Q2 2024 Oatly Group AB Earnings Call
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Operator: Good day, and welcome to the Oatly Second Quarter Earnings Call. All participants will be in listen-only mode.
Speaker Change: Good day and welcome to the Oatly Second Quarter Earnings Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions.
Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on a touch-tone phone; to withdraw your question, please press star then 2.
To ask a question, you may press star then one on a touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Brian Kearney from Investor Relations. Please go ahead.
Operator: Please note this event is being recorded. I would now like to turn the conference over to Brian Kearney from Investor Relations. Please go ahead.
Brian Kearney: Good morning, and thanks for joining us today. 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.
Brian Kearney: Good morning, and thanks for joining us today.
Speaker Change: On today's call, our Chief Executive Officer, Jean-Christophe Platon, our Chief Operating Officer, Daniel Ordonez, and our Chief Financial Officer, Marie-Josée David.
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. 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.
Speaker Change: Before we begin, please review the disclaimer on slide 3.
Brian Kearney: While the company believes these non-IFRS measures will provide useful information, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with IFRS. Please refer to today's release for a reconciliation of 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. With that, I'd now like to turn the call over to Jean-Christophe. Thank you, Brian, and good morning, everyone.
Jean-Christophe Platon: Slide 5 is the key messages I want you to take away from today's presentation. First, during the second quarter, we continued to make good progress on strengthening the business and moving towards achieving profitable growth. You can see that clearly in our accelerated top-line growth and improved margins, as well as how we are activating the brands in each of our markets. This continued improvement is driven by our progress on our 2024 strategic priorities of bringing the Oatly magic to more people, continuing our calibration of resources, and a continued focus on executional excellence.
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.
Speaker Change: Business Strategy, Market Growth, and Anticipated Cost Savings.
Speaker Change: These statements are based on management's current expectations and beliefs and involvement.
Speaker Change: risks and uncertainties that could differ materially from actual events.
Speaker Change: or those described in these forward-looking statements. Please refer to the documents we have 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-IFRS financial measures including EBITDA, adjusted EBITDA, constant currency revenue, and free cash flow. While the company believes these non-IFRS measures
Speaker Change: 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.
Speaker Change: Please refer to today's release for reconciliation of the non-IFRS financial measures to the most comparable measures prepared in accordance with IFRS.
Speaker Change: In addition, Oatly has posted a supplemental presentation on its website for reference. With that, I would now like to turn the call over to Jean-Christophe. Thank you, Brian , and good morning, everyone.
Jean-Christophe Platon: Slide 5 are the key messages I want you to take away from today's presentation.
Jean-Christophe Platon: First, during the second quarter, we continue to make good progress on strengthening the business and moving towards achieving profitable goals.
Operator: You can see that clearly in our austerity top-line goals and in both margins, as well as how we are activating the brand in each of our markets. This continuing improvement is driven by our progress on our 2022 strategic priority of bringing the ocean magic to more people, continuing our carry ratio of results, and a continued focus on exceptional excellence.
Jean-Christophe Platon: You can see that clearly in our accelerated top-line growth and improved margins, as well as how we are activating the brand in each of our markets.
Jean-Christophe Platon: This continued improvement is driven by our progress on our 2024 strategic priorities of bringing the Oatly magic to more people, continuing our calibration of resources, and a continued focus on executional excellence.
Jean-Christophe Platon: Finally, given our solid performance through the first half of the fiscal year and an increased confidence in our second-half performance, we are updating our full-year guidance to be slightly more favorable than the previous outlook. We know it's fair.
Operator: Finally, given our civic performance for the first time for the fiscal year and an increased confidence in our second half performance, we are updating our future guidance to be slightly more favorable than the previous outlook. We now expect confidence can run zero billion goals in the range of six to ten percent, compared to our higher guidance of five to ten percent. Adjusted a PDA in the range of minus 35 to minus 50 million compared to our higher guidance of minus 35 to minus 60 million, and capital expenditure to be below 70 million compared to our higher guidance of below 75 million.
