Q1 2024 Oatly Group AB Earnings Call

April 30, 2024

Operator: Greetings and welcome to the Oatly Group First Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode.

Greetings and welcome to the Old group first quarter 2024 earnings call. At this time, all participants are in a listen only mode.

Operator: A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Brian Kearney, Vice President and Treasurer of Oatly. Thank you, sir.

A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded I would now like to turn the conference over to your host Mr. Brian Kearney, Vice President Investor Relations for Outlay group. Thank you Sir you may begin.

Brian Kearney: You may begin. Good morning, and thanks for joining us today for Oatly's first quarter of 2024. On today's call are our Chief Executive Officer, Jean-Christophe Platon, our Chief Operating Officer, Daniel Ordonez, and our Chief Financial Officer, Marie-Josée David. 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 Security 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 four booking statements.

Good morning, and thanks for joining us today on <unk> first quarter 2024 earnings conference call.

Brian Kearney: On today's call are our Chief Executive Officer, John Christoph <unk>, our Chief operating Officer, Daniel Daniel.

Brian Kearney: Our Chief Financial Officer brings us a W.

Before we begin please review the disclaimer on slide three.

Brian Kearney: 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.

Brian Kearney: 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.

Brian Kearney: 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. 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 the 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.

Brian Kearney: Also please note on today's call management will refer to certain non ISR us financial measures, including EBITDA adjusted EBITDA constant currency revenue and free cash flow. 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.

Brian Kearney: Third in isolation or as a substitute for the financial information presented in accordance with our corrupt.

Brian Kearney: Please refer to today's release for reconciliation of the non <unk> financial measures to the most comparable.

Measures prepared in accordance with IRS and.

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

Brian Kearney: Finally, as discussed on our fourth quarter earnings call, as of the beginning of this year, we have modified our reporting segment to align with how management evaluates and allocates resources. We will be discussing the business using these new reporting segments today. We filed a 6K earlier this month that has historical financial information for the segment. With that, I'd now like to turn the call over to Jean Christophe. Thank you, Brian, and good morning, everyone.

Brian Kearney: Finally, as discussed on our fourth quarter earnings call as of the beginning of this year, we have modified our reporting segments to align with how management evaluates the business and allocates resources, we will be discussing the business using the new reporting segments. Today, we furnished our 6K earlier this month that has historical financial information for the <unk>.

Brian Kearney: Yeah.

Brian Kearney: With that I'd now like to turn the call over to John Kristoff.

John Joseph Baumgartner: 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, we are making good progress towards achieving our profitable goals. Every employee throughout the organization, no matter their position, region, or role, is clearly focused on strengthening the business and bringing us to structural, consistent, profitable growth, and our first quarter results reflect that progress. We had a solid first quarter, and the year is off to a good start.

John Joseph Baumgartner: Slide five as the key messages I want you to take away from today's presentation.

John Joseph Baumgartner: First we are making good progress towards achieving profitable growth.

John Joseph Baumgartner: Every employee throughout the organization no matter their position region alone is squarely focused on strengthening the business and bringing us to structural consistent profitable goals.

And our first quarter results reflect the progress we had a solid first quarter and the year is off to a good start.

Jean-Christophe Platon: As you saw, in two days on Infinite, we are clearly seeing the benefits from the bold actions we have taken over the past two years. These benefits are most clear in our gross margin, increasing by nearly 1,000 basis points year over year, as well as our reduced SG&A, which was partially aided by certain fees and selling expenses that will hit a bit later than we planned. While we are encouraged by our first quarter results, we recognize that we are only one quarter through the year.

As you saw in todays earnings release, we are clearly seeing the benefits from the bold actions, we have taken over the past two years.

John Joseph Baumgartner: These benefits are most clear in our gross margin expanded nearly 1000 basis points year over year as.

John Joseph Baumgartner: As well as all had used SG&A.

Which was partially aided by surfing fees and selling expenses that will hit a bit later than we planned.

John Joseph Baumgartner: While we are encouraged by our first quarter results.

John Joseph Baumgartner: Recognize that we are only one quarters for the year.

Jean-Christophe Platon: And that our three operating segments are in very different stages of their turnaround journeys, their maturity, their execution, and the amount of traction they have achieved on the strategic actions. Therefore, we are reiterating our full-year guidance across all measures.

John Joseph Baumgartner: And that's all three operating segments are in very different stages of their tell me if I'm journeys.

John Joseph Baumgartner: But truly see the execution and the amount of <unk>. They have achieved on the strategy actions.

John Joseph Baumgartner: Therefore, we are reiterating our full year guidance across all metrics.

John Joseph Baumgartner: And slide six.

Jean-Christophe Platon: And slide six is our report card on how we are progressing on our journey towards profitable growth. As you can see, our volume growth is positive and accelerated in the first quarter. The total company's 3% volume growth was driven by solid growth in both our European international segment and our North American segment, which was partially offset by the greater China segment, which continues to reflect our intentional actions to refocus the business.

John Joseph Baumgartner: A report card on how we are progressing on our journey towards profitable goals.

John Joseph Baumgartner: As you can see our volume.

John Joseph Baumgartner: Volume growth is positive and exited <unk> in the first quarter.

John Joseph Baumgartner: The total company, 3% volume growth was driven by solid growth in both our Europe and international segment and our notes American segment, which was partially offset by the greater China segment, which continues to reflect our intentional actions to refocus the business.

John Joseph Baumgartner: Even as we were implementing a film England actions in 2023, we grew our total company volume by over 3%, which further solidifies our belief in the strength of our business.

Jean-Christophe Platon: Even as we were implementing our turnaround actions in 2023, we grew our total company volume by over 3%, which further solidifies our belief in the strength of our business. Gross margin continued to increase sequentially in the quarter and was nearly 10 full percentage points higher than last year's first quarter.

John Joseph Baumgartner: Gross margin continued to increase sequentially in the quarter and was nearly 10 full percentage points higher than last year first quarter.

Jean-Christophe Platon: As you can see in this chart, our 27% gross margin in the quarter is a significant improvement from the 11% margin we reported for the full year 2022. We still have plenty of work to do to get to our longer-term target, but we are clearly making good progress. Similarly, we have made significant progress on our adjusted BDA. In 2022, we reported quarterly losses between $53 million and $83 million.

John Joseph Baumgartner: As you can see the starts of 27% gross margin in the quarter is a significant improvement from the 11% margin we reported for the full year 2022.

John Joseph Baumgartner: We still have plenty of work to do to get to our longer term targets, but we are clearly making good progress.

John Joseph Baumgartner: Similarly, we have made significant progress on our adjusted EBITDA.

John Joseph Baumgartner: In 2022, we reported quarterly losses between 53 million and $83 million.

Jean-Christophe Platon: Today, we are reporting a first quarter loss of just $13 million. Slide 7 is a reminder of the strategic pillars we are focused on in 2024. Those are, Bringing the Oatly magic to more people, continuing our work on the calibration of resources across SG&A and the supply chain, and focusing relentlessly on execution, and Slide 8 gives you a brief update on our progress on these three pillars. As I showed on the prior slide, we continued to grow our volume growth in the first quarter.

John Joseph Baumgartner: Today, we are reporting a first quarter loss of just 17 million.

John Joseph Baumgartner: Slide seven is a reminder of the strategic pillars, we are focused on in 2024.

John Joseph Baumgartner: Those are <unk>.

John Joseph Baumgartner: Banking, the oddly magic to more people.

John Joseph Baumgartner: Continuing our work on the calibration of resort fees.

John Joseph Baumgartner: SG&A and the supply chain.

John Joseph Baumgartner: And focusing relentlessly on execution.

John Joseph Baumgartner: And slide eight gives you a brief update on our progress on these three pillars.

John Joseph Baumgartner: As I showed them the prior slide we continue to grow our volume goals in the first quarter.

Jean-Christophe Platon: We intend to maintain this momentum by continuing to expand our reach. We are placing advertisements in high-traffic areas, such as European train stations, and we are creating great tasting experiences at various trade events and coffee festivals. We even created some buzz with a pop-up venue at Milan Design Week.

John Joseph Baumgartner: We intend to maintain this momentum by continuing to expand our reach.

John Joseph Baumgartner: We are placing advertisements in high traffic areas, such as European Penn station, and we are creating great tasting experiences at various tight events and coffee festival.

John Joseph Baumgartner: We even created some boes with a public venue at Milan design week.

Jean-Christophe Platon: And, as you may have seen, we are expanding our partnership with Minor League Baseball to bring the Oatly magic to consumers across the United States. Next, we remain on track with our work on the calibration of results. This includes the work related to our reduction of the company's SG&A fixed cost by $85 million, as well as the previously announced discontinuation and exit of manufacturing facilities in the US and the UK. And we are continuing to evaluate our options regarding our Asian supply. Finally, the entire Oatly team is doing a very good job of focusing on execution.

John Joseph Baumgartner: And as you may have seen we are expanding our partnership with minor league baseball to bring the utterly magic to consumers across the United States.

John Joseph Baumgartner: Next we remain on track with our work on the calibration of resources.

John Joseph Baumgartner: This includes the work related to a reduction of the company's SG&A fixed cost by $85 million.

John Joseph Baumgartner: As well as the previously announced discontinuation of exit of the manufacturing facilities in the U S and the UK.

John Joseph Baumgartner: And we are continuing to evaluate all options regarding our Asian supply chain.

John Joseph Baumgartner: Finally, the entire OTT, he's doing a very good job at focusing on execution.

Jean-Christophe Platon: Our supply chain continued its strong performance in the quarter, driving down costs and becoming more efficient while keeping fill rates above 95% in every region. I also see increased fluid joint work across teams, across regions, and operating segments. While we can't quantify a direct financial impact of this increased collaboration, we know there is a benefit there. As I said earlier, every employee is focused on strengthening the business and driving towards profitable growth.

John Joseph Baumgartner: Our supply chain continued their strong performance in the quarter driving down costs, and becoming more efficient whilst keeping fill rates above 95% in a breeze Egypt.

I also see increased fluids joint work across teams across region and operating segments.

John Joseph Baumgartner: While we cant quantify your direct financial impact to these increased collaboration we know there is a benefit there.

John Joseph Baumgartner: As I said earlier every employee is focused on strengthening the business and driving towards profitable growth and this focus on execution is critical to our success.

Jean-Christophe Platon: And this focus on execution is critical to our success, which is why, before I turn the call over to Daniel, I want to thank our employees for their commitment, dedication, and focus on driving business results while staying true to our company's mission. With that, Daniel, over to you.

Speaker Change: Which is why before I turn the call over to Daniel I want to thank our employees for their commitment dedication and focus to driving business results, while staying true to our company's mission.

Daniel Ordonez: With that Danielle over to you.

Daniel Ordonez: Thank you, JC, and very good morning, everyone. I will start on slide 10 with Europe and international, which is our largest operating sector. Europe and International reported solid results in the quarter, with constant currency revenue growth of approximately 8% and Adjusted EBITDA that continued to increase sequentially to $15 million, which is approximately 13% of net sales. Slide 11 gives you an update of how we are performing in retail, which is the largest part of this segment's revenue.

Daniel: Thank you Jessie and very good morning, everyone.

Daniel: I will start on slide 10, with Europe, and international which is our largest operating segment.

Daniel: Europe and international reported solid results in the quarter with constant currency revenue growth of approximately 8% and adjusted EBITDA that continued to increase sequentially to $15 million, which is approximately 13% of the net sales.

Daniel: Slide 11 gives you an update of how we are performing in retail which is the largest part of this segments revenue.

Daniel Ordonez: On the left, you can see that we continue to observe a significant difference between the category growth in plant-based drinks versus the oat milk category, and we are driving our growth well above the oatmeal category. In the quarter, Oatly outgrew the category by 200 basis points.

On the left you can see that we continue to offset a significant difference between the category growth in plant based drinks versus the old milk category.

Daniel: And we are driving our growth well above the old milk category in the quarter.

Daniel: We outgrew the category by 200 basis points.

Daniel: On the right hand side of the slide you can see this translating into strong market shares that continue to expand in most of our major markets.

On Slide 12, we gave an update on the foodservice side of this business for some time now we have mentioned our intention to cease the opportunity this channel presents to accelerate our growth.

Daniel: This focus has resulted in a strong 20% year on year revenue growth.

Daniel Ordonez: You may have seen some of our recent communications on our new partnerships like DR Railways, Deutsche Bahn, Swiss Railways, and Coffee Fellows, in many cases leveraging the new tailored portfolio for the channel and for the occasion, like the Jigger. We expect these partnerships, as well as the many others we continue to pursue, to drive more growth opportunities going forward. On slide 13, you can see an update on our performance in Newmarket.

Daniel: You may have seen some of our recent communications on our new partnerships like the D. R Railways Deutsche Bahn squeeze railways and coffee failures.

Daniel: In many cases, leveraging the new tailored portfolio or for the channel and for the location like the GE here.

Daniel: We expect these partnerships as well as the many others, we continue to pursue to drive more growth opportunities going forward.

Daniel: On Slide 13, you can see an update on our performance in new markets now.

Daniel Ordonez: Now that we have changed our reporting segments, our geographic expansion initiatives will be captured within Europe and internationally. As such, our comments will include both the European markets, which we have historically discussed with you, as well as the other international markets where we will be increasing our focus, such as Australia, North and Southeast Asia, the Middle East, and Latin America. Volume in these new markets grew a strong 29% year-on-year in this quarter.

Now that we have changed our reporting segments, our geographic expansion initiatives will be captured within Europe and international.

Daniel: Such remarks will include both the European markets, which we have historically discussed with you as well as the other international markets, where we will be increasing our focus like Australia, North and southeast Asia, The Middle East and Latin America.

Daniel: Volume in these new markets grew a strong 29% year on year in this quarter that is approximately 2 million liters of incremental volume, which is roughly equivalent to how many liters, we sell in Austria every quarter.

Daniel Ordonez: That is approximately 2 million liters of incremental volume, which is roughly equivalent to how many liters we sell in Austria every quarter. These markets now represent approximately 12% of the segment's total volume, up from 9% in the last year's first quarter. In short, our focus on bringing the Oatly magic in a disciplined fashion to more people in more geographies is work. On slide 14, I would like to pivot the discussion from channels and geographies to our portfolio with an update on our Go Blue strategy intended to expand the usage of our products by offering them more flexibility and a wider range of options that also help improve our margins.

Daniel: These markets now represent approximately 12% of the segment's total volume up from 9% in the last year's first quarter in short our focus on bringing the magic in a disciplined fashion to more people in more geographies is working.

Daniel: On slide 14, I would like to pivot the discussion from channels and geographies to portfolio with an update on our go blue strategy intended to expand the usage of our products by offering them more flexibility and a wider range of options that also help improve our margins in this first quarter.

Daniel Ordonez: In this first quarter, the strategy has generated a net 7% growth in volume year on year. Slide 15 shows the lineup of the iconic Barista Edition new items launching this year. They are meant to continue to drive new occasions, new price points, and new channel opportunities, which are very significant to us.

Daniel: The strategy has generated a net 7% growth in volume year on year.

Slide 15 shows the lineup of the iconic barista edition of new items launching this year.

Daniel: They are meant to continue to drive new locations, new price points, and new channel opportunities, which are very significant to us. So.

Daniel Ordonez: So far, these items have had a very good selling success with customers, and several of them are already in the market. On slide 16, you can see that our new products, including the new Old Girds, have hit the retail shelves across Europe and are already gaining distribution and driving trials. All of that in line with our plan. I turn now to North America on slide 17.

So far these items had a very good selling into customers and several of them are already in the market.

Daniel: On slide 16, you can see that our new products, including the new old goods have hit the retail shelves across Europe and are already gaining distribution and driving trial.

Daniel: All of that in line with our plans.

Daniel: I turn now to North America on Slide 17.

Daniel: Here you can see that revenue growth has accelerated in the first quarter to approximately 5%.

Daniel Ordonez: Here you can see that revenue growth accelerated in the first quarter to approximately 5%. This is on top of last year's very strong 36% growth on a comparable base. You can also see that Adjusted EBITDA made good progress in the quarter and was just below breakeven at only $400,000 lost.

Daniel: This is on top of last year's very strong 36% growth in our comparable base.

Daniel: You can also see that our adjusted EBITDA made good progress in the quarter and was just below breakeven at only $400000 loss.

Daniel Ordonez: This continued improvement was driven by strong gross margin expansion as we continue to see the benefit of the strategic actions taken in our supply chain over the past 18 months. This segment has clearly done a very good job of improving its cost structure, and it has also done a very good job of improving margins and focusing on execution while bringing the Oatly magic to more customers and to more consumers. Slide 18 gives you an update on the retail side of this business, which is a little more than half of the segment's net sales.

Daniel: This continued improvement was driven by strong gross margin expansion as we continue to see the benefit of the strategic actions taken in our supply chain over the past 18 months.

Daniel: These segments has clearly done a very good job of improving its cost structure and he has done also a very good job at improving margins mix.

Daniel: And focusing on execution, while bringing the old new magic to more customers and to more consumers.

Daniel: Slide 18 gives you an update on the retail side of the business, which is a little more than half of this segment's net sales.

Daniel Ordonez: On the left, you can see that, similarly to Europe, there is a very clear and growing difference between the performance of the plant-based drinks category and the oat milk category. And now that we have our full playbook in place, there is a growing difference between oat milk in general and the Oatly brand.

Daniel: On the left you can see that similarly to Europe. There is a very clear and growing difference between the performance of the plant based drinks category and the old milk category.

Daniel: And now that we have our full playbook in place there's a growing difference between ultra milking general and the ultimate Bryant.

Daniel Ordonez: This is evidenced by the accelerating share gains that we show on the right-hand side of this slide. As discussed during the last call, part of our growth plan in 2024 is driven by these new products, which we show on this slide. While still in the very early days, our new products are off to a good start, with several items already reaching velocities that are higher than competitive products that have been on show for much longer.

Daniel: This is evidenced by our accelerating share gains that we show on the right hand side of the slide.

Daniel: Discussed during the last call part of our growth plans in 2024 is driven by these new products, which we show on this slide.

Daniel: Still is very early days, our new products are off to a good start with several items already reaching velocity there are higher than competitive products that had been on show for much longer so again.

Daniel Ordonez: So again, it is early days, but we see some positive signs. Turning now to slide 20, on the food service side of this. As we have mentioned in the past, we are aggressively pursuing new customers to expand and diversify our food service customer base and hence drive stronger growth and better margins. The food service revenue growth in North America was approximately flat in quarter one.

Daniel: It's early days, but we see some positive signs.

Daniel: Turning now to slide 20 on the foodservice side of this business.

Daniel: As we have mentioned in the past, we are aggressively pursuing new customers to expand and diversify our foodservice customer base, and hence drive stronger growth and better margins.

The foodservice revenue growth in North America was approximately flat in quarter one however.

Daniel Ordonez: However, outside of our largest customer, revenue has grown at a very strong 35% in the quarter. Besides, I am very glad to report that we have now come to an agreement on new terms with our largest food service customers, and we plan to move forward on this mutually beneficial basis. This is expected to facilitate joint business planning and innovation, which will further build on our overall company profitable growth agenda. I will turn now to Greater China on slide 21.

Daniel: However outside of our largest customer revenue has grown at a very strong 35% in the quarter.

Besides I am very glad to report that we have come now to an agreement on new terms with our largest foodservice customer and we plan to move forward on this mutually beneficial basis.

Daniel: This is expected to facilitate joint business planning and innovation, which will further build on our overall company profitable growth agenda.

Daniel: I will turn now to greater China on slide 21.

Daniel Ordonez: On this slide, you can see the continued impact of the bold strategic actions we have taken to refocus the business on higher-margin products and channels while reducing costs. The segment reported just a $3 million adjusted EBITDA loss in the first quarter.

Daniel: On this slide you can see the continued impact of the bold strategic actions, we have taken to refocus the business on higher margin products and channels, while reducing costs.

Daniel: Segment as reported chest at $3 million adjusted EBITDA loss in the first quarter.

Daniel Ordonez: That is an impressive number when you also take into consideration the impact of the Chinese New Year holiday, when we don't ship products for several days. I am pleased with the progress we have made on the first stage of this segment's turnaround plan. However, there is still plenty of work to do to get this business where it needs to be.

Daniel: It is an impressive number when you also take into consideration the impact of the Chinese new year holiday.

We don't ship product for several days.

Daniel: I am pleased with the progress we have made on the first stage of this segment's turnaround plan.

Daniel: However, there is still plenty of work to do to get this business, where it needs to be.

Daniel Ordonez: For that, we need to build a stronger top line with a redefined portfolio and channel perimeter, which is the second stage of our turnaround plan. So slide 22 gives you an update on where we are with this next stage. We are very excited to partner up with China's largest coffee chain. These started only last week as part of the Earth Day promotion.

Daniel: For that we need to build a stronger topline with our redefined portfolio and channel perimeter.

Daniel: Which is the second stage of our turnaround plan.

Daniel: So slide 22 gives you an update on where we are with this next stage.

We are very excited to partner up with China's largest coffee chain.

Daniel: <unk> started only last week as part of the Earth day promotion.

Daniel Ordonez: While it is for a limited time only, for the moment, we believe it will provide additional category momentum and brand visibility to consumers. As we mentioned last quarter, sensitive to the economic context prevailing in China and new consumer behavior, it was clear we needed to complement our portfolio with SKUs that could hit certain price points. We have, therefore, selectively launched these value products with several customers, and they are performing well. This helps us to build a stronger service package for our customers, drive volume growth to sustain the necessary levels of capacity absorption, and hence solidify our margin. The consumer environment in Greater China remains challenging.

Daniel: While it is for a limited time only for the moment, we believe it will provide additional category momentum.

Daniel: On brand visibility to consumers.

Daniel: As we mentioned last quarter sensitive to the economic context prevailing in China, and the new consumer behavior.

Daniel: It's clear we needed to complement our portfolio with skus that could hit certain price points.

Daniel: We have therefore selectively launched these value products with several customers and they are performing well.

Daniel: This helps us to build a stronger service package for our customers drive volume growth to sustain necessary levels of capacity absorption and hence solidify our margins there.

Daniel: Consumer environment, and greater China remains challenging.

Daniel: However, we're identifying opportunities to rebuild our business in a disciplined manner with our north star being profitable growth.

Marie-Josée David: However, we're identifying opportunities to rebuild our business in a disciplined manner, with our North Star being profitable growth. While it is clear we have not yet gained the traction needed for this business to capture the full opportunity that Rijon provides, you can see we're starting to make progress on the second stage of this segment's turnaround plan. With that, I would now like to turn the call over to Marie-Josée. MJ, it's over to you.

Daniel: While it is clear we have not yet getting the traction needed for this business to capture the full opportunity that region provides you can see we're starting to make progress on the second stage of this segment's turnaround plan with that I would now like to turn the call over to Matt as you say and Jay over to you.

Matt: Thank you Danielle and good morning, everyone.

Matt: Slide 24 give you another view of the P&L for the quarter.

Matt: We reported one 8% year over year revenue growth and constant currency revenue growth of one 2%.

Marie-Josée David: Thank you, Daniel, and good morning, everyone. Slide 24 gives you another view of the PNL for the quarter. We reported 1.8% year-over-year revenue growth and constant currency revenue growth of 1.2%. Gross margin for the quarter was 27.1 percent, which is a 970 basis point improvement versus the prior year quarter. This came in slightly ahead of our expectations as our supply chain team was able to reduce our cost structure more quickly than we planned. Adjusted EBITDA was a loss of $13.2 million, which was ahead of our expectations.

Matt: Gross margin for the quarter was 27, 1% which is a.

Matt: 970 basis point improvement versus the prior year quarter.

Matt: This came in slightly ahead of our expectations as our supply chain team was able to reduce our cost structure more quickly than we planned.

Matt: Adjusted EBITDA was a loss of $13 2 million, which was ahead of our expectations.

Matt: In addition to the gross margin trends, we also benefited from the timing of certain SG&A expenses.

Matt: We estimate this benefit to be approximately 3 million.

Marie-Josée David: In addition to the gross margin strength, we also benefited from the timing of certain SG&A expenses. We estimate this benefit to be approximately $3 million. These are items, for example, such as planning for various professional fees to hit in Q1, but now expected to hit a bit later. We also chose to attend certain trade shows that fall later in the year.

Matt: These are items for example, such as planning for various professional T to hit in Q1.

Matt: No we expect it to heat a bit later.

Matt: We also chose to advance certain trade shows that for later in the year.

Matt: We are pleased with our performance in the quarter.

Matt: Slide 25 shows the bridging items of our quarterly revenue growth.

Marie-Josée David: Overall, we are pleased with our performance in the quarter. Slide 25 shows the bridging items of our quarterly revenue growth. You can see volume increased 3.1 percent, price mix was a 1.9% headwind for 1.2% constant currency revenue growth, and exchange was a tailwind of 0.6, resulting in 1.8% total revenue growth for the quarter. Slide 26 shows the revenue bridge by segment. Europe and international continue to report solid growth with a 7.7% constant currency revenue growth led by a 4.1% volume growth.

Matt: You can see volume increased three 1%.

Matt: Price mix was one 9% headwind for 1.2% constant currency revenue growth.

Matt: Foreign exchange was it 10 win of six.

Matt: Six resulting in one 8% total revenue growth for the quarter.

Matt: Slide 26 shows the revenue bridge by segment.

Matt: Europe and international continued to report solid growth, we have a seven 7% constant currency revenue growth led by a four 1% volume growth.

Matt: Americas revenue growth of four 6% was driven by a strong 11, 4% volume growth, which was aided by distribution gains and continued sell in of new products.

Marie-Josée David: North America's revenue growth of 4.6% was driven by strong 11.4% volume growth, which was aided by distribution gains and continued sell-in of new products. Price mix was a headwind of 6.8%, consistent with the fourth quarter's level. Greater China's 26.8% constant currency decline was driven by the actions we have taken as part of the Segment Strategic Reset Plan. Volume declined 15.8%, and price-mix declined 11%, largely driven by an unfavorable sales mix as we eliminated SKUs that were higher-priced but lower-margined.

Matt: Price mix was a headwind of six 8% consistent with the first quarter's 11.

Matt: Greater China 26, 8% constant currency decline was driven by the actions we have taken as part of this segments strategic reset plan.

Matt: Well you have declined 15, 8% and price mix decline, 11% largely driven by unfavorable sales mix as we have eliminated skus, that's where higher priced but lower margin.

Matt: Slide 27 shows you the drivers of our 970 basis points year over year gross margin expansion.

Matt: The biggest item is the 750 basis point increase driven by absorption and supply chain improvements.

Speaker Change: For those of who have been following us for a Y yeah.

Marie-Josée David: Slide 27 shows you the drivers of our 970 basis points year-over-year gross margin expansion. The biggest item is a 750 basis point increase driven by absorption and supply chain improvement. For those of you who have been following us for a while, you know that we have done a lot of work on improving our supply chain operation. The YAYA food transactions and consolidation of our North American co-packer network were a big step for us in unlocking margin.

Know that we have done a lot of work on improving our supply chain operations.

Speaker Change: Yeah, Yes, food transactions and consolidation of our North American co Packer network was a big step for us in unlocking margin.

Speaker Change: We have also done a lot of mess and use where few work to drive margins.

Speaker Change: Such as improving our inventory management to reduce writing off aged inventory and working closer with our suppliers to reduce raw material costs as well as penalties and cheap.

Speaker Change: Our net pricing and product mix improved margins by 150 basis points in the quarter.

Speaker Change: This was largely driven by the work we have done in greater China to eliminate lower margin products.

Marie-Josée David: We have also done a lot of less newsworthy work to drive margins, such as improving our inventory management to reduce writing off aged inventory and working closer with our suppliers to reduce raw material costs, as well as penalties and fees. Our net pricing and product mix improved margins by 150 basis points in the quarter. This was largely driven by the work we have done in Greater China to eliminate low-margin products. Foreign exchange increased our gross margin by 90 basis points, and we experienced a modest inflation headwind of 20 basis points.

Speaker Change: Foreign exchange increased our gross margin by 90 basis points, and we experienced modest inflation headwind of 20 basis points.

Speaker Change: Oh, Brian we are pleased with our progress on our gross margin so far.

Speaker Change: Slide 28 shows our adjusted EBITDA by segment.

Brian Kearney: As you can see.

Brian Kearney: Each segment continued to report a significant improvement compared to the prior year.

Brian Kearney: I'm pleased that from the second quarter I know rule the sum total of the adjusted EBIDTA for the free region was positive.

Brian Kearney: It's clear that the strategic actions that we had been taken are driving concrete results.

Marie-Josée David: Overall, we are pleased with the progress on our gross margin so far. Slide 28 shows our adjusted EBITDA by segment. As you can see, each segment continued to report a significant improvement compared to the prior year. I am pleased that, for the second quarter in a row, the sum total of the adjusted EBITDA for the three regions was positive. It's clear that the strategic actions that we have been taking are driving concrete results.

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

Brian Kearney: Turning to our balance sheet and cash flow on slide 29.

Brian Kearney: The two biggest takeaways are that our cash flow remains on track with our plans and our liquidity remains strong at 410 1 million.

Brian Kearney: The chart on the right is our first quarter cash flow bridge.

Brian Kearney: As you can see in the quarter, our total cash balance decreased by $14 million.

Brian Kearney: There are a few notable of course out in this chart.

Brian Kearney: Working capital was a 19 million use of cash in the quarter.

Marie-Josée David: 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 29. The two biggest takeaways are that our cash flow remains on track with our plans and our liquidity remains strong at 401 million. The chart on the right is our first quarter cash flow break. As you can see, in the quarter, our total cash balance decreased by $14 million. There are a few notable calls out in this chart. Working capital was a 19 million use of cash in the quarter.

Brian Kearney: It was impacted by the timing of payables as well as the season goes the inventory levels.

Speaker Change: Round plants, that's great why are we working down inventory at Sharon and build inventory in the first quarter.

Speaker Change: We do not expect such a large headwind going forward.

Speaker Change: The other notable call out is around the cash flow related to the discontinuation of construction of our manufacturing facilities in the U K and U S that we have discussed on prior calls.

Speaker Change: Overall, we remain on track to have the impact of these exits result in no more than 20 million of net cash out for the end of 2025.

Marie-Josée David: It was impacted by the timing of payables, as well as the phasing of the inventory levels around plant upgrades, where we work down inventory at year-end and build inventory in the first quarter. We do not expect such a large headwind going forward. The other notable call-out is around the cash flow related to the discontinuation of construction of our manufacturing facilities in the UK and US that we have discussed on Paracord. Overall, we remain on track to have the impact of this exit result in no more than $20 million of net cash out through the end of 2025.

Speaker Change: As we have mentioned before this net cash outflow includes the benefit of selling some of the assets. As you can see we have received $14 million from the selling of plant assets in the quarter.

Speaker Change: We also started to pay out some of the costs related to this.

Speaker Change: We expect this restructuring cost to increase over time to bring us in line with the overall project.

Speaker Change: As you can see the restructuring cost will flow through operating cash flow and thus far in fact free cash flow, while the benefits from setting us it will not.

Speaker Change: We encourage you to keep that in mind as you evaluate our cash flow going forward.

Marie-Josée David: As we have mentioned before, this net cash outflow includes the benefit of selling some of the assets. As you can see, we received $14 million from the sale of plant assets in the quarter. We have also started to pay out some of the costs related to this exit. We expect these restructuring costs to increase over time to bring us in line with the overall budget. As you can see, the restructuring cost will flow through operating cash flow and therefore impact free cash flow while the benefits from selling assets will not.

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

Speaker Change: Our finance team has been doing a great job of helping us increase the organization's focus on cash.

Speaker Change: This great work has helped us improve our working capital metrics as well as increase the visibility and predictability of our cash flows.

Speaker Change: On slide 13, we are confirming our guidance across all metrics.

Speaker Change: We expect constant currency revenue growth in the range of 5% to 10% and we expect currency to be a small headwind.

Speaker Change: We continue to expect the second half constant currency growth rate to be stronger than the first half.

Speaker Change: Largely driven by volume growth acceleration in each region.

Marie-Josée David: This great work has helped us improve our working capital metrics as well as increase the visibility and predictability of our cash flows. On slide 30, we are confirming our guidance across all metrics. We expect constant currency revenue growth in the range of 5 to 10 percent, and we expect currency to be a small headwind. We continue to expect the second half constant currency growth rate to be stronger than the first half, largely driven by volume growth acceleration in each region.

Speaker Change: Our adjusted EBITDA, we continue to expect to report a loss of between $55 million and 16 million in 2024.

Speaker Change: We have one solid quarter behind us and are continuing to expectations that adjusted EBITDA dollars will be stronger in the second half than in the first half.

Speaker Change: Reaching the unfavorable end of this range is now less likely.

Speaker Change: However.

Speaker Change: We want to see additional traction on our strategic actions.

Speaker Change: Therefore, we are constructive and we are affirming the ranch.

Marie-Josée David: For adjusted EBITDA, we continue to expect to report a loss of between $35 million and $60 million in 2024. We've got one solid quarter behind us, and the continuous expectation that adjusted EBITDA dollars will be stronger in the second half than in the first half. Reaching the alpha variable end of this range is now less likely.

Speaker Change: Finally, we continue to expect capex to be below 75 million for 2024.

Speaker Change: This concludes our prepared remarks.

Speaker Change: A writer we are now prefer to take question.

Speaker Change: Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.

Marie-Josée David: However, we want to see additional traction on our strategic actions. Therefore, we are comfortable reaffirming the rent. Finally, we continue to expect CAPEX to be below $75 million for 2024.

Speaker Change: A confirmation tone will indicate your line is in the question queue you.

Speaker Change: You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.

Operator: This concludes our prepared remarks. Operator, we are now prepared to take questions. Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue.

Speaker Change: Our first question comes from the line of Michael Lavery with Piper Sandler. Please proceed with your question.

Michael Scott Lavery: Thank you and good morning.

Speaker Change: Okay.

Michael Scott Lavery: Morning, Michael.

Michael Scott Lavery: I was wondering if you could elaborate a little bit more on the updated relationship with your largest U S foodservice customer.

Michael Scott Lavery: Kind of any more color you can add but also I think you've touched on the innovation component, maybe just elaborate on that as well.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of Michael Lavery with Piper Sandler. Please proceed with your question. Thank you. Good morning.

Michael Lavery: Good morning, Michael how are you doing Daniel here, Yeah, I guess from the innovation just checking with you Michael you are referring to the same customer.

Speaker Change: Right exactly yeah yeah.

Speaker Change: Well listen.

Speaker Change: Pretty pleased with how things have evolved right. We are dirty and use that to have reached an agreement on new terms.

Speaker Change: And Thats because these supports our profitable growth North star that we have been made public. So many times. So now we can focus on our mission which is.

Michael Scott Lavery: I was wondering if you could elaborate a little bit more on the updated relationship with your largest U.S. food service customer and kind of any more color you can add, but also, I think you touched on an innovation component; maybe just elaborate on that as well. Good morning, Michael. How are you doing?

Speaker Change: With these very important important customer of us this means more precise.

Speaker Change: More innovation, so expect a joint business planning to work together in new locations, new moments of Consumptions and new products.

Speaker Change: And that in the end would mean more openly unless cosmic which is back to our mission right.

Daniel Ordonez: Daniel here. Yeah, I guess on the innovation. Just checking with you, Michael. You are referring to the same customer, right? Right, exactly, yeah. Yeah. Well, listen, we are pretty pleased with how things have evolved, right? We are very excited to have reached an agreement on new terms. And that's because these supports are a profitable growth non-start that we have been made public so many times. So now we can focus on our mission, which is with this very important, important customer of ours.

Speaker Change: So again.

Speaker Change: The way you should look at these moving forward.

Speaker Change: When it comes to planning and the outlook is zinc steel on a on a modest headwind less.

Speaker Change: Less than we expected so far.

Speaker Change: But with a very stable and even neutral impact in the overall business as we move forward. So the situation has improved.

Speaker Change: It looks better and he certainly moving in the right direction, but since you asked about the largest customer of ours Michael in foodservice.

Speaker Change: This is the most exciting parts of as we've talked about this diversifying the portfolio of customers and managing growth and mix.

Daniel Ordonez: This means more presence, more innovation, so expect joint business planning to work together on new occasions, new moments of consumption, and new products. And that, in the end, would mean more Oatly and less cow's milk, which is back to our mission.

Speaker Change: What's most exciting nowadays is that we can report a very strong growth of 30 above 30%.

Speaker Change: In this important channel to us which is driving experience.

Speaker Change: And so forth so.

Speaker Change: This proves that our ability to expand aggressively and the potential of the brand and the potential of the oatmeal category. So is.

Daniel Ordonez: So, again, the way you should look at this moving forward when it comes to planning and the outlook is think still of a modest headwind, less than we expected so far, but with a very stable and even neutral impact on the overall business as we move forward. So the situation has improved, it looks better, and it's certainly moving in the right direction. Since you asked about the largest customer of ours, Michael, and food service, this is the most exciting part of us.

Speaker Change: It's looking good Michael Thank you for the question.

Speaker Change: Yes, sure great color. Thanks.

Speaker Change: Follow up I had was just on the guidance.

Speaker Change: I recognize as you just pointed out theres a lot of year left but.

Speaker Change: Could you just maybe give a sense of the scenarios that would steer you to the higher or lower end and just some of what we should keep an eye on in terms of how that plays out.

Speaker Change: Thank you so much Michael J C. Here I'll take this one first it's important to note that the reason why we feel comfortable with reaffirming our guidance for the year is because we've made the progress we expected to make in the first quarter.

Daniel Ordonez: We talked about this diversifying the portfolio of customers and managing growth and mix. And what's most exciting nowadays is that we can report very strong growth of 30%, about 30% in this important channel of us, which is driving experience, and so forth. So this proves our ability to expand aggressively and the potential of the brand and the potential of the oatmeal capital. So, it's looking good, Michael. Thank you for the question.

Speaker Change: So if you look at it from a top line standpoint, we made the progress we expected on gaining distribution in both new and existing markets. We made progress on filling in our new products to customers and we made progress driving trial with consumers when it comes to the bottom line. We also made the progress we expected driven.

Speaker Change: By of course, our topline actions, but also the progress we made on reducing our structural costs both in the supply chain and in SG&A actually we performed a bit better than we expected on the cost side. So that's the very first importantly, the second decade of business expands.

Daniel Ordonez: Yeah, sure, and a great call. Thanks. The follow-up question I have is just on the guidance. I recognize, as you just pointed out, there's a lot of the year left, but could you maybe give a sense of the scenarios that would steer you to the higher or lower end and just some of what we should keep an eye on in terms of how that plays out? Thank you so much, Michael. JC here. I'll take this one.

Speaker Change: One quarter does not make failure, we are satisfied with our first quarter, which we recognize we are three quarters in front of us to deliver to make a year.

Speaker Change: And finally, what I would like you to consider as well as you heard me explained in previous earnings calls is that all three segments are in three very diverse situations when it comes to maturity execution.

Jean-Christophe Platon: First, it's important to know that the reason why we feel comfortable with reaffirming our guidance for the year is because we made the progress we expected to make in the first quarter. So if you look at it from a top line standpoint, we made the progress we expected on gaining distribution in both new and existing markets. We made progress on selling our new products to customers, and we made progress driving trials with consumers.

Speaker Change: <unk>.

Speaker Change: Our most of the segments, if you take Europe and international and North America already have most of the building blocks in place. So now therefore, it's a matter of execution to deliver the impact we expect.

Speaker Change: On the other hand, our sales one greater China is just completing the first phase of the reset so our guidance needed to reflect these diversity within our segments portfolio.

Jean-Christophe Platon: When it comes to the bottom line, we also made the progress we expected, driven by, of course, our top-line actions, but also the progress we made in reducing our structural costs, both in the supply chain and in SG&A. In fact, we performed a bit better than we expected on the cost side. So that's the very first important reason.

Speaker Change: Okay, great. Thank you so much.

Speaker Change: Thank you. Our next question comes from the line of.

Speaker Change: Ken Goldman with Jpmorgan. Please proceed with your question.

Kenneth B. Goldman: Hi, good morning.

Kenneth B. Goldman: It's encouraging to see your share gains in the U S and Europe.

Kenneth B. Goldman: So encouraging to see progress within oat milk as a category in these regions I just wanted to dig a little deeper into what youre seeing in plant based milk in general that's leading it to be you know I guess somewhat flattish in Europe as you reported it and down low single digits in the U S.

Jean-Christophe Platon: Second, decades of business experience tells us that one quarter does not make the year. We are satisfied with our first quarter, but we recognize we have three quarters in front of us to deliver to make the year. And finally, what I would like you to consider, as you heard me explain in our previous earnings call, is that our three segments are in three very diverse situations when it comes to maturity, execution, and performance.

Kenneth B. Goldman: Are there any concerns you have about the category.

Kenneth B. Goldman: And what do you believe needs to happen for the category and I'm talking just broad plant based milk too.

Kenneth B. Goldman: To expand again at a fairly rapid pace in these regions. Thank you.

Speaker Change: Thank you Ken Good morning, Daniela, we'll take that you take your question.

Speaker Change: Decent note we were pleased with what we see right. But this is this is the way in which we would like you to think about it which is that does not take scan data at face value to judge how the category is developing scan.

Jean-Christophe Platon: Our most advanced segments, if you take Europe and international and North America, already have most of the last building blocks in place. So now, therefore, it's a matter of their execution to deliver the impact we expect. On the other hand, our third one, Greater China, is just completing the first phase of its reset. So our guidance needed to reflect this diversity within our segment's portfolio. Okay, great. Thank you so much.

Speaker Change: Scan data is not fully representative of the total category growth too.

Speaker Change: Two very important facts.

Speaker Change: That underpin that.

Speaker Change: Ken number one there is a growing bifurcation between plant based drinks.

Speaker Change: The old meals category and the <unk> brand and you picked up on that.

Operator: Thank you. Our next question comes from the line. I've got Ken Goldman with J.P. Morgan, please proceed with your question. Hi, good morning.

Speaker Change: <unk> continues to outgrow.

Speaker Change: Plant based in general and Oakley outgrowth, both categories consistency.

Speaker Change: And we continue to see the gains the share gains in both regions. So that is something that is growing it's a growing trend.

Kenneth B. Goldman: It's encouraging to see your share gains in the U.S. and Europe, and it's also encouraging to see progress within oat milk as a category in these regions. I just wanted to dig a little deeper into what you're seeing in plant-based milk in general that's leading it to be, you know, I guess somewhat flattish in Europe, as you reported, and down low single digits in the U.S. Are there any concerns you have about the category, and what do you believe needs to happen for the category, and I'm talking just broad plant-based milk, to expand again at a fairly Thank you. Thank you, Ken. Good morning.

Speaker Change: And second of all for the non measured channels in foodservice as we have been working consistently four quarters now you will remember both Europe growing above 20% and the U S growing above 35%.

Speaker Change: Outside of our largest customer.

Speaker Change: So that the categories in good growth.

Speaker Change: So I'll, just say, we arent and as.

Speaker Change: You saw we are very selective in the way we drive growth in the foodservice channel abandoned balancing growth and margin. So what we're doing at the moment instead of figuring out what to do according to scan data, we're head down controlling the controllable.

Daniel Ordonez: Daniel, we'll take that. You take your question. Listen, no, we're pleased with what we see, right? But this is the way in which we would like you to think about it, which is to not take scan data at face value to judge how the category is developing. Scan data is not fully representative of total category growth. There are two very important facts that underpin that, Ken. Number one, there is a growing bifurcation between plant-based drinks, the Oatmeal Category, and the Oatly Brand, which you picked up on. Oatmilk continues to outgrow plant-based milk in general, and Oatly outgrows both categories consistently.

Speaker Change: Just like we said, we would quarters ago, gaining distribution driving strong velocities, introducing great new products for new locations and investing more in consistently behind the brand.

Speaker Change: So besides driving disproportionate foodservice growth and launching in new markets right in a very disciplined and asset light manner. So the way. We see this is that what we're doing is working and there is more to come.

Speaker Change: Thank you for that and then quickly just as we think about.

Speaker Change: Modeling the second quarter, you did give some helpful color in terms of the shape of the year first half and back half.

Speaker Change: Are there any other specific things as we just think up and down the P&L.

Speaker Change: That might be useful as we plug in some numbers, obviously last year, you had a fairly high SG&A number.

Daniel Ordonez: And we continue to see share gains in both regions. So that is something that is growing. It's a growing trend.

Speaker Change: I think the highest of the year I just wanted to get a sense for the seasonality of that spend maybe.

Daniel Ordonez: And second of all, for the non-measured channels in food service, as we have been working consistently for quarters now, you will remember, both Europe growing about 20% and the U.S. growing about 35%, outside our largest customer, are proof that the category is in good growth. So, as you say, and as you saw, we are very selective in the way we drive growth in the food service channel, balancing growth and margin. So what we're doing at the moment, instead of figuring out what to do according to scan data, we're head down controlling the controller.

Speaker Change: Do you guys think about it and then any color we should think about as we model the regions into <unk> in terms of the top line. Thanks.

Speaker Change: Okay.

Advisors: Hi, Ken This is advisors Yeah, let me take this question.

Advisors: So if you recall last quarter, we told you that we would have in second half.

Kenneth B. Goldman: It's going to be higher than the first half.

Speaker Change: If you look at our performance in the first quarter.

Advisors: First purchase gains slightly higher than expected largely driven by supply chain improvement in North America. The structural savings from continuous improvement actions and these are these are going to come as we go through the year as well so.

Advisors: So that's one thing right. So we noted that we expected the savings to come as well. So they came earlier than expected and we continue to see them coming if you look for the year over year margin expansion.

Daniel Ordonez: Just like we said we would, quarters ago, gaining distribution, driving strong velocity, introducing great new products for new occasions, and investing more and consistently behind the brand. So, besides driving disproportionate food service growth and launching in new markets, in a very disciplined and asset-like manner. So the way we see this is that what we're doing is working, and there's more to come. Thank you for that. And then quickly, just as we think about modeling the second quarter. You did give some helpful color in terms of the shape of the year, first half and back half.

Advisors: Some weeks will become smaller as we know China reset.

Advisors: These include the benefit from the supply chain improvement as we anniversary that supply chain consolidation in the U S. So you use that means they understand I know that there is a specific element to that.

Advisors: They are going to show you a second half that Houston is going to be different than the first half.

Advisors: No when we look at our SG&A going for the Canada, right, which is exactly the question that you asked when we go through our journey and when we go through the agenda and we look at the SG&A.

Advisors: We call industry for our remarks that we have that.

Advisors: We had this journey in this quarter.

Advisors: I'm, sorry, if I ever go into all of our expectations.

Advisors: This is driven by uncertainty like trade shows are professional fees that he she want now expected to hit Q2.

Kenneth B. Goldman: Are there any other specific things as we just think up and down the P&L that might be useful as we plug in some numbers? Obviously, last year you had a fairly high SG&A number, I think the highest of the year. I just wanted to get a sense for, you know, their seasonality of that spend, maybe as you guys think about it. And then any color we should think about as we model the regions in 2Q in terms of the top line. Thanks.

Advisors: All.

Advisors: Of which target even offer her a job. So if you add all of that you will get a good picture I think between first half and second half.

Advisors: Okay.

Advisors: Thank you. Our next question comes from the line of Max <unk> with BNP Powerbar. Please proceed with your question.

Max: Okay. Thanks for the question I was hoping you could give us a bit more color on the state of the strategic reset in China. It seems like you're making some good progress on that front.

Marie-Josée David: Hi Ken, this is Marie-Josée. Let me take this question. So if you recall, right, last quarter, we told you that we would have a second half that was going to be higher than the first half. If you look at our performance in the first quarter, I mean, operating profit came slightly higher than expected, largely driven by supply chain improvements. In North America, the structural savings are from continuous improvement actions, and these are going to come as we go through the year as well. So that's one thing, right?

Speaker Change: I'm also curious.

Max: Given China's business exposure to foodservice, how youre thinking about the macro.

Advisors: The macroeconomic environment, there and the health of the consumer Thank you very much.

Advisors: IMAX is Daniel here I will take your question.

Daniel: You saw in the prepared remarks on the consistency with the at least two previous quarters. We are completing now the first phase of the reset plan.

Daniel: Which is going in line with our expectations and now we are entering the second phase.

Marie-Josée David: So we know that we expected those savings to come as well. But they came earlier than expected, and we continue to see them coming. If you look forward, the year-over-year margin expansion from mixed will become smaller as we lap the China reset, in addition to the benefits from the supply chain improvement as we anniversary the supply chain consolidation in the U.S. So you definitely understand by now that there is a specific element that they are going to show you in the second half that is a little bit different than the first. Now, when we look at our SG&A, going through the P& Which is exactly the question that you asked.

Speaker Change: What is the second phases, obviously maximizing growth.

Speaker Change: Within the defined perimeter of that defined parameter for us is foodservice and reduced core portfolio, the <unk> and the <unk> brand.

Speaker Change: That is the redefined parameters. So now we hit down maximizing capacity utilization and we are selectively introducing some.

Speaker Change: Selected products to meet seasonal demand and certain price points, which are needed to the new context.

Speaker Change: A bit more detail for you to understand this.

Speaker Change: The status of the business on the on the reset plan the decline you're observing quarter. One importantly, which is significant is almost entirely related to the diluted portfolio. We have rationalized in the second part of 2023 and that boosted our sales in the first part of 2023.

Marie-Josée David: When we go through our SG&A, and when we go through the P&L, and we look at the SG&A, we call in the prepared remarks that we had a Q1 that became favorable to our expectations. This is driven by certain fees, like trade shows and professional fees, that hit Q1, now expected to hit Q2. It's about 3 million, of which 2 million is in North America.

Speaker Change: This effect.

Speaker Change: Max will will fade as of quarter three this year.

Speaker Change: So in general terms the way you should look at this reportable segment is the calibration between asset structure and business sides will continue.

Speaker Change: Nonstop.

Speaker Change: And the teams have on ongoing mandates.

Marie-Josée David: So if you add all of that, you will get a good picture, I think, between the first 500. Thank you. Our next question comes from the line of Max Gumport with BNP Paribas. Please proceed with your question. Hey, thanks for the question. I was hoping you could give us a bit more color on the state of the strategic reset in China. Seems like you're making some good progress on that front.

Speaker Change: To continue to bring these reportable segments into structural profitable.

Speaker Change: Growth moving forward.

Speaker Change: Undeniable that the contracts continue to be challenging and now the team as we move from stage one to stage two head down finding more consumption and more demand for the <unk> brand within the defined perimeter, but all in a conservative and measured approach. So thank you Mark So I hope that was okay for your question.

Mark: Very helpful. Thanks, very much.

Speaker Change: Thank you, ladies and gentlemen, as a reminder, if you'd like to join the question queue. Please press star one on your telephone keypad.

Max Andrew Stephen Gumport: But I'm also curious, given China's business exposure to food service, how you're thinking about the macroeconomic environment there and the health of the consumer. Hi Max, it's Daniel here. We'll take your question. You saw in the prepared remarks and the consistency with at least two previous quarters. We are now completing the first phase of the reset plan, which is going in line with our expectations, and now we are entering the second phase.

Mark: Our next question comes from the line of John Baumgartner with Mizuho Securities. Please proceed with your question.

John Joseph Baumgartner: Good morning, Thanks for the question.

John Joseph Baumgartner: Maybe first off in your your international markets. The volume from New markets is ramping in those new markets. Also include some of the higher per capita consumption regions globally can you speak to the progress or planned evolution to migrate those new markets from the initial foodservice entry into a.

Max Andrew Stephen Gumport: What the second phase is, obviously, maximizing growth within the defined perimeter. That defined perimeter for us is food service, a reduced core portfolio, the key cities, and the Oatly brand. That is the redefined perimeter.

John Joseph Baumgartner: A larger presence at retail I mean is that occurring now is it more of a 2025 of that how do you think about the channel evolution in these new markets.

Speaker Change: Yeah, I'll I'll take that question Jon Good morning.

Speaker Change: It's we're very excited by the progress made in new markets. I know your question has two angles, which is new markets in general and specifically in the channel.

Daniel Ordonez: So now we are heading down to maximize capacity utilization, and we are selectively introducing some selected products to meet seasonal demand and certain price points which are needed for the new content. A bit more detail for you to understand the status of the business and the reset plan. The decline you observe in quarter one, important and significant, is almost entirely related to the dilutive portfolio we have rationalized in the second part of 2023, and that boosted our sales in the first part of 2023. This effect, Max, will fade as of quarter three this year.

Speaker Change: In the channel domain.

Speaker Change: The reason why we're very infused is because every city in which we land the op Brian proves the magic of the of the brand and how prepared these markets are to welcome.

Speaker Change: US with open arms, where there is a barista in specialty coffee already say.

Speaker Change: Customer buyer.

Speaker Change: Repeatedly get the finally you guys are here.

Speaker Change: So.

Speaker Change: Whether it's to gain you saw the numbers in some of the key cities, we already above 50 or 60% uptake in coffee specialty.

Daniel Ordonez: So, in general terms, the way you should look at this reportable segment is that calibration between assets, structure, and business size will continue, will not stop, and the teams have an ongoing mandate to continue to bring this reportable segment into structural profitable growth moving forward. It's undeniable that the context continues to be challenging, and now the team, as we move from Stage 1 to Stage 2, heads down to find more consumption and more demand for the Oatly brand within the defined period, but all in a conservative and measured approach. So, thank you, Max. I hope that was okay for your question. Very helpful. Thanks very much.

Speaker Change: And the way in which we reached number one velocities is quite extraordinary how we'll reach number one velocity retail in some of these key cities is very very fast which means that the.

Speaker Change: The potency of the brand is already there.

Speaker Change: Whether it's Paris, Barcelona or Brussels.

Speaker Change: This is how you should look however at our expansion we expand in a very disciplined manner.

Speaker Change: So we are in.

Speaker Change: <unk> leveraging two things in one hand, the installed capacity and on the other.

Speaker Change: Overheads to the way, we manage overheads so.

Speaker Change: The overhead synergies we have in some of these neighboring market. So we're not expanding everywhere.

Speaker Change: At the same time.

Speaker Change: And again.

Speaker Change: We are mission lift right. So only we don't regard only us an exclusive club.

Max Andrew Stephen Gumport: Thank you. Ladies and gentlemen, as a reminder, if you'd like to join the question queue, please press star 1 on your telephone keypad. Our next question comes from the line of John Baumgartner with Mizuho Securities. Please proceed with your question.

Speaker Change: We believe that the reason why we are seeding future growth is because we kind of be real about our mission just being present in only a few a few markets.

Speaker Change: To your question about channels we.

Speaker Change: We have mentioned <unk> in past earnings calls that we have a playbook.

John Joseph Baumgartner: Good morning, thanks for the question. Maybe first off, in your international markets, the volume from new markets is ramping, and those new markets also include some of the higher per capita consumption regions globally. Can you speak to the progress or planned evolution to migrate those new markets from the initial food service entry into a larger presence at retail? I mean, is that occurring now?

Speaker Change: With Oakley in fact internally we call it the algorithm and we respect that beautifully which means we conquer the hearts and the minds of coffee specialty first then we expand experiences in foodservice, but in a selected manner balancing margin and growth, while we make ourselves available in retail.

Speaker Change: That model is not changing I would say we take it religiously.

Speaker Change: In house, and we have not changed and we have no plans to change that by market.

Daniel Ordonez: Is it more of a 2025 event? How do you think about the channel evolution in these new markets? Yeah, I'll take that question. John, good morning. We're very excited by the progress made in NewMarkets. I know your question has two aspects, which are NewMarkets in general and specifically in the channel domain.

Speaker Change: And Daniel in North America do you have any early data yet on the sell through in some of your newer accounts for fall and winter resets, Walmart Costco and whether there is any additional distribution plans, having been announced do you expect going forward.

Daniel: Yeah. Thank you.

Daniel: This is how you should look at this is how we are looking at the U S.

Daniel Ordonez: The reason why we're very enthused is because every city in which we land the Oatly brand proves the magic of the brand and how prepared these markets are to welcome us with open arms. Whether it's a barista in specialty coffee or it's a customer-buyer, we repeatedly get the, "Finally, you guys are here." So whether it's to gain or lose, you saw the numbers in some of the key cities. We're already about 50% or 60% uptake in specialty coffee. And the way in which we reach number one velocities is quite extraordinary.

Daniel: We have been growing Tdp's Im sure you follow scan data more than us.

Daniel: Very high numbers close to 50% now if you look at the numbers to be lower than last year on year.

Daniel: In both units and dollars we have been consistently growing in scan data above the in double digits since the start of the year. So we're pretty pleased with that.

Daniel: The way in which we're looking at blocks ease.

Daniel: That it will take time to take that trial into repeat.

Daniel: Into loyalty and therefore higher velocity and higher sales right Im sorry, I don't want to come across as teaching your mathematics.

Daniel Ordonez: How we reach number one velocities in retail in some of these key cities is very, very fast, which means that the potency of the brand is already there, whether it's Paris, Barcelona, or Brussels. This is how you should look, however, at our expansion. We expand in a very disciplined manner. So we are efficiently leveraging two things. On the one hand, we are efficiently leveraging two things.

Daniel: John but this is this is what we see and we start seeing some early data and penetration that suggests that could be the case right. So so very exciting progress you will remember when we were a year ago were explaining other things to you is a very exciting prospect as what we can we can expect moving forward.

Daniel: And we trust the strength of the brand to have that now.

Daniel: Actual numbers in the short term the core ultimate portfolios and growth.

Daniel: And to that we add the incremental growth from the innovations in existing and new doors. So.

Daniel Ordonez: And on the other hand, the way we manage overheads. So the overhead synergies we have in some of these neighboring markets. So we're not expanding everywhere at the same time. And again, you know, we are mission-led, right? So Oatly, we don't regard Oatly as an exclusive class.

Daniel: And we are the only brand growing shares in both ultimate.

Daniel: And total non dairy.

Daniel: So we're 50% we believe that things are things are.

Speaker Change: It's going well.

Daniel: It's a lot of work to do but we're pretty pleased with the progress and the outlook.

Daniel: And then I guess last question in terms of your expansion plans Q1, Capex was basically at a maintenance level and you continue to leave the door open and I guess for growth Capex for the new Asia capacity.

Daniel Ordonez: So we believe that the reason why we are seeding future growth is because we cannot be real about our mission, just being present in only a few markets. To your question about channels, JC and I have mentioned in past earnings calls that we have a playbook. In fact, internally, we call it the algorithm, and we respect that beautifully, which means we conquer the hearts and minds of coffee specialty first, then we expand experiences in food service in a selective manner, balancing margin and growth, while we make ourselves available in retail.

Daniel: But given the excess capacity you have in that region. The curtailed growth plans for China at what point do you think you'll have a decision whether that investment actually goes ahead I guess, what's keeping you from discounting it at this point and maybe giving greater free cash visibility to the street.

Daniel: Thank you so much John.

Speaker Change: Stop here I'll take your question. So I think let me start by reiterating.

Speaker Change: <unk> 3000 Islands factory as we previously communicated we continue to evaluate options for our Asia III facility.

Daniel Ordonez: That model is not changing. I would say we take it religiously, you know, in-house, and we have not changed, and we have not planned to change that with money. And Daniel, in North America, do you have any early data yet on the sell-through in some of your newer accounts, the fall and winter resets, you know, Walmart, Costco, and whether there's any additional distribution plans having been announced or you expect going forward? Yeah, thank you.

Speaker Change: And honestly greater China, and total Asia region are very important to us and we continue to see a lot of opportunities. There. So we want to make sure that we make those decisions for this business and its future and honestly, we are going to take as much time as needed to make the heightened decision on these factory Nmd's regional <unk>.

Speaker Change: <unk> network. So let me reiterate our guidance for Capex is confirmed below $75 million.

Daniel Ordonez: This is how we are looking at the U.S. We have been growing TDPs, I'm sure you follow SCANDATA more than we do, at very high numbers, close to 50%. Now if you look at the numbers, it's a bit lower than that, year on year. In both units and dollars, we have been consistently growing scan data in double digits since the start of the year, so we're pretty pleased with that. The way in which we're looking at that is that it will take time to take that trial into repeating, into loyalty, and therefore higher velocities and higher sales, right? I'm sorry, I don't want to come across as teaching you mathematics, John, but this is what we see, and we start seeing some early daytime penetration that suggests that could be the case, right?

Speaker Change: For the year.

Speaker Change: You have heard US say previously this capex guidance reflects the 2020 full portion of an end to end project in the mainland and we stick to the plan and we give ourselves the time to make the right decision for the future of this business as we have done over the past two years.

Speaker Change: Thanks, Jesse Thanks Danielle.

Speaker Change: Thank you John.

Speaker Change: Thank you, ladies and gentlemen that concludes our question and answer session I'll turn the floor back to Mr. Carney for any final comments.

Carney: Great. Thank you.

Carney: If anybody wants to schedule a follow up call feel free to shoot me, an email and we will set something up aside from that everybody have a great day.

Speaker Change: Thank you. This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.

Daniel Ordonez: So it's very exciting progress. You will remember where we were a year ago explaining other things to you. It's a very exciting prospect as to what we can expect moving forward, and we trust the strength of the brand to do that. In the short term, the core ultimate portfolio is in growth. And to that, we add the incremental growth from the innovations in existing and new doors. So, and we are the only brand growing shares in both oat milk and total non-dairy.

Daniel Ordonez: So, we're pretty pleased, and we believe that things are going well. So there's a lot of work to do, but we're pretty pleased with the progress and the outcome. And then, I guess, last question, in terms of your expansion plans, Q1 CapEx was basically at a maintenance level, and you continue to leave the door open, I guess, for growth CapEx for the new Asia capacity. But given the excess capacity you have in that region, and the curtailed growth plans for China, at what point do you think you'll have a decision whether that investment actually goes ahead? I guess, you know, what's keeping you from, you know, discounting it at this point and maybe giving greater free cash visibility to it? Thank you so much, John. Jean-Christophe here.

Speaker Change: [music].

Jean-Christophe Platon: I'll take your questions. So I think, let me start by addressing Asia 3, Southern Island Factory. As we previously communicated, we continue to evaluate options for our Asia 3 facility. And, honestly, Greater China and the overall Asian region are very important to us, and we continue to see a lot of opportunities there. So we want to make sure that we make the right decision for this business and its future, and honestly, we are going to take as much time as needed to make the right decision about this factory and this regional supply network.

Jean-Christophe Platon: So, let me reiterate, our guidance for CAPEX is confirmed below $75 million for the year, as you have heard us saying previously. This CAPEX guidance reflects the 2024 portion of an end-to-end project in Southern Ireland, and we stick to the plan, and we give ourselves the time to make the right decisions for the future of this business, as we have done over the past two years. Thanks, J.C. Thanks, Daniel.

John Joseph Baumgartner: Thank you, John. Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Kearney for any final comments. Great. Thank you. If anybody wants to schedule a follow-up call, feel free to shoot me an email and we'll set something up. Aside from that, everybody have a great day.

Brian Kearney: Thank you. This concludes today's conference call. You may disconnect your lines at this time.

Operator: Thank you for your participation. ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? Greetings and welcome to the Oatly Group First Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode.

Brian Kearney: You may begin. Good morning, and thanks for joining us today for Oatly's first quarter of 2024. On today's call are our Chief Executive Officer, Jean-Christophe Platon, our Chief Operating Officer, Daniel Ordonez, and our Chief Financial Officer, Marie-Josée David. 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 four booking statements.

Brian Kearney: Finally, as discussed on our fourth quarter earnings call, as of the beginning of this year, we have modified our reporting segment to align with how management evaluates and allocates resources. We will be discussing the business using these new reporting segments today. We provided a 6k earlier this month that has historical financial information for the segment. With that, I'd now like to turn the call over to Jean Christophe. Thank you, Brian, and good morning, everyone.

Speaker Change: [music].

Jean-Christophe Platon: Slide 5 has the key messages I want you to take away from today's presentation. First, we are making good progress towards achieving profitable goals. Every employee throughout the organization, no matter their position, region, or role, is clearly focused on strengthening the business and bringing us to structural, consistent, profitable growth, and our first quarter results reflect that progress. We had a solid first quarter, and the year is off to a good start.

Speaker Change: Greetings and welcome to the Old group first quarter 2024 earnings call. At this time all participants are in a listen only mode mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad as a reminder, this conference is.

Speaker Change: Is being recorded I would now like to turn the conference over to your host Mr. Brian Kearney, Vice President Investor Relations for Oatley group. Thank you.

Speaker Change: Sir you may begin.

Brian Kearney: Good morning, and thanks for joining us today on <unk> first quarter 2024 earnings conference call.

Jean-Christophe Platon: As you saw, in two days on Incredits, we are clearly seeing the benefits from the bold actions we have taken over the past two years. These benefits are most clear in our gross margin expanding by nearly 1,000 basis points year over year, as well as our reduced SG&A, which was partially aided by certain fees and selling expenses that will hit a bit later than we planned. While we are encouraged by our first quarter results, we recognize that we are only one quarter through the year and that our three operating segments are in very different stages of their turnaround journeys, their maturity, their execution, and the amount of traction they have achieved on their strategic actions. Therefore, we are reiterating our full-year guidance across all methods.

Brian Kearney: On today's call are our Chief Executive Officer, John Kristoff peloton, our Chief operating Officer, Daniel Daniel <unk>, and our Chief Financial Officer brings us a W.

Speaker Change: Before we begin please review the disclaimer on slide three.

Speaker Change: 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.

Speaker Change: Payments 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.

Speaker Change: Please refer to the documents, we filed with 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.

Speaker Change: 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. 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.

Speaker Change: Third in isolation or as a substitute for the financial information presented in accordance with I have her up.

Speaker Change: Please refer to today's release for a reconciliation of the non <unk> financial.

Speaker Change: <unk> financial measures to the most comparable.

Speaker Change: Measures prepared in accordance with <unk> for us.

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

Jean-Christophe Platon: As you can see in this chart, our 27% gross margin in the quarter is a significant improvement from the 11% margin we reported for the full year 2022. We still have plenty of work to do to get to our longer-term target, but we are clearly making good progress. Similarly, we have made significant progress on our adjusted EBITDA. In 2022, we reported quarterly losses between $53 million and $83 million.

Speaker Change: Finally, as discussed on our fourth quarter earnings call as of the beginning of this year, we have modified our reporting segments to align with how management evaluates the business and allocates resources, we will be discussing the business using the new reporting segment today, we furnished our 6K earlier this month that has historical financial information for the <unk>.

Speaker Change: Yep.

Speaker Change: With that I'd now like to turn the call over to John Kristoff.

John Joseph Baumgartner: Thank you, Brian and good morning, everyone.

John Joseph Baumgartner: Slide five as the key messages I want you to take away from today's presentation.

Jean-Christophe Platon: Today, we are reporting a first quarter loss of just $13 million. Slide 7 is a reminder of the strategic pillars we are focused on in 2024. Those are

John Joseph Baumgartner: First we are making good progress towards achieving profitable goals.

John Joseph Baumgartner: Employees throughout the organization no matter the position the region alone is squarely focused on strengthening the business and bringing us to structural consistent profitable growth.

Jean-Christophe Platon: Bringing the Oatly magic to more people, continuing our work on the calibration of resources across SG&A and the supply chain, and focusing relentlessly on execution, and Slide 8 gives you a brief update on our progress on these three pillars. As I showed on the prior slide, we continued to grow our volume growth in the first quarter. We intend to maintain this momentum by continuing to expand our reach. We are placing advertisements in high-traffic areas, such as European train stations, and we are creating great tasting experiences at various trade events and coffee festivals. We even created some buzz with a pop-up venue at Milan Design Week.

John Joseph Baumgartner: And our first quarter results reflect the progress we had a solid first quarter.

John Joseph Baumgartner: The year is off to a good start.

John Joseph Baumgartner: As you saw in todays earnings release, we are clearly seeing the benefits from the bold actions, we have taken over the past two years.

John Joseph Baumgartner: These benefits are most clear.

John Joseph Baumgartner: Smelting.

John Joseph Baumgartner: Pending nearly 1000 basis points.

John Joseph Baumgartner: Over a year as.

Jean-Christophe Platon: And, as you may have seen, we are expanding our partnership with Minor League Baseball to bring the Oatly magic to consumers across the United States. Next, we remain on track with our work on the calibration of results. This includes the work related to our reduction of the company's SG&A fixed cost by $85 million, as well as the previously announced discontinuation and exit of the manufacturing facilities in the U.S. and the U.K., and we are continuing to evaluate our options regarding our Asian supply. Finally, the entire Oatly team is doing a very good job of focusing on execution.

John Joseph Baumgartner: As Windows all had used SG&A.

John Joseph Baumgartner: Which was partially aided by cepheid fees setting expenses that will hit a bit later than we planned.

John Joseph Baumgartner: While we are encouraged by our first quarter results. We recognize that we are only one quarters for the year.

John Joseph Baumgartner: And that's all three operating segments.

John Joseph Baumgartner: Very different stages of their journeys.

John Joseph Baumgartner: But truly see the execution and the amount of traction we have achieved on desktop the gieck actions.

John Joseph Baumgartner: Therefore, we are reiterating our full year guidance across all metrics.

John Joseph Baumgartner: And slide six is a report card on how we are progressing on our journey towards a profitable goals.

Jean-Christophe Platon: Our supply chain continued its strong performance in the quarter, driving down costs and becoming more efficient, whilst keeping fill rates above 95% in every region. I also see increased fluid joint work across teams, across regions, and operating segments. While we can't quantify a direct financial impact of this increased collaboration, we know there is a benefit there. As I said earlier, every employee is focused on strengthening the business and driving towards profitable growth.

John Joseph Baumgartner: As you can see our.

John Joseph Baumgartner: Volume growth is positive and accelerated in the first quarter.

John Joseph Baumgartner: The total company, 3% volume growth was driven by solid growth in both our Europe and international segments, and all North American segment, which was partially offset by the greater China segment, which continues to reflect our intentional actions to refocus the business.

John Joseph Baumgartner: Even as we were implementing I'll tell them. They want actions in 2023, we go our total company volume by over 3%, which further solidifies our belief in the strength of our business.

John Joseph Baumgartner: Gross margin continued to increase sequentially in the quarter and was nearly 10%.

Daniel Ordonez: Thank you, J.C., and very good morning, everyone. I will start on slide 10 with Europe and international, which is our largest operating sector. European and international reported solid results in the quarter, with constant currency revenue growth of approximately 8% and adjusted EBITDA that continued to increase sequentially to $15 million, which is approximately 13% of net sales. Slide 11 gives you an update of how we are performing in retail, which is the largest part of this segment's revenue.

John Joseph Baumgartner: Points higher than last year first quarter.

John Joseph Baumgartner: As you can see the start of 27% gross margin in the quarter is a significant improvement from the 11% margin we reported for the full year 2022.

John Joseph Baumgartner: We still have plenty of work to do to get to our longer term targets, but we are clearly making good progress.

John Joseph Baumgartner: Similarly.

John Joseph Baumgartner: We have made significant progress on all adjusted EBITDA.

John Joseph Baumgartner: In 2022, we reported quarterly losses between $53 million and $83 million.

John Joseph Baumgartner: Today, we are reporting a first quarter loss of just 17 million.

John Joseph Baumgartner: Slide seven is a reminder of the strategic pillars, we are focused on in 2024.

Daniel Ordonez: On the right-hand side of this slide, you can see this translating into strong market shares that continue to expand in most of our major markets. On slide 12, we give an update on the food service side of this business. For some time now, we have mentioned our intention to seize the opportunity this channel presents to accelerate our growth. This focus has resulted in a strong 20% year-on-year revenue growth. You may have seen some of our recent communications on our new partnerships like VR Railways, Deutsche Bahn, Swiss Railways, and Coffee Fellows, in many cases, leveraging the new tailored portfolio for the channel and for the occasion, like the Jigger.

John Joseph Baumgartner: Those are <unk>.

John Joseph Baumgartner: The oddly magic to more people.

John Joseph Baumgartner: Continuing our work on the calculation of resort fees across SG&A and the supply chain.

John Joseph Baumgartner: And focusing relentlessly on execution.

John Joseph Baumgartner: And slide eight gives you a brief update on our progress on these three pillars.

John Joseph Baumgartner: As I showed them the pilot flight, we continue to grow our volume growth in the first quarter.

John Joseph Baumgartner: We intend to maintain this momentum by continuing to expand our reach.

John Joseph Baumgartner: We are placing advertisement in high traffic areas, such as European Penn station, and we are creating great tasting experiences at various tidy Ben and Coffee Festival.

Daniel Ordonez: We expect these partnerships, as well as the many others we continue to pursue, to drive more growth opportunities going forward. On slide 13, you can see an update on our performance in Newmarket. Now that we have changed our reporting segments, our geographic expansion initiatives will be captured within Europe and internationally.

John Joseph Baumgartner: We even created some buzz with the venue at Milan design week.

John Joseph Baumgartner: And as you may have seen we are expanding our partnership with minor league baseball to bring be utterly magic to consumers across the United States.

John Joseph Baumgartner: Okay.

John Joseph Baumgartner: Next we remain on track with our work on the calibration of legal fees.

Daniel Ordonez: As such, our remarks will include both the European markets, which we have historically discussed with you, as well as other international markets where we will be increasing our focus, like Australia, North and South East Asia, the Middle East, and Latin America. Volume in this new market grew a strong 29% year-on-year in this quarter; that is approximately 2 million liters of incremental volume, which is roughly equivalent to how many liters we sell in Austria every quarter. These markets now represent approximately 12% of the segment's total volume, up from 9% in last year's first quarter.

John Joseph Baumgartner: This includes the work related to a reduction of the company's SG&A fixed cost by 85 million.

John Joseph Baumgartner: As well as the previously announced discontinuation the exit of the manufacturing facilities in the U S and the UK.

John Joseph Baumgartner: And we are continuing to evaluate all options regarding our Asian supply chain.

John Joseph Baumgartner: Finally, the entire Ot team is doing a very good job at focusing on execution.

John Joseph Baumgartner: Our supply chain continued their strong performance in the quarter driving down costs, and becoming more efficient whilst keeping fill rates above 95% enabling agent.

Daniel Ordonez: In short, our focus on bringing the Oatly magic in a disciplined fashion to more people in more geographies is work. On slide 14, I would like to pivot the discussion from channels and geographies to our portfolio with an update on our Go Blue strategy intended to expand the usage of our products by offering them more flexibility and a wider range of options that also help improve our margin. In this first quarter, the strategy has generated a net 7% growth in volume year on year. Slide 15 shows the lineup of the iconic Barista Edition new items launching this year.

John Joseph Baumgartner: I also see increased fluid joint work across teams across region and operating segments.

John Joseph Baumgartner: While we cant quantify your direct financial impact to this increased collaboration we know there is a benefit there.

John Joseph Baumgartner: As I said earlier every employee is focused on strengthening the business and driving toward profitable growth and this focus on execution is critical to our success.

Daniel Ordonez: They are meant to continue to drive new locations, new price points, and new channel opportunities, which are very significant to us. So far, these items have had a very good selling success with customers, and several of them are already in the market. On slide 16, you can see that our new products, including the new Old Girds, have hit the retail shelves across Europe and are already gaining distribution and driving trials, all of that in line with our plan. I turn now to North America on slide 17.

Daniel: With that Doug.

Daniel: Over to you.

Doug: Thank you Jessie and very good morning, everyone.

Doug: I will start on slide 10, with Europe, and international which is our largest operating segment.

Doug: Europe and international reported solid results in the quarter with constant currency revenue growth of approximately 8% and adjusted EBITDA that continued to increase sequentially to $15 million, which is approximately 13% of the net sales.

Daniel Ordonez: Here, you can see that revenue growth accelerated in the first quarter to approximately 5%. This is on top of last year's very strong 36% growth on a comparable base. You can also see that adjusted EBITDA made good progress in the quarter and was just below breakeven at only $400,000 lost.

Daniel: Slide 11 gives you an update of how we are performing in retail which is the largest part of this segments revenue.

Daniel: On the left you can see that we continue to offset a significant difference between the category growth in plant based drinks versus the old milk category.

Daniel: We are driving our growth well above the old milk category in the quarter.

Daniel: We outgrew the category by 200 basis points.

Daniel: On the right hand side of the slide you can see this translating into strong market shares that continue to expand in most of our major markets.

Daniel: Slide 12, we gave an update on the foodservice side of this business for some time now we have mentioned our intention to cease the opportunity this channel presents to accelerate our growth.

Daniel: This focus has resulted in a strong 20% year on year revenue growth.

Daniel: You may have seen some of our recent communications on our new partnerships like the D. R Railways Deutsche Bahn squeeze railways and coffee Sandoz.

Daniel: In many cases, leveraging the new tailored portfolio or for the channel and for the location like the junior.

Daniel: We expect these partnerships as well as the many others, we continue to pursue to drive more growth opportunities going forward.

Daniel: On Slide 13, you can see an update on our performance in new markets.

Daniel: Now that we have changed our reporting segments, our geographic expansion initiatives will be captured within Europe and international.

Daniel: As such our remarks will include both the European markets, which we have historically discussed with you as well as the other international markets, where we will be increasing our focus like Australia, North and southeast Asia, The Middle East and Latin America.

Daniel: These markets now represent approximately 12% of the segment's total volume up from 9% in the last year's first quarter.

Daniel: In short our focus on bringing the magic in a disciplined fashion to more people in more geographies is working.

Daniel: On slide 14, I would like to pivot the discussion from channels and geographies to portfolio.

Daniel Ordonez: However, outside of our largest customer, revenue has grown at a very strong 35% in the quarter. Besides, I am very glad to report that we have now come to an agreement on new terms with our largest food service company, and we plan to move forward on this mutually beneficial basis. This is expected to facilitate joint business planning and innovation, which will further build on our overall company profitable growth agenda. I will turn now to Greater China on slide 21.

Daniel: With an update on our go blue strategy intended to expand the usage of our products by offering them more flexibility and a wider range of options that also help improve our margins in this first quarter. The strategy has generated a net 7% growth in volume year on year.

Daniel: Yeah.

Daniel: Slide 15 shows the lineup of the iconic Barry. The addition of new items launching this year.

Daniel: They are meant to continue to drive new locations, new price points, and new channel opportunities, which are very significant to us. So.

Daniel: So far these items had a very good selling into customers and several of them are already in the market.

Daniel: On slide 16, you can see that our new products, including the new old goods have hit the retail shelves across Europe and are already gaining distribution and driving trial.

Daniel: All of that in line with our plans.

Daniel: I turn now to North America on Slide 17.

Daniel: Here you can see that revenue growth has accelerated in the first quarter to approximately 5%.

Daniel: This is on top of last year's very strong 36% growth in our comparable base.

Daniel: You can also see that adjusted EBITDA made good progress in the quarter and was just below breakeven at only $400000 loss.

Daniel: This continued improvement was driven by strong gross margin expansion as we continue to see the benefit of the strategic actions taken in our supply chain over the past 18 months.

Daniel: These segments has clearly done a very good job of improving its cost structure and he has done also a very good job at improving margins mix.

Daniel Ordonez: While it is for a limited time only, for the moment, we believe it will provide additional category momentum and brand visibility to consumers. As we mentioned last quarter, sensitive to the economic context prevailing in China and new consumer behavior, it was clear we needed to complement our portfolio with SKUs that could hit certain price points. We have, therefore, selectively launched these value products with several customers, and they are performing well. This helps us to build a stronger service package for our customers, drive volume growth to sustain the necessary levels of capacity absorption, and hence solidify our margins. The consumer environment in Greater China remains challenging.

Daniel: And focusing on execution, while bringing the old magic to more customers and to more consumers.

Daniel: Slide 18 gives you an update on the retail side of this business, which is a little more than half of this segment's net sales.

Daniel: The left you can see that similarly to Europe. There is a very clear and growing difference between the performance of the plant based drinks category and the ultimate category.

Daniel: And now that we have our full playbook in place those are growing difference between ultra milking general and the ultimate Brian.

Daniel: This is evidenced by our accelerating share gains that we show on the right hand side of the slide.

Daniel: Discussed during the last call part of our growth plans in 2024 is driven by these new products, which we show on this slide.

Daniel: While still very early days, our new products are off to a good start with several items already reaching velocity higher than competitive products that had been on shelf for much longer. So again. It is early days, but we see some positive signs.

Daniel Ordonez: However, we're identifying opportunities to rebuild our business in a disciplined manner, with our North Star being profitable growth. While it is clear we have not yet gained the traction needed for this business to capture the full opportunity that Region provides, you can see we're starting to make progress on the second stage of this segment's turnaround plan. With that, I would now like to turn the call over to Marie-Josée. MJ, it's over to you.

Daniel: Turning now to slide 20 on the foodservice side of this business.

Daniel: As we have mentioned in the past, we are aggressively pursuing new customers to expand and diversify our foodservice customer base, and hence drive stronger growth and better margins.

Daniel: The foodservice revenue growth in North America was approximately flat in quarter one however.

Marie-Josée David: Thank you, Daniel, and good morning, everyone. Slide 24 gives you another view of the PNL for the quarter. We reported 1.8% year-over-year revenue growth and constant currency revenue growth of 1.2%. Gross margin for the quarter was 27.1%, which is a 970 basis point improvement versus the prior year quarter. This came in slightly ahead of our expectations as our supply chain team was able to reduce our cost structure more quickly than we planned. Adjusted EBITDA was a loss of $13.2 million, which was ahead of our expectations.

Daniel: However outside of our largest customer revenue has grown at a very strong 35% in the quarter.

Daniel: Besides I am very glad to report that we have come now to an agreement on new terms with our largest food service customer.

Daniel: We plan to move forward on this mutually beneficial basis.

Daniel: This is expected to facilitate joint business planning and innovation, which will further build on our overall company profitable growth agenda.

Daniel: I will turn now to greater China on slide 21.

Daniel: On this slide you can see the continued impact of the bold strategic actions, we have taken to refocus the business on higher margin products and channels, while reducing costs.

Marie-Josée David: In addition to the gross margin strength, we also benefited from the timing of certain SG&A expenses. We estimate this benefit to be approximately $3 million. These are items, for example, such as planning for various professional fees to hit in Q1, but are now expected to hit a bit later. We also choose to attend certain trade shows that fall later in the year. Overall, we are pleased with our performance in the quarter. Slide 25 shows the bridging items of our quarterly revenue growth.

Daniel: The segment has reported chest at 3 million adjusted EBITDA loss in the first quarter that is an impressive number when you also take into consideration the impact of the Chinese new year holiday.

Daniel: We don't ship product for several days.

Daniel: I am pleased with the progress we have made on the first stage of this segment's turnaround plan. However, there is still plenty of work to do to get this business, where it needs to be.

Daniel: For that we need to build a stronger topline with our redefined portfolio and channel perimeter.

Marie-Josée David: You can see volume increased 3.1%, price mix was a 1.9% headwind for 1.2% constant currency revenue growth, and exchange was a tailwind of 0.6, resulting in 1.8% total revenue growth for the quarter. Slide 26 shows the revenue bridge by segment. Europe and International continue to report solid growth with a 7.7% constant currency revenue growth led by a 4.1% volume growth. North America's revenue growth of 4.6% was driven by a strong 11.4% volume growth, which was aided by distribution gains and continued sell-in of new products.

Daniel: Which is the second stage of our turnaround plan.

Daniel: <unk> 'twenty to give you an update on where we are with this next stage.

Daniel: We are very excited to partner up with China's largest coffee chain. These.

Daniel: <unk> started only last week as part of the Earth day promotion.

Daniel: While it is for a limited time only for the moment, we believe it will provide additional category momentum.

Daniel: On brand visibility to consumers.

Daniel: As we mentioned last quarter sensitive to the economic context prevailing in China, and the new consumer behavior.

Daniel: It's clear we needed to complement our portfolio with skus that could hit certain price points.

Daniel: We have therefore selectively launched these value products with several customers and they are performing well.

Marie-Josée David: Price mix was a headwind of 6.8%, consistent with the fourth quarter's level. Greater China's 26.8% constant currency decline was driven by the actions we have taken as part of the Segment Strategic Reset Plan. Volume declined 15.8% and price-mix declined 11%, largely driven by an unfavorable sales mix as we eliminated SKUs that were higher priced but lower margin.

Daniel: This helps us to build a stronger service package for our customers drive volume growth to sustain necessary levels of capacity absorption and hence solidify our margins.

Daniel: Consumer environment, and greater China remains challenging.

Daniel: Wherever we're identifying opportunities to rebuild our business in a disciplined manner with our north star being profitable growth.

Manager Say: While it is clear we have not yet gained the traction needed for this business to capture the full opportunity that region provides you can see we're starting to make progress on the second stage of this segment's turnaround plan with that I would now like to turn the call over to manager say and Jay over to you.

Jay: Thank you Danielle and good morning, everyone.

Jay: Slide 24 give you another view of the P&L for the quarter.

Jay: We reported one 8% year over year revenue growth and constant currency revenue growth of one 2%.

Jay: Gross margin for the quarter was 27, 1% which is <unk>.

Jay: 970 basis point improvement versus the prior year quarter.

Marie-Josée David: We have also done a lot of mass-newsworthy work to drive margins, such as improving our inventory management to reduce writing-off-age inventory and working closer with our suppliers to reduce raw material costs as well as penalties and fees. Our net pricing and product mix improved margins by 150 basis points in the quarter. This was largely driven by the work we have done in Greater China to eliminate low-margin products. Foreign exchange increased our gross margin by 90 basis points, and we experienced a modest inflation headwind of 20 basis points.

Jay: This came in slightly ahead of our expectations as our supply chain team was able to reduce our cost structure more quickly than we planned.

Jay: Adjusted EBITDA was a loss of $13 2 million, which was ahead of our expectations.

Jay: In addition to the gross margin trends, we also benefited from the timing of certain SG&A expenses.

Jay: We estimate this benefit to be a proximity 3 million.

Jay: These are items for example, such as plant Inc. For various professional T to hit in Q1 are now expected to heat a bit later.

Jay: We also chose to act than certain trade shows that for later in the year.

Marie-Josée David: Overall, we are pleased with the progress on our gross margin so far. Slide 28 shows our adjusted EBITDA by segment. As you can see, each segment continues to report a significant improvement compared to the prior year. I'm pleased that, for the second quarter in a row, the sum total of the adjusted EBITDA for the three regions was positive. It's clear that the strategic actions that we have been taking are driving concrete results.

Jay: We are pleased with our performance in the quarter.

Jay: Slide 25 shows the bridging items of our quarterly revenue growth.

Jay: You can see volume increased three 1%.

Jay: Price mix was one 9% headwind for one 2% constant currency revenue growth.

Jay: Foreign exchange was it didn't win of 0.6, resulting in one 8% total revenue growth for the quarter.

Jay: Slide 26 shows the revenue bridge by segment.

Jay: Europe and international.

Jay: <unk> to report solid growth, we have a seven 7% constant currency revenue growth led by a four 1% volume growth.

Jay: North America revenue growth of four 6% was driven by a strong 11, 4% volume growth, which was ended by distribution gains and continued sell in of new products.

Jay: Price mix was a headwind of six 8%.

Jay: With the fourth quarter's 11.

Jay: Greater China 26, 8% constant currency decline was driven by the actions we have taken as part of this segments strategic reset plan.

Jay: Volumes declined 15, 8% and price mix decline, 11% largely driven by unfavorable sales mix as we have any unique its QE, that's where higher priced but lower margin.

Jay: Slide 27 shows you the drivers of our 970 basis points year over year gross margin expansion.

Jay: The biggest item is the 750 basis point increase driven by absorption and supply chain improvements.

Speaker Change: For those of who have been following us for a y.

Speaker Change: Know that we have done a lot of work on improving our supply chain operations.

Speaker Change: Yeah, Yeah, food transactions and consolidation of our North American co Packer network was a big step for us in unlocking margin.

Marie-Josée David: As we have mentioned before, this net cash outflow includes the benefit of selling some of the assets. As you can see, we received 14 million dollars from the sale of plant assets in the quarter. We have also started to pay out some of the costs related to this exit. We expect these restructuring costs to increase over time to bring us in line with the overall budget. As you can see, the restructuring cost will flow through operating cash flow and therefore impact free cash flow while the benefits from selling assets will not.

Speaker Change: We have also done a lot of mess news, where few work to drive market share.

Speaker Change: Such as improving our inventory management to reduce writing, that's aged inventory and working closer with our suppliers to reduce raw material costs as well as spinouts isn't cheap.

Speaker Change: Our net pricing and product mix improved margins by 150 basis points in the quarter.

Marie-Josée David: We encourage you to keep that in mind as you evaluate our cash flow going forward. As I said previously, improving our cash flow is a priority for me, and our organization is very focused on it. Our finance teams have been doing a great job of helping us increase the organization's focus on cash. This great work has helped us improve our working capital metric, as well as increase the visibility and predictability of our cash flows.

Speaker Change: This was largely driven by the work we have done in greater China to eliminate lower margin products.

Speaker Change: Foreign exchange increased our gross margin by 90 basis points, and we experienced a modest inflation headwind of 20 basis points.

Speaker Change: Overall, we are pleased with our progress on our gross margin so far.

Speaker Change: Slide 28 shows our adjusted EBITDA by segment.

Jay: As you can see.

Jay: Each segment continued to report a significant improvement compared to the prior year.

Marie-Josée David: On slide 30, we are confirming our guidance across all methods. We expect constant currency revenue growth in the range of 5 to 10 percent, and we expect currency to be a small headwind. We continue to 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 continue to expect to report a loss of between $35 million and $16 million in 2024.

Jay: I'm pleased that from the second quarter I know rule the sum total of the adjusted EBIDTA for the free region was positive.

Jay: It's clear that the strategic actions that we have been taken are driving concrete transact.

Jay: Quarter after quarter, we havent been executing our plan improving the business and driving the business for profitable growth.

Jay: Turning to our balance sheet and cash flow on slide 29.

Marie-Josée David: With one solid quarter behind us and the continued expectation that adjusted EBITDA dollars will be stronger in the second half than in the first half, reaching the alpha variable end of this range is now less likely. However, we want to see additional traction on our strategic actions. Therefore, we are comfortable reaffirming the rent. Finally, we continue to expect CAPEX to be below $75 million for 2024.

Jay: The two biggest takeaways are that our cash flow remains on track with our plans and our liquidity remains strong at 410 1 million.

Jay: The chart on the right is our first quarter cash flow bridge as you can.

Jay: Can see in the quarter, our total cash balance decreased by $14 million.

Jay: They are not somebody calls out in this chart.

Jay: Working capital was a 19 million use of cash in the quarter.

Jay: It was impacted by the timing of payables as well as the season goes the inventory levels around plants. That's great. Why are we worked down inventory at yearend and build inventory in the first quarter we.

Jay: We do not expect such a large headwind going forward.

Jay: The other notable call out is around the cash flow related to the discontinuation of construction of our manufacturing facilities in the U K and U S.

Jay: That we have discussed on prior calls.

Operator: You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star 2. Our first question comes from the line of Michael Lavery with Piper Sandler. Please proceed with your question. Thank you. Good morning.

Jay: Overall, we remain on track to have the impact of these exits result in no more than 20 million of net cash out for the end of 'twenty to 'twenty five.

Jay: We have mentioned before this net cash outflow includes the benefit of selling some of the assets. As you can see we have received $14 million from the selling of plant assets in the quarter we.

Jay: We also started to pay out some of the costs related to this.

Jay: We expect these restructuring costs to increase.

Jay: Kris overtime to bring us in line with the other part of it yet.

Jay: As you can see the restructuring cost will flow through operating cash flow and thus far in fact free cash flow, while the benefits from setting us it will not.

Daniel Ordonez: Daniel here. Yeah, I guess from the innovation, just checking with you, Michael, you are referring to the same customer, right? Right, exactly, yeah. Yeah, well, listen, we are pretty pleased with how things have evolved, right? We are very enthused to have reached an agreement on new terms. And that's because these supports are a profitable growth non-start that we have been made public so many times. So now we can focus on our mission, which is with this very important, important customer of ours.

Jay: We encourage you to keep that in mind as you evaluate our cash flow going forward.

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

Jay: Our finance teams have been doing a great job of helping us increase the organization's focus on cash.

Jay: This great work has helped us improve our working capital metrics as well as increase the visibility and predictability of our cash flows.

Jay: On slide 13, we are confirming our guidance across all metrics.

Jay: We expect constant currency revenue growth in the range of 5% to 10% and we expect currency to be a small headwind.

Daniel Ordonez: So, again, the way you should look at this moving forward when it comes to planning and the outlook is think still of a modest headwind, less than we expected so far, but with a very stable and even neutral impact on the overall business as we move forward. So the situation has improved, it looks better, and it's certainly moving in the right direction. But since you asked about the largest customer of ours, Michael, and food service, this is the most exciting part of us.

Jay: We continue to expect the second half constant currency growth rate to be stronger than the first half.

Jay: That's really driven by volume growth acceleration in each region.

Jay: Our adjusted EBITDA, we continue to expect to report a loss of between $35 million and 16 million in 2024.

Jay: We have one solid quarter behind us and the continued expectation that adjusted EBITDA dollars will be stronger in the second half than in the first half.

Daniel Ordonez: We talked about diversifying the portfolio of customers and managing growth and mix. And what's most exciting nowadays is that we can report very strong growth of about 30% in this important channel of us, which is driving experience, and so forth. So this proves our ability to expand aggressively on the potential of the brand and the potential of the oatmeal category. So, it's looking good, Michael. Thank you for the question. Yeah, sure, and a great caller.

Jay: Reaching the unfavorable end of this range is now less likely.

Jay: However.

Jay: We want to see additional traction on our strategic actions.

Jay: Therefore, we are comfortable we are affirming the ranch.

Jay: Finally, we continue to expect capex to be below $75 million for 2024.

Speaker Change: This concludes our prepared remarks.

Speaker Change: A writer we are now prefer to take questions.

Speaker Change: Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.

Michael Scott Lavery: The follow-up I have is just on the guidance. I recognize, as you just pointed out, there's a lot of the year left, but could you maybe give a sense of the scenarios that would steer you to the higher or lower end and just some of what we should keep an eye on in terms of how that plays out? Thank you so much, Michael. JC here.

Speaker Change: A confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.

Speaker Change: Our first question comes from the line of Michael Lavery with Piper Sandler. Please proceed with your question.

Jean-Christophe Platon: I'll take this one. First, it's important to know that the reason why we feel comfortable with reaffirming our guidance for the year is because we made the progress we expected to make in the first quarter. So if you look at it from a top line standpoint, we made the progress we expected on gaining distribution in both new and existing markets. We made progress on selling our new products to customers, and we made progress driving trial with consumers.

Michael Scott Lavery: Thank you and good morning.

Michael Scott Lavery: Well I mean, Michael.

Michael Scott Lavery: I was wondering if you could elaborate a little bit more on the updated relationship with your largest U S foodservice customer.

Michael Scott Lavery: Kind of any more color you can add but also I think you've touched on the innovation component, maybe just elaborate on that as well.

Michael Scott Lavery: Good morning, Michael how are you doing Daniel here, Yeah, I guess I'm. The innovation just checking with you Michael you are referring to the same customer.

Speaker Change: Right exactly yes.

Speaker Change: Yeah, well listen we are pretty pleased with how things have evolved right. We are very enthused that we have reached an agreement on new terms.

Speaker Change: And Thats because these supports our profitable growth North star that we have been made public. So many times. So now we can focus on our mission which is.

Speaker Change: With this.

Speaker Change: Important important customer of us this means more presence.

Speaker Change: More innovation, so expect joint business planning to work together in new locations, new moments of Consumptions are new products.

Speaker Change: And that in the end would mean more openly unless cosmic which is back to our mission right.

Speaker Change: So again the.

Speaker Change: The way you should look at these moving forward.

Speaker Change: When it comes to planning and the outlook is zinc steel on a modest headwind less.

Speaker Change: Less than we expected so far.

Speaker Change: But we they are very stable and even neutral impact in the overall business as we move forward. So the situation has improved it looks better and he certainly moving in the right direction, but since you asked about the largest customer of ours Michael in foodservice.

Speaker Change: This is the most exciting parts of both as we talked about diversifying the portfolio of customers and managing growth and mix.

Speaker Change: Most exciting nowadays is that we can report.

Speaker Change: Very strong growth of 30 above 30%.

Speaker Change: In this important channel to us which is driving experience.

Speaker Change: And so forth so.

Speaker Change: This proves that our ability to expand aggressively and the potential of the brand and the potential of the oatmeal category. So.

Operator: Thank you. Our next question comes from the line. I'm Ken Goldman with J.P. Morgan.

Speaker Change: Looking good Michael Thank you for the question.

Kenneth B. Goldman: Please proceed with your question. Hi, good morning. It's encouraging to see your share gains in the U.S. and Europe, and it's also encouraging to see progress within oat milk as a category in these regions. I just wanted to dig a little deeper into what you're seeing in plant-based milk in general that's leading it to be, you know, I guess somewhat flattish in Europe as you reported it and down low single digits in the U.S. Are there any concerns you have about the category, and what do you believe needs to happen for the category, and I'm talking just broad plant-based milk, to expand again at a fairly rapid Thank you. Thank you, Ken. Good morning.

Speaker Change: Yes sure.

Speaker Change: Great color. Thanks.

Speaker Change: A follow up I had was just on the guidance.

Speaker Change: I recognize as you just pointed out theres a lot of year left but.

Michael: Could you just maybe give a sense of the scenarios that would steer you to the higher or lower end and just some of what we should keep an eye on in terms of how that plays out.

Speaker Change: Probation in both new and existing markets, we made progress on filling in our new products to customers and we made progress driving trial with consumers when it comes to the bottom line. We also made the progress we expected driven by of course, our topline actions, but also the progress we've made on reducing our structural cost.

Daniel Ordonez: Daniel, you take your question. Listen, no. We're pleased with what we see, right? But this is the way in which we would like you to think about it, which is, let us not take scan data at face value to judge how the category is developing because scan data is not fully representative of total category growth. Two very important facts that underpin that, Ken. Number one, there is a growing bifurcation between plant-based drinks, the Oatmeal Category, and the Oatly Brand. And you picked up on that oatmilk continues to outgrow plant-based in general, and Oatly outgrows both categories consistently.

Speaker Change: Both in the supply chain and in SG&A actually we performed a bit better than we expected on the cost side. So that's the the very first importantly, second decades of business experience tells us that one quarter does not make the year.

Speaker Change: We are satisfied with our first quarter, which we recognize we are three quarters in front of us to deliver to make a year.

Speaker Change: And finally, what I would like you to consider as well as you heard me explained in our previous earnings call is that all three segments are in three very diverse situations when it comes to maturity execution.

Daniel Ordonez: And we continue to see share gains in both regions. So that is something that is growing. It's a growing trend.

Speaker Change: Paul.

Daniel Ordonez: And second of all, for the non-measured channels in food service, as we have been working consistently for quarters now, you will remember, both Europe growing about 20% and the U.S. growing about 35% outside our largest customer are proof that the category is in good growth. So, as you say, and as you saw, we are very selective in the way we drive growth in the food service channel, balancing growth and margin. So what we're doing at the moment, instead of figuring out what to do according to scan data, we're head down controlling the controller.

Speaker Change: On the other hand, our sales one greater China is just completing the first phase of the reset so our guidance needed to reflect these diversity within those segments portfolio.

Speaker Change: Okay, great. Thank you so much.

Speaker Change: Thank you. Our next question comes from the line.

Speaker Change: Ken Goldman with Jpmorgan. Please proceed with your question.

Kenneth B. Goldman: Hi, good morning.

Kenneth B. Goldman: It is encouraging to see your share gains in the U S and Europe.

Kenneth B. Goldman: Also encouraging to see progress within oat milk as a category in these regions I just wanted to dig a little deeper into what youre seeing in plant based milk in general that's leading it to be you know I guess somewhat flattish in Europe as you reported it and down low single digits in the U S.

Kenneth B. Goldman: Are there any concerns you have about the category.

Kenneth B. Goldman: And what do you believe needs to happen for the category and I'm talking just broad plant based milk to.

Kenneth B. Goldman: To expand again at a fairly rapid pace in these regions. Thank you.

Speaker Change: Thank you Ken Good morning, Daniel we'll take that you would take your question.

Speaker Change: We're pleased with what we see right. But this is this is the way in which we would like you to think about it which is that does not take scan data at face value to judge how the category is developing.

Daniel Ordonez: Thank you for that. And then quickly, just as we think about, modeling the second quarter. You did give some helpful color in terms of the shape of the year, first half and back half.

Speaker Change: Scan data is not fully representative of the total category growth.

Speaker Change: Very important facts.

Speaker Change: That underpin that.

Speaker Change: Number one there is a growing bifurcation between plant based drinks.

Kenneth B. Goldman: Are there any other specific things, as we just think up and down the P&L, that might be useful as we plug in some numbers? Obviously, last year you had a fairly high SG&A number, I think the highest of the year. I just wanted to get a sense for, you know, their seasonality of that spend, maybe as you guys think about it. And then any color we should think about as we model the regions in 2Q in terms of the top line. Thanks.

Speaker Change: The ultimate category and DLP burnt and you picked up on that.

Speaker Change: Both milk continues to outgrow.

Speaker Change: Plant based in general and hopefully outgrowth boats categories consistently.

Speaker Change: And we continue to see the gains the share gains in both regions. So that is something that is growing it's a growing trend.

Speaker Change: And second of all for the non measured channels in foodservice as we have been working consistently for quarters. Now you will remember both Europe growing above 20% and the U S growing above 35%.

Speaker Change: Outside of our largest customer of the tools that the category seeing good growth.

Marie-Josée David: Hi Ken, this is Marie-Josée. Let me take this question. So, if you recall, last quarter we told you that we would have a second half that was going to be higher than the first half. If you look at our performance in the first quarter, I mean, underlying profit came slightly higher than expected, largely driven by supply chain improvement. In North America, those structural savings are from continuous improvement actions, and these are going to come as we go through the year as well. So that's one thing, right?

Speaker Change: So I'll just say we arent.

Speaker Change: As you saw we are very selective in the way we drive growth in the foodservice channel in balancing growth and margin. So what we're doing at the moment instead of figuring out what to do according to scan data, we're head down controlling the controllable.

Speaker Change: Just like we said, we would quarters ago, gaining distribution driving strong velocities, introducing great new products for new locations.

Speaker Change: Investing more and consistently behind the brand.

Speaker Change: So besides driving disproportionate foodservice growth and launching in new markets right in a very disciplined and asset light manner. So the way we see the seats that what we're doing is working and there's more to come.

Marie-Josée David: So we know that we expected those savings to come as well. But they came earlier than expected, and we continue to see them coming. If you look forward, the year-over-year margin expansion from mix will become smaller as we lack the China reset, in addition to the benefits from the supply chain improvement as we anniversary the supply chain consolidation in the US. So you definitely understand by now that there is a specific element that they are going to show you in the second half that's a little bit different than the first half. Now, when we look at our SG&A, going through the P&L, right? Which is exactly the question that you asked.

Speaker Change: Thank you for that and then quickly just as we think about.

Speaker Change: Modeling the second quarter, you did give some helpful color in terms of the shape of the year first half and back half.

Speaker Change: Are there any other specific things as we just think up and down the P&L.

Speaker Change: That might be useful as we plug in some numbers, obviously last year, you had a fairly high SG&A number.

Speaker Change: I think the highest of the year I just wanted to get a sense for the seasonality of that spend maybe.

Speaker Change: You guys think about it and then any color we should think about as we model the regions into <unk> in terms of the top line.

Speaker Change: Hi, Ken This is Jay let me take this question.

Kenneth B. Goldman: So if you recall last quarter. We told you that we would have a second half that is going to be higher than the first half.

Marie-Josée David: When we go through our SG&A, and when we go through the P&L, and we look at the SG&A. We called in the prepared remarks that we had a quarter that turned out favorable to our expectations. This is driven by certain fees, like trade shows and professional fees, that hit Q1, now expected to hit Q2. It's about 3 million, of which 2 million is in North America.

Jay: If you look at our performance in the first quarter.

Jay: First purchase gain slightly higher than expected largely driven by supply chain improvement in North America. The structural savings are from continuous improvement actions and these are these.

Jay: And these are going to come as we go through the year as well. So that's one thing right. So we noted that we expected the savings to come as well. So they came earlier than expected and we continue to see them coming in.

Jay: You look for the year over year margin expansion.

Jay: From mix will become smaller as we knock out the China six in addition to the benefit from the supply chain improvement as we anniversary that supply chain consolidation in the U S. So you definitely understand I know that there is a specific elements that they are going to show you a second half that Houston is going to be different than the first.

Marie-Josée David: So if you add all of that, you will get a good picture, I think, between the first half and the second half. Thank you. Our next question comes from the line of Max Gumport with BNP Paribas. Please proceed with your question. Hey, thanks for the question. I was hoping you could give us a bit more color on the state of the strategic reset in China. Seems like you're making some good progress on that front.

Jay: No when we look at our SG&A going for the Kinder Rice, which is exactly the question that you asked when we go through our journey and when we go for the candidate and we look at the SG&A.

Jay: We call the industry for our remarks that we had the quarter.

Jay: We had this journey in this quarter that became available to all of our expectations. This is driven by surface T. Like trade shows are professional fees that he or she want now expected to hit Q2, it's about for media of which target <unk>.

Max Andrew Stephen Gumport: But I'm also curious, given China's business exposure to food service, how you think about the macroeconomic environment there and the health of the consumer. Hi Max, it's Daniel here. I will take your question. You saw in the prepared remarks and the consistency with at least two previous quarters. We are now completing the first phase of the reset plan, which is going in line with our expectations, and now we are entering the second phase. What is the second phase?

Jay: In North America.

Jay: If you add all of that you will get a good picture I think between first half and second half.

Jay: Thank you. Our next question comes from the line of Max Comport with BNP Pareve. Please proceed with your question.

Max Andrew Stephen Gumport: Okay. Thanks for the question I was hoping you could give us a bit more color on the state of the strategic reset in China. It seems like you're making some good progress on that front.

Max Andrew Stephen Gumport: Also curious.

Max Andrew Stephen Gumport: Given China's business exposure to foodservice, how youre thinking about the macro.

Max Andrew Stephen Gumport: Macroeconomic environment, there and the health of the consumer Thank you very much.

Daniel Ordonez: It's obviously maximizing growth within the defined perimeter. That defined perimeter for us is food service, a reduced, core portfolio, the key cities, and the Oatly brand. That is the redefined perimeter.

Max Andrew Stephen Gumport: IMAX Daniel here I will take your question.

Daniel: Yeah. So in the prepared remarks on the consistence with this at least to previous quarters. We are completing now the first phase of the reset plan.

Daniel: Which is going in line with our expectations and now we're entering the second phase.

Daniel Ordonez: So now we are heading down to maximize capacity utilization, and we are selectively introducing some selected products to meet seasonal demand and certain price points which are needed for the new content. A bit more detail for you to understand the status of the business and the reset plan. The decline you observe in quarter one, important and significant, is almost entirely related to the dilutive portfolio we have rationalized in the second part of 2023 and that boosted our sales in the first part of 2023. This effect, Max, will fade as of quarter three this year.

Daniel: What is the second phases, obviously maximizing growth.

Max Andrew Stephen Gumport: Within the defined perimeter of that defined parameter for us is foodservice and reduced core portfolio, the <unk> and the <unk> brand.

Max Andrew Stephen Gumport: That is the redefined perimeter. So now we hit down maximizing capacity utilization and we are selectively introducing some.

Max Andrew Stephen Gumport: Selected products to meet seasonal demand and certain price points, which are needed to the new context.

Speaker Change: A bit more detail for you to understand.

Speaker Change: This effect.

Max Andrew Stephen Gumport: Max will will fade as of quarter three this year.

Daniel Ordonez: So, in general terms, the way you should look at this reportable segment is that calibration between assets, structure, and business size will continue, and will not stop, and the teams have an ongoing mandate to continue to bring this reportable segment into structural profitable growth moving forward. It's undeniable that the context continues to be challenging, and now the team, as we move from Stage 1 to Stage 2, heads down, finding more consumption and more demand for the Oatly brand within the defined perimeter, but all in a conservative and measured approach. So, thank you, Max. I hope that was OK for your question. Very helpful. Thanks very much.

Max Andrew Stephen Gumport: So in general terms the way you should look at this reportable segment is that calibration between asset structure and business sides will continue.

Speaker Change: We will not stop.

Max Andrew Stephen Gumport: And the teams have on ongoing mandate to continue to bring these reportable segments into structural profitable.

Max Andrew Stephen Gumport: Growth moving forward.

Max Andrew Stephen Gumport: And I hope that the contact continued to be challenging and now the team as we move from stage one to stage two head down finding more consumption and more demand for the <unk> brand within the defined perimeter, but all in a conservative and measured approach. So thank you Mark So I hope that was okay for your question.

Mark: Very helpful. Thanks, very much.

Max Andrew Stephen Gumport: Ladies and gentlemen, as a reminder, if you'd like to join the question queue, please press star 1 on your telephone keypad. Our next question comes from the line of John Baumgartner with Mizzou Health Security. Please proceed with your question.

Speaker Change: Thank you, ladies and gentlemen, as a reminder, if you'd like to join the question queue. Please press star one on your telephone keypad.

Speaker Change: Our next question comes from the line of John Baumgartner with Mizuho Securities. Please proceed with your question.

John Joseph Baumgartner: Good morning, Thanks for the question.

John Joseph Baumgartner: Maybe first off, in your international markets, the volume from new markets is ramping up, and those new markets also include some of the higher per capita consumption regions globally. Can you speak to the progress or, you know, planned evolution to migrate those new markets from the initial food service entry into a larger presence at retail? I mean, is that occurring now?

John Joseph Baumgartner: Maybe first off in your international markets. The volume from new markets is ramping in those new markets. Also include some of the higher per capita consumption regions globally can you speak to the progress or planned evolution to migrate those new markets from the initial foodservice entry into a.

Speaker Change: A larger presence at retail I mean is that occurring now is it more of a 2025 of that how do you think about the channel evolution in these new markets.

Speaker Change: Yeah, I'll take that question Jon Good morning.

Jon: It's we're very excited by the progress made in new markets. I know your question has two angles, which is new markets in general and specifically in the channel.

Speaker Change: And in the channel domain.

Daniel Ordonez: The reason why we're very enthused is because every city in which we land the Oatly brand proves the magic of the brand and how prepared these markets are to welcome us with open arms. Whether it's a barista in a specialty coffee shop or it's a customer buyer, we repeatedly get the, "Finally, you guys are here." So whether it's to gain or lose, you saw the numbers in some of the key cities. We're already about 50% or 60% uptake in specialty coffee. And the way in which we reach number one velocities is quite extraordinary.

Speaker Change: The reason why we're very infused is because every city in which we land the op Brian proves the magic of the of the brand and how prepared these markets are to welcome.

Speaker Change: US with open arms, whether is a barista in specialty coffee or it's a customer buyer we repeatedly get the finally you guys are here.

Speaker Change: So.

Speaker Change: Yeah.

Speaker Change: Whether it's to gain you saw the numbers in some of the key cities, we already about 50 or 60% uptake in coffee specialty and the way in which we reached number one velocities is quite extraordinary how we'll reach number one velocities in retail in some of these key CTC is very very fast which means that the.

Speaker Change: The potency of the brand is already there.

Speaker Change: Whether it's Paris, Barcelona or Brussels.

Speaker Change: This is how you should look however at our expansion we expand in a very disciplined manner.

Speaker Change: So we are at.

Speaker Change: <unk> leveraging two things in one hand, the installed capacity and on the other.

Daniel Ordonez: And on the other hand, the way we manage overheads, so the overhead synergies we have in some of these neighboring markets. So we're not expanding everywhere at the same time. And again, you know, we are mission-led, right? So Oatly, we don't regard Oatly as an exclusive class.

Speaker Change: Overheads the way, we manage overheads so.

Speaker Change: <unk> had synergies with having some of these neighboring markets. So we're not expanding everywhere.

Speaker Change: At the same time.

Speaker Change: And again.

Speaker Change: We are mission lift right. So only we don't regard only as an exclusive club.

Daniel Ordonez: So we believe that the reason why we are seeding future growth is because we cannot be real about our mission, just being present in only a few markets. To your question about channels, JC and I have mentioned in past earnings calls that we have a playbook. In fact, internally, we call it the algorithm, and we respect that beautifully, which means we conquer the hearts and minds of coffee specialty first, then we expand experiences in food service, but in a selective manner, balancing margin and growth, while we make ourselves available in retail. That model is not changing.

Speaker Change: We believe that the reason why we are seeding future growth is because we kind of be real about our mission just being present in only a few a few markets.

Speaker Change: To your question about channels.

Speaker Change: We have mentioned <unk> in past earnings calls that we have a playbook.

Speaker Change: We openly in fact internally we call it the algorithm and with respect that beautifully which means we conquer the hearts and the minds of coffee specialty first.

Speaker Change: Then we expand experiences in foodservice, but in a selective manner balancing margin and growth while we make ourselves available in retail that model is not changing I would say we take it religiously.

Daniel Ordonez: I would say we take it religiously in-house, and we have not changed, and we have not planned to change that by market. And Daniel, in North America, do you have any early data yet on the sell-through in some of your newer accounts, the fall and winter resets, you know, Walmart, Costco, and whether there's any additional distribution plans having been announced or you expect going forward? Yeah, thank you. This is how we are looking at the U.S. We have been growing TDPs, I'm sure you follow ScanData more than we do, at very high numbers, close to 50%. Now, if you look at the numbers, it's a bit lower than that, year on year.

Speaker Change: In house, and we have not changed and we have no plans to change that by market.

Daniel: Yeah. Thank you.

Daniel: This is how you should look at this is how we are looking at the U S.

Daniel: We have been growing Tdp's I'm sure you've photoscan data more than us.

Daniel: The very high numbers close to 50% now if you look at the numbers to be lower than last year on year.

Daniel Ordonez: In both units and dollars, we have been consistently growing scan data in double digits since the start of the year, so we're pretty pleased with that. The way in which we're looking at that is that it will take time to take that trial into repeating, into loyalty, and therefore higher velocities and higher sales, right? I'm sorry, I don't want to come across as teaching you mathematics, John, but this is what we see, and we start seeing some early daytime penetration that suggests that could be the case, right?

Daniel: In both units and dollars we have been consistently growing in scan data about the in double digits.

Daniel: The start of the year, so we're pretty pleased with that.

Daniel: The way in which we're looking at blocks ease.

Daniel: It will take time to take that trial.

Daniel: To repeat in.

Daniel: Into loyalty and therefore higher velocity and higher sales right Im sorry, I don't want to come across as teaching your mathematics.

Daniel: John but this is this is what we see and we start seeing some early data and penetration that suggests that could be the case right. So so very exciting progress you will remember when we were a year ago. We explained in other things to you you said very exciting prospect as what we can we can expect moving forward.

Daniel Ordonez: So it's very exciting progress. You will remember when we were a year ago explaining other things to you. It's a very exciting prospect as to what we can expect moving forward, and we trust the strength of the brand to do that. In the short term, the core ultimate portfolio is in growth. And to that, we add the incremental growth from the innovations in existing and new doors. So we are the only brand growing shares in both oat milk and total non-dairy.

Daniel: And we trust the strength of the brand to do that now.

Daniel: Actual numbers in the short term the core ultimate portfolios and growth.

Daniel: And to that we add the incremental growth from the innovations in existing and new doors.

Daniel: <unk>.

Daniel: And we are the only brand growing shares in both ultimate and total non dairy.

Daniel Ordonez: So we're pretty pleased, and we believe that things are going well. There is a lot of work to do, but we're pretty pleased with the progress and the outcome. And then, I guess, last question in terms of your expansion plans, Q1 CapEx was basically at a maintenance level, and you continue to leave the door open, I guess, for growth CapEx for the new Asia capacity. But given the excess capacity you have in that region, and the curtailed growth plans for China, at what point do you think you'll have a decision whether that investment actually goes ahead? I guess, you know, what's keeping you from, you know, discounting it at this point and maybe giving greater free cash visibility to the stream?

Daniel: So we're 50 pizza, we believe that things are things are.

Daniel: Boeing Boeing whether.

Daniel: It's a lot of work to do but we're pretty pleased with the progress and the outlook.

Daniel: But given the excess capacity you have in that region. The curtailed growth plans for China at what point do you think youll have a decision whether that investment actually goes ahead, I guess whats keeping you from discounting at this point and maybe giving greater free cash visibility to the street.

Jean-Christophe Platon: Thank you so much, John. Jean-Christophe here. I'll take your questions. So I think, let me start by addressing Asia 3, the Southern Island Factory. As we previously communicated, we continue to evaluate options for our Asia 3 facility. And, honestly, Greater China and the total Asian region are very important to us, and we continue to see a lot of opportunities there.

Speaker Change: Thank you so much John.

Speaker Change: Stop here I'll take your question so I think.

Speaker Change: Let me start by the moderating.

Speaker Change: <unk> 3000 Islands factually as we previously communicated we continue to evaluate options for our Asia III facility.

Speaker Change: And honestly greater China, and total Asian region are very important to us and we continue to see a lot of opportunities. There. So we want to make sure that we make those decisions for this business and its future and honestly, we are going to take as much time as needed to make the right decision on this factory and on these regional <unk>.

Jean-Christophe Platon: So we want to make sure that we make the right decision for this business and its future, and honestly, we are going to take as much time as needed to make the right decision on this factory and on this regional supply network. So, let me reiterate, our guidance for CAPEX is confirmed below $75 million for the year, as you have heard us saying previously. This CAPEX guidance reflects the 2024 portion of an end-to-end project in Southern Ireland, and we stick to the plan, and we give ourselves the time to make the right decisions for the future of this business, as we have done over the past two years.

Speaker Change: <unk> network. So let me reiterate our guidance for Capex is confirmed below $75 million for the year.

Speaker Change: You have heard US say previously this capex guidance reflects the 2020 full portion of an end to end project in the Netherlands, and we stick to the plan and we give ourselves the time to make the right decision for the future of this business as we have done over the past two years.

John Joseph Baumgartner: Thanks, J.C. Thanks, Daniel. Thank you, John.

Speaker Change: Thanks, Jesse Thanks, Daniel.

Speaker Change: Thank you John.

Brian Kearney: Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Kearney for any final comments. Great, thank you. If anybody wants to schedule a follow-up call, feel free to shoot me an email and we'll set something up. Aside from that, everybody, have a great day. Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: Thank you, ladies and gentlemen that concludes our question and answer session I'll turn the floor back to Mr. Carney for any final comments.

Carney: Great. Thank you.

Carney: Anybody wants to schedule a follow up call feel free to shoot me, an email and we'll send something up aside from that everybody have a great day.

Speaker Change: Thank you. This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.

Q1 2024 Oatly Group AB Earnings Call

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