improvement versus the prior year quarter and a 600 basis point sequential improvement from Q3. Gross profit dollars were in line with our expectations, while the percentage margin was slightly below our expectations, partially driven by an insurmountable mixed impact. Adjusted EBITDA was a loss of $19.2 million, which was ahead of our expectations.

As we continue to work with them to become more and more efficient. We believe we can continue to reduce our costs going forward.

In 2020 for the Americas segments, we'll look to capitalize on the progress we made in 2023 and bring the <unk> magic to more people. For example, we will be executing several exciting campaigns, such as partnering with James and innovations and Activations that are tailor made for the health.

And fitness community.

Target automobile consumers in particular.

We will also be continuing our partnership with minor League baseball, while we have some very exciting activations planned.

This is such a great way to expand the reach of our brands beyond the country's biggest cities. So we look forward to sharing more with you Chuck before the 2024 season begins.

Turning now to Asia on Slide 23.

We discussed on last quarter's call. The Asia team has moved quickly to implement the first stage of their strategy reset plan on this slide you can see the impact of those actions.

By refocusing the business on reducing costs that has been a top line impact and a significant bottom line impact in the fourth quarter. We saw the topline trend started to stabilize.

Adjusted EBITDA improved by $10 million sequentially.

Slide 24 focuses on the supply chain.

You will recall that last quarter, we told you that in Asia. The team reduced the risk it used by over 70%. This helped improved efficiency in the plants.

We have also significantly shifted our production from our hybrid facility in Singapore for our end to end facility and mindshare in China, which is closer to our distribution points with fewer skus to produce the mansion facilities able to run longer product runs and therefore increase efficiency.

Combination of the Skus reduction in production shift has resulted in a reduction of our cost of goods per liter by over 30% since the first quarter of 2023.

Now turning to slide 25.

While we are pleased with the progress to date, we note that we still have work to do to get the segment to where it needs to be and the team is squarely focused on achieving profitable growth.

Marie-Josée David: Slide 29 shows the revenue bridge by segment. EMEA continued to report strong growth with 11.8% constant currency revenue growth led by a 11.3% price mix improvement which was driven by the price increase we took last winter and which we started to anniversary this quarter. America's 2.4% growth was driven by 9.2% volume growth, which was added by distribution gains and selling of our new products. Price Mix was a headwind of 6.8%, driven by new product-related slotting as well as customer mix. Asia's 18% constant currency decline was driven by the actions we have taken as part of the Segment Strategic Reset Plan. Volume declined 3.3%, which is a significant improvement over the first quarter's 15% decline. Price mix declined 14.7%, largely driven by the antiviral cells mix as we rationalized skews that were higher priced but lower margin.

Phase one of our reset plan was to cut back on Sku's drive supply chain efficiency and reduce SG&A phase III is to rebuild the foodservice business in a disciplined way.

As I mentioned on the last call. Our sales teams are active and energize. They have been given the direction to continue to build the business with our core channels geographies and it skews. So our business is strong profitable and sustainable.

Maintaining a high level of channel intimacy will be important as we look to rebuild the topline and improve profitability.

These products, we will rebuild this business.

With that I would now like to turn the call over to our CFO noninterest said debit and Jay.

Thank you Danielle and good morning, everyone.

Slide 27 gives you another view of the P&L for the quarter.

We reported 12, 6% year over year revenue growth and constant currency revenue growth of two 5%.

Marie-Josée David: Slide 30 shows you the sequential quarterly-over-quarter gross margin break. A year-over-year bridge is provided in the appendix of this presentation. The largest driver of the sequential improvement in gross margin is the 490 basis points benefit from Asia's strategic reset. As Daniel mentioned, this is a combination of cutting low-margin SKUs and driving increased efficiency in the supply chain. Within EMEA and Americas, we saw a 60-basis-point positive impact from pricing net of trade spend, and that was offset by a 250-basis-point headwind, primarily from customer mix.

This was above our expectations driven by outperformance in our EMEA and Americas segment.

Gross margin for the quarter was 23, 4%, which is a 750 basis point improvement versus the prior year quarter, and the 600 basis point sequential improvement from Q3.

Gross profit dollars were in line with our expectations, while the percentage margin was slightly below our expectation.

Firstly, driven by and some of our mix impact.

Adjusted EBITDA was a loss of $19 2 million, which was ahead of our expectations.

This was $41 2 million improvement versus the prior year and $16 8 million improvement versus the first quarter.

Marie-Josée David: We also saw continued benefits from supply chain efficiencies coming from absorption and America's CopaCorps consolidation, all of which drove 270 basis points of improvement. Slide 31 shows our adjusted EBITDA by segment. As you can see, each segment reported a significant improvement compared to the prior year for both the quarter and full year. Also, the fourth quarter was the first time that the sum...

Slide 28 shows the bridging items of our quarterly revenue growth.

You can see volume increased 2% and price mix improved by 35% to 5% constant currency revenue growth.

Foreign exchange headwind of two 1%, resulting in $4, 6% total revenue growth for the quarter.

Slide nine shows the revenue bridge by segment.

EMEA continued to report strong growth we've had.

One 8% constant currency revenue growth.

By 11, 3% price mix improvement, which was driven by the price increase we took last winter and we started to anniversary this quarter.

And Marie Jos to 4% growth was driven by nine 2% volume growth, which was added by distribution gains and sell in of our new products.

Price mix was a headwind of six 8% driven by new product related stocking as well as customer mix.

Yes, 18% constant currency decline was driven by the actions we have taken as part of this segments strategic reset plan.

Volume declined three 3%, which is a significant improvement for the FERC for tourists 15% decline.

Price mix declined 14, 7% largely driven by unfavorable sales mix as we have rationalized skus, that's where higher priced but some of our markets.

Slide 14 shows you the sequential quarter over quarter of gross margin bridge.

Year over year Bridge is provided in the appendix of this presentation.

The largest driver of the sequential improvement in gross margin is a 490 basis point benefit from Asia strategic reset.

Daniel mentioned this is a combination of cutting low margin skus and driving increased efficiency in the supply chain.

Within EMEA and Americas, we saw a 60 basis point positive impact from pricing net of trade spend and that's was offset by a 260 basis points headwind primarily from customer mix.

We also saw continued benefits from supply chain efficiencies.

Coming from absorption and Americas co Packer consolidation.

Which drove 270 basis points improvement.

Now I talked to one shows our adjusted EBITDA by segment.

As you can see each segment reported a significant improvement compared to the prior year for both the quarter and full year.

Marie-Josée David: We expect constant currency revenue growth in the range of 5 to 10 percent. We expect currency to be a small headwind. We expect the second half constant currency growth rate to be stronger than the first half, largely driven by volume growth acceleration in each region. For adjusted EBITDA, we expect to report a loss of between $35 million and $60 million in 2024.

Also the fourth quarter was the first time that this some.

Got all of the adjusted EBITDA for the three regions less clarity.

It's clear.

That the board strategic actions, we have been taking are driving results.

After quarter, we have been executing our plan improving the business and driving the business towards profitable growth.

Turning to our balance sheet and cash flow on slide 32.

Marie-Josée David: At the midpoint, this would be a year-over-year improvement of over $100 million from where we landed in 2023. We expect this improvement to be driven by an improvement in gross profit dollars, with some benefits coming from SG&A as we continue to deliver on our communicated cost reduction program. We expect adjusted EBITDA dollars to be stronger in the second half than in the first half. We expect the increase in gross profits to be primarily driven by sales volume growth. We also expect the benefits of certain lower costs, which is partially driven by easing inflation in certain inputs but also driven by our supply chain, eliminating costs through productivity and efficiency programs.

Our liquidity position is strong and we are continuing to improve our free cash flow.

The left hand chart shows our liquidity position at the end of the quarter.

We ended the quarter with 464 million in total liquidity comprised of $249 million of cash and equivalents and $205 million of Undrawn bank facilities.

The right hand chart shows that we have made good progress in improving our free cash flow.

In the fourth quarter free cash flow was enough so for Q1 yet.

As I have said previously improving our cash flow is a priority for me and our organization is very focused on it.

As such we expect our cash flow to continue to improve driven primarily by improvement in adjusted EBITDA and added by improvements in working capital metrics as well.

Capital expenditures.

So I've heard you free shows you our 2020 for guidance.

Marie-Josée David: While we believe that the business continually improves, our guidance range for adjusted EBITDA is below what we were previously targeting. That is primarily driven by more conservatism around our assumptions on new customer acquisitions and on new product launches while continuing to prioritize brand building investments to energize the brand. We will continue to aggressively pursue new business and more efficient ways of working, and we have confidence in our volume-led growth in 2024. However, we believe that it's appropriate to have a more balanced outlook at this point. [inaudible] We are reiterating our guidance of below $75 million for 2024, which continues to assume that our third Asian manufacturing facility remains end-to-end. As a reminder, we are continuing to evaluate our options for this plan. Lastly, I would like to update you on a change we are making to our reportable segment. Effective the beginning of fiscal 2024, we began managing our operation with slightly different reportable segments: Europe and International, North America, Greater China, and Corporate. The most significant change is that the Western China business will be separated from the Asia segment.

Our outlook reflects the continued impact of the actions we have been seeking to build a stronger business and set ourselves for strong sustainable long term profitable growth.

Turning to details.

We expect constant currency revenue growth in the range of 5% to 10%.

We expect currency to be a small headwind.

We expect the second half constant currency growth rate to be stronger than the first half largely driven by volume growth acceleration in each region.

Well I adjusted EBITDA, we expect to report a loss of between $35 million and $16 million in 2024.

The midpoint this would be a year over year improvement of over $100 million from where we landed in 2023.

We expect this improvement to be driven by an improvement in gross profit dollars with some benefits coming from SG&A as we continue to deliver on our communicated cost reduction program.

We expect adjusted EBITDA to be stronger in the second half than in the first half.

We expect increasing gross profit to be primarily driven by sales volume growth. We also expect the benefit from certain lower cost, which is partially driven by easing inflation in certain input, but also driven by our supply chain eliminating cost for productivity and efficiency.

Program.

Why do we believe that the visa <unk> continually improved our guidance range for adjusted EBITDA is below what you were previously targeting.

We will continue to aggressively pursue new business and more efficient ways of working.

Marie-Josée David: The rest of the Asia business, which includes the Singapore manufacturing facility, together with the current EMEA segment, will constitute the new Europe and international segment. We will also be moving R&D expenses out of corporate and into the individual segments to better align with how we allocate resources. In the coming weeks, we will provide recast financial information that is consistent with our new reporting segment structure. We will begin to provide our financial results under the new reportable segment with our first quarter results. This concludes our preferred remarks. (Inaudible) Thank you. We will now begin the question and answer session. To ask a question, you may press star one on your touchtone phone.

And we have confidence in our volume led growth in 2024.

However, we believe that it's appropriate to have a more balanced outlook at this point.

Well capex.

We are re tiara is king.

Guidance of below $75 million for 2024, which continues to assume that our first Asian manufacturing facility remains and two N.

As a reminder, we are continuing to evaluate our options for display.

Lastly, I would like to update you on a change we're making to our reportable segments.

At the beginning of fiscal 'twenty before we began managing our own version with slightly different reportable segments.

Europe and international.

In North America, Greater China and corporate.

The most significant change is that the worst of our China business will be separated from the Asia segment.

Operator: If you are using a speakerphone, please pick up your handset before pressing the. If at any time your question has been addressed, you may... would like to withdraw your question, please press star then 2. Our first question comes from Michael Lavery with Piper Sandler. Please proceed. Good morning.

The rest of the Asia Pizza, which includes this hunger for our manufacturing facility together with the current EMEA segment will constitute the new Europe and international segments.

We would also be moving R&D expenses also for print and into the individual segments to better align with how we allocate resources.

In the coming weeks, well provide recast financial information that is consistent with our new reporting segment structure.

We will begin to provide our financial results under the new reportable segment with our first quarter results.

This concludes our prepared remarks.

Operator, we are now prepared to take questions.

Yeah.

Thank you Ware.

Now begin the question and answer session to ask a question you May press Star one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the keys.

At this time your question has been address it you'll be.

We would like to withdraw your question. Please press Star then two.

Our first question comes from Michael Lavery with Piper Sandler. Please proceed.

Good morning, Thank you.

Okay.

You touched on it in your prepared remarks on the status of the relationship with your largest food service customer.

Americas, and how that may or may not be changing can you, maybe just give a little bit more detail there. Please.

Thank you Michael Daniel here, how are you. Thank you for joining us this morning.

Listen as you know.

One we have said repeatedly in the last earnings.

Have only one start and that is profitable growth.

So we have since last earnings continued to make steady progress on channel mix in general we are actively rebalancing growth between the very important foodservice customers that are low margin.

Daniel Ordonez: For example, universities, campuses, workplaces, and all other iconic high street customers that you've seen in recent press releases. So, as you saw in the prepared remarks, we're making steady progress in these two domains, retail and food service, outside the largest customer, and the headspace for growth continues to be very significant. Now, to your questions. We continue to work very well with all customers, and let me underline all.

With significant growth in higher margin channels that presented very significant growth opportunity for us.

I appreciate that seeing that in the in the prepared remarks and in the presentation.

These channels are number one retail.

Number two the foodservice sub channels in which the brand can be experienced to its fullest by customers right. Like example, universities campuses workplaces.

And all other iconic high street customers that you've seen in recent in recent press releases. So as you saw in the prepared remarks, we are making steady progress in these two domains retail and foodservice outside the largest customer and the head space for growth continues to be very significant now to your question. We continue to work.

Very well with all customers and let me underline for our largest customer is no different to that so in this in fact over the past few months.

Our conversations have become more and more constructive and.

And we believe there is path forward that is mutually beneficial.

With regards to the 2024 outlook without giving any forecast by customer we expect less of a quarterly headwind going forward versus what we presented at the last earnings. So thank you Michael for the question.

Marie-Josée David: And just given the updated thoughts on 2024 EBITDA and the progression there, I know on slide 32, I think it is, you touch on liquidity and the balance sheet, but can you give a sense of your expectations a little bit further out? Would your change now suggest that you may be coming up towards another capital raise at some point? Or do you have a multi-year plan that you've kept that off the table? Just how should we think about the trajectory there and what your expectations are? Yes, hi Michael. This is Margot Lee.

That's helpful.

Just given the updated thoughts on 2020 for EBITDA and the progression there I know.

Slide 32, I think it is your touch on liquidity in the balance sheet, but.

Can you give a sense of your expectations a little bit further out.

Good.

Or would you change now suggests that you may be.

Coming up towards another capital raise at some point or.

Do you have a multiyear plan that you've cut that off the table just how should we think about kind of the trajectory there and what your expectations are.

Yes, Hi, Mike This is Michael.

Marie-Josée David: Let me go back first to the pre-polled remarks where I mentioned... that our liquidity position is strong and we continue to improve our... We believe when I say we believe our liquidity position remains really strong, it's because we are adequately..., are funded from a BNF fund. We have Henry Cash Panel, as well, as you know, we've over... We are, as well, as we pulled out that quarter, driving improvement on our free cash flow from, of course, Stronger Adjusted Visa that has well-working capital opportunities. You know that those metrics from working capital are definitely super important. So we are definitely strong on this front. We are fully funded until we reach free cash flow positive. And we will continue to work on that. That's really helpful. Thanks so much.

Let me first go back to the prepared remarks, where I imagine that's our liquidity position is strong and we continue to improve our free cash flow.

Our we believe our when.

When I say, we believe our liquidity position remains really strong because we are I think courtney.

Sunday from Athena excellent.

We have healthy cash center as well as you know refund for backup.

We are as well.

<unk>.

Quarter driving an.

Our free cash flow from of course stronger adjusted EBITDA, but that one working that instead of our T V.

You'll note that both metrics from working capital in our business is super important for me so.

So we definitely are.

We are fully funded I stated, we have reached free cash flow, let me see.

And we continue to work on that front.

That's really helpful. Thanks, so much.

Operator: Our next question comes from Kaumil Gajrawala with Jefferies. Hey, everybody. Good morning or good afternoon, I suppose, depending on where you guys are.

Okay.

Our next question comes from Cal meal.

L. A with Jefferies. Please proceed.

Hey, everybody good morning, or good afternoon.

Depending on where you guys, where you guys are.

Given the change in your 2024 outlook, maybe you could just provide a few more details you've mentioned some shifts on.

Expectations on new customers expectations on innovation any more color you could provide would be useful.

Jean-Christophe Platon: Good morning, Kaumil. It's great to speak to you again, and thank you for asking. Let me unpack for you the three main drivers that shaped the design of our guidance. Number one, I just want to reiterate the magnitude of the turnaround journey that we are driving. As a reminder, in 2022, which is just 13 months ago, this business lost $268 million of adjusted EBITDA. In 2023, as you just heard, thanks to our effort and the mobilization on profitable growth, we have reduced this loss by $110 million. And when you look at the midpoint of our 2024 guidance, it projects another reduction of $110 million between 2024 and 2023.

Good morning, Tokyo Gaye to speak to you again and thank you for asking let me unpack for you with the three main drivers that shaped the designer call guidance number one I just want to say the magnitude of the till now in Germany.

As a reminder, in 2022, which is just 13 months ago. This business loss to about $68 million of adjusted EBITDA. In 2023 is due as you've just heard same store it for.

And the mobilization of unprofitable goes we have reduced this loss by one of those $10 million and when you look at the midpoint of our 2020 core guidance is projecting another reduction of $110 million between 24 and 23, so the magnitude of the Standalone tools.

Jean-Christophe Platon: So the magnitude of this turnaround, $220 million improvement in adjusted EBITDA in two years, and what it takes to achieve it operationally, is the first driver of our guidance. Second, very clearly, in profitable growth, you hear growth. Why do I underline that?

$10 million improvement in adjusted EBITDA in two years and what it takes to achieve operationally is the first driver of our guidance.

Second very clearly in profitable you hear goals why do I underline that I and with Kobe beef.

Jean-Christophe Platon: I strongly believe that this business has a massive growth opportunity in front of us. We are convinced about that. Hence, our duty is to capture this growth potential. So, our adjusted BDA guidance also reflects healthy growth investments. Innovation projects, slurping feeds for new products, new field tests for results, and, of course, bond investments to carry our unique brand goal. All of this in a very rigorous and choiceful manner.

<unk> business is a massive opportunity in front of US we are convinced about that hence our duty is to capture the growth potential so.

Adjusted EBITDA guidance also reflects healthy growth investments innovation projects sloping fees for new products, New field sales force is all fees and of course bond investments to carry our unique brand books all of these innovative ziegler.

And so through manner. So the second driver of our adjusted EBITDA guidance is really a reflection of the balance profitable goals nonstop.

Jean-Christophe Platon: So the second driver of our adjusted EBDA guidance is the linear reflection of this balanced, profitable growth north-south. Finally, as you have heard in our remarks, our three segments are in three very diverse situations when it comes to maturity and execution. Some are more advanced, while some, like the rest of China, for example, have just completed the first phase of their reset.

Finally, I just heard we know we must all three segments.

Three very diverse situations when it comes to maturity and in execution.

Some are more advanced lifestyle.

China for example, just completed the first phase of their reset and therefore, our guidance needed to reflect these diversity within our segments portfolio.

Jean-Christophe Platon: And therefore, our guidance needed to reflect this diversity within our segment's portfolio. And that's what guided our guidance. Got it.

Thus, what's guided our guidance.

Daniel Ordonez: Thank you. And if I may ask you, highlighted the shelf space or expected shelf space gains, can you again provide a bit more color at 10%, 20% more? And then how does that translate to incremental sales? Kaumil, Daniel here. I guess you're referring to the Americas in particular? Yeah, I'm sorry, that's where you highlighted it, specifically for the Americans.

Got it. Thank you and then if I may ask you highlighted the shelf space or expected shelf space gains.

Can you again provide a bit more color is it.

10%, 20% more and then how does that translate to incremental sales.

Coming in at Daniel Here, I guess, you are referring to the Americas in particular.

Yes, I'm, sorry, that's where you highlighted specifically for the Americas.

Daniel Ordonez: Yeah, well, yeah, I will try my best to answer what's behind your question, Kaumil, which is progress in retail, in the retail space. And I'll try to comment on the obvious question about shelf space, which is obviously something we're tracking and we're gaining, right? Although the data is very recent, and I won't be able to fully share that with you today, Kaumil, but as you saw in the prepared remarks, Kaumil, the team is delivering some very significant distribution, consistent with the discussions we had in previous ones, in previous quarters. So,

Yes, well, yes, I will try my best to.

To answer what's behind your question Camille with T cell progress.

In retail in the retail space.

I'll try to comment in the in dividend question about shelf space, which is obviously, we're tracking and we're gaining right. Although this data is very recent.

And I won't be able to fully shared that with you today, so but as you saw in the prepared remarks Camille that the team is delivering some very significant distribution gains consistent with the discussions we have in previous ones in previous quarters. So.

Daniel Ordonez: As you heard us talking about controlling the controllables, you know, we were able to drive PDP growth above 50%, 5-0. And the ACBs have grown by above 1,000 basis points year on year to 43%, and still counting. So there is more room to go there in terms of TDPs and ACBs, so weighted distribution. This has, Kaumil, generated the highest ever market share in oat milks. If you guys are tracking the scanner data, I know you are. So, about 25% for oat milk and 6% across all plant-based drinks.

You heard us talking about controlling the controllable we were able to drive pdp's growth above 50% five zero.

And the Acb's have grown four above.

<unk> basis points year on year to 43%.

And still counting so there is more room to go there in terms of Tdp's on ACD, so weighted distribution.

Camille generated the highest ever market share in old Milks, you guys are trucking the scanner data I know you are so above 25% for oat milk and 6% across all plant based drinks so the.

Daniel Ordonez: So the traction you might have seen in the recent scanner data, with solid growth in both units and dollars in our core business. We believe, yes, indeed, share of sales is growing, distribution is growing, and we see this only as the beginning. You know, Kaumil, we are the only category pure player in oatmeal, and we are the brand that has proven to drive category penetration, holding that unique space.

The traction you might have seen in the recent scanner data with solid growth in both units and dollars in a.

Core business so.

We believe yes, indeed ship share of shelf is growing distribution is growing and we see this is only the beginning.

Camille.

We are the only category pure player in oat milk.

And we are the brand that has proven to drive category penetration so.

Holding that unique space and with so much plenty plenty of ACB runway ahead, there is more to come and more to go.

Daniel Ordonez: And with plenty of ACB runway ahead, there is more to come and more to go. With supply chain reliability issues behind them and having regained distribution, we expect steady progress on distribution and sales execution to drive further profitable growth. I hope that answers your question, Kenneth. Yeah, thank you. Our next question comes from Andrew Lazar with Barclays. Great. Thanks so much. Good morning, everybody.

With supply chain.

Liability issues behind and having regained distribution, we expect steady progress on distribution and sales <unk> sales execution to drive further profitable growth.

That answers your question on commitment.

Yes. Thank you.

Our next question comes from Andrew Lazar with Barclays.

Great. Thanks, so much good morning, everybody.

Hi, Andrew.

I think.

Andrew Lazar: I think... I guess I'm curious about the cadence of EBITDA as we move through 24. EBITDA obviously improves sequentially each quarter through 23, and I guess I'm curious whether this pattern continues as we start 24, meaning sequential improvement, or are there reasons that perhaps EBITDA losses will expand again versus the fourth quarter, you know, as we move into the first half, and if so, why? Because I think I heard you say that EBITDA dollars would be concentrated more in the back half, so maybe I've answered my own question, but

I guess I'm curious about the cadence of EBITDA as we move through 'twenty four.

EBITDA, obviously improve sequentially each quarter through 'twenty three.

And I guess I'm curious whether this pattern continues as we start 24 meeting sequential improvement or are there reasons that perhaps EBITA losses expand again versus the fourth quarter.

As we move into the first half and if so why because I think I heard you say that EBITDA dollars would be.

Concentrated more in the back half so maybe I've answered my own question, but I'm trying to get a sense of how you see the EBITDA cadence going as we go through the year and what the rationale.

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