Jean-Christophe Platon: Finally, given our solid performance through the first half of the fiscal year and an increased confidence in our second-half performance,
Jean-Christophe Platon: We are updating our full year guidance to be slightly more favorable than the previous outlook.
Jean-Christophe Platon: Constant currency revenue growth in the range of 6% to 10%, compared to our prior guidance of 5% to 10%, adjusted PDA in the range of minus 35 to minus 50 million compared to our prior guidance of minus 35 to minus 60 million, and capital expenditures to be below $70 million compared to our prior guidance of below $75 million. Turning now to our report card on slide 6. Here, you can see we continue to make good progress on our journey towards profitable growth.
Speaker Change: We know it's fixed.
Speaker Change: Constant currency revenue growth in the range of 6% to 10%, compared to our prior guidance of 5% to 10%.
Speaker Change: Adjusted BDA in the range of minus 35 to minus 50 million compared to our prior guidance of minus 35 to minus 60 million.
Speaker Change: and capital expenditures to be below $70 million compared to our prior guidance of below $75 million.
Operator: Turning now to our revocard on flight 6. Here, you can see we continue to make good progress on our journey to work for feasible goals. As you can see, total company volume access to its home 10 to 10 years over year increased in the quarter, as we draw volume goals in every region. Growth margin increased sequentially by approximately 200 visits points in this quarter to 29 percent, which is 10 full-best contact points higher than not just second quarter. This is a significant improvement from the 11-percent margin with a focus for the school year 2022. We still have plenty of work to do to get to our longer-term target, as we are clearly making good progress.
Speaker Change: Turning now to our report card on slide 6.
Speaker Change: Here, you can see we continue to make good progress on our journey towards profitable growth.
Jean-Christophe Platon: As you can see, total company volume accelerated to a strong 10% year-over-year increase in the quarter as we saw volume growth in every region. Gross margin increased sequentially by approximately 200 basis points in this quarter to 29%, which is 10 full percentage points higher than last year's second quarter.
Speaker Change: As you can see, total company volume accelerated to a strong 10% year-over-year increase in the quarter as we drove volume growth in every region.
Speaker Change: Gross margin increased sequentially by approximately 200 basis points in this quarter to 29%, which is 10 full percentage points higher than last year's second quarter.
Jean-Christophe Platon: This 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 targets, but we are clearly making good progress. We have made noteworthy progress on our adjustment of BGA. In 2022, we reported quarterly losses between $53 million and $83 million.
Speaker Change: This is a significant improvement from the 11% margin we reported for the full year 2022.
Speaker Change: We still have plenty of work to do to get to our longer-term targets, but we are clearly making good progress.
Operator: Finally, we have to make note for the progress on our adjusted a PDA. In 2022, we reported quarterly losses between 53 million to 83 million. Today, we are reporting the quarterly loss of just 11 million and our full consecutive quarter of sequentially improving adjusted A BDA.
Speaker Change: Pindidoli
Speaker Change: We have made noteworthy progress on our adjusted BGA.
Speaker Change: In 2022, we reported quarterly losses between $53 million to $83 million.
Speaker Change: Today, we are reporting a quarterly loss of just $11 million and our fourth consecutive quarter of sequentially improving adjusted LBDA.
Jean-Christophe Platon: Today, we are reporting a quarterly loss of just $11 million and our fourth consecutive quarter of sequentially improving adjusted EBITDA. Slide 7 gives you an update on where the operating segments are on their respective improvement plans. Recall that we have been methodically applying the same transformation formula to each region.
Operator: 27 give you a note day of where the operating segments are on a respective improvement plan. Recall that we have been methodically applying the same transformation formula to each region. We started our work in our European international segment. Our progress in Europe is our confidence in our approach. We then applied the same framework to our North America segment, and we gained further confidence. and one year ago, we began applying the same work to our Greater China segment.
Speaker Change: Slide 7 gives you an update on where the operating segments are on their respective improvement plans.
Speaker Change: Recall that we have been methodically applying the same transformation formula to each region.
Jean-Christophe Platon: We started our work with our European and international segment. Our progress in Europe builds our confidence in our approach. We then applied the same framework to our North America segment, and we gained further confidence. And one year ago, we began applying the framework to our Greater China segment.
Speaker Change: We started our work with our European and international segments.
Speaker Change: Our progress in Europe builds our confidence in our approach. We then apply the same framework to our North America segment, and we gain further confidence.
Speaker Change: And one year ago, we began applying the framework to our Greater China Segment.
Jean-Christophe Platon: As such, our European and international segment is the furthest along, and it has consistently driven profitable growth while reinvesting in brand building and innovation. The next stage of this segment will be increasing demand-generating investments to drive accelerated growth via new markets and new occasions. Our North America segment has been making continued progress, and I am pleased to report the North America segment reported its full quarter of profitable growth in the second quarter. This segment will continue to focus on driving awareness, trial, and repeat purchases across all channels, whilst continuing to be disciplined on cost.
Operator: As such, our European and international segment is the first and last moment, and it has been consistently driving possible goals while investing in rendering and innovation. The next phase for this segment will be increasing, demanding generating investments to life after taking goals via new markets and new occasions. Now, most of the main segments have been making continuous progress, and I have used these two examples. And both the major segments revolts in its full-concerer of profitable goals in the second quarter. The segment will continue to focus on driving awareness, trial, and repeat purchases across old channels, while continuing to be disciplined on course.
Speaker Change: As such, our European and international segment is the furthest along, and it has been consistently driving profitable growth while reinvesting in brand building and innovation.
Speaker Change: The next stage of this segment will be increasing demand-generating investments to drive accelerated growth via new markets and new occasions.
Speaker Change: Our North America segment has been making continued progress and I am pleased to report that the North America segment reported its full quarter of profitable growth in the second quarter.
Speaker Change: This segment will continue to focus on driving awareness, trial and repeat purchases across all channels, whilst continuing to be disciplined on cost.
Jean-Christophe Platon: As you all know, our Greater China business has been executing very well on this important plan we announced just one year ago on our second quarter 2023 earnings call. After a year of focused execution, I am proud to announce that Segment Generic is positive adjusted DDA for one month until inter-corporate. I recognize that one month is just one month, but this is a clear sign that the segment is moving in the right direction.
Operator: As you all know, our greater China business has been existing very well, and it's a cool plan. We are not just one year ago, and our second quarter is 23 year-old in school. After a year of focusing on the execution, I am proud to announce the second version of IT, both IT and just ITA for one month; there is a quarter. I take a note that one month is just one month, 50th is a clear sign; the segment is moving in the wide direction, and as we move forward, these segments will be balancing goals and profitability as we continue to execute on the improvement plan.
Speaker Change: As you all know, our Greater China business has been executing very well on its important plan we announced just one year ago on our second quarter 2023 earnings call.
Speaker Change: After a year of focused execution, I am proud to announce the second metagenetic depositive adjusted EPA for one month during the quarter.
Speaker Change: I recognize that one month is just one month, but it is a clear sign the segment is moving in the right direction.
Jean-Christophe Platon: And as we move forward, these segments will be balancing growth and profitability as we continue to execute on the improvement plan. Slide 8 is a reminder of the strategic pillars we are focused on in 2024. The first one is bringing the Oatly magic to more people.
Speaker Change: And as we move forward, these segments will be balancing growth and profitability as we continue to execute on the improvement plan.
Operator: Like eight, it's a reminder of the strategic leaders we are focused on in 2024. The first one is bringing the ultimate magic to more people. In Europe and international, we are engaging with new consumers in new occasions, while also making very good progress in our geological expansion strategy. In the US, we have increased our distribution compared to one year ago, and in the rest of China, we have seen positive sets of results with China's largest copy chain, which is helping us expand our reach in a difficult manner. Our second pillar is to continue to work on the calibration of the groupies across the DNA and the supply chain.
Speaker Change: Slide 8 is a reminder of the strategic pillars we are focused on in 2024.
Speaker Change: The first one is bringing the Oatly magic to more people.
Jean-Christophe Platon: In Europe and internationally, we are engaging with new consumers on new occasions while also making very good progress in our geographical expansion strategy. In the U.S., we have increased our distribution compared to one year ago. And in Greater China, we have seen positive test results with China's largest copy chain, which is helping us expand our reach in a disciplined manner.
Speaker Change: In Europe and internationally, we are engaging with new consumers in new occasions, while also making very good progress in our geographical expansion strategy.
Speaker Change: In the U.S., we have increased our distribution compared to one year ago. And in Greater China, we have seen positive test results with China's largest coffee chain, which is helping us expand our reach in a disciplined manner.
Jean-Christophe Platon: Our second pillar is to continue to work on the calibration of resources across SG&A and the supply chain. We remain on track with both our previously announced SG&A concepting program as well as our previously announced exit of our manufacturing facilities in the US and the UK. And we are continuing to evaluate our options in our Asian supply chain. The final feature we are focused on this year is the execution of accidents. As I work with our teams across the globe, I am glad to see our culture maintaining the disruptive mindset that made Oatly a global phenomenon, while also being increasingly disciplined on execution. Having both at the same time within the same organization is rare, and therefore, I believe our culture is true in unity. Turning to slide 9, where I want to bring this pillar to life a bit more.
Speaker Change: Our second pillar is to continue to work on the calibration of resources across SGMA and the supply chain.
Operator: We remain on track with both our previously announced DNA constantly programmed, as well as our previously announced exit of our manufacturing facilities in the US and the UK. And we are continuing to evaluate the options in our Asian supply chain.
Speaker Change: We remain on track with both our previously announced SG&A concept building program, as well as our previously announced exit of our manufacturing facilities in the US and the UK.
Speaker Change: And we are continuing to evaluate our options in our Asian supply chain.
Operator: The final pillar we are focused on this year is exhibition of excellence. I think what we've noticed across the globe, and glad to see our culture is maintaining the diversity mindset that made Oakley a global phenomenon, while also being increasingly difficult on execution. I've been both at the same time within the same organization in the air, and therefore, I believe our culture is true in the next year.
Speaker Change: The final field we are focused on this year is execution of accidents.
Speaker Change: As I work with our teams across the globe, I am glad to see our culture is maintaining the disruptive mindset that made Oatly a global phenomenon, while also being increasingly disciplined on execution.
Speaker Change: Having both at the same time, within the same organization is rare, and therefore, I believe our culture is truly unique.
Operator: Turning to slide 9, when I want to build this pillar tonight a bit more. Our work on the three strategic pillars are not necessarily discrete projects that fall neatly into one individual bucket. Our partnership with E.S. Procycling is a good example of how we are executing on the three strategic priorities or in one project. First, the partnership is clearly focused on bringing the ultimately managed to more people by increasing awareness of our mind E.S. Procycling is extremely focused on the decision, and we are excited to partner with them as their official performance partner. The partnership also demonstrates how we are continuing to be efficient with all the non-serocations to benefit all three operating segments. More specifically, let's reflect on the fact that E.S.
Speaker Change: Turning to slide 9, where I want to bring this filter to life a bit more.
Jean-Christophe Platon: Our work on these three strategic pillars is not necessarily discrete projects that fall neatly into one individual bucket. Our partnership with ES Pro Cycling is a good example of how we are executing on these three strategic priorities all in one project. First, this partnership is clearly focused on bringing the Oatly magic to more people by increasing awareness of our brand. EF Pro Cycling is extremely focused on nutrition, and we are excited to partner with them as their official performance partner.
Speaker Change: Our work on these three strategic pillars are not necessarily discrete projects that fall neatly into one individual bucket.
Speaker Change: Our partnership with ES Pro Cycling is a good example of how we are executing on these three strategic priorities all in one project.
Speaker Change: First, this partnership is clearly focused on bringing the Oatly magic to more people by increasing awareness of our brand.
Speaker Change: EF Pro Cycling is extremely focused on nutrition, and we are excited to partner with them as their official performance partner.
Jean-Christophe Platon: This partnership also demonstrates how we are continuing to be efficient with our resource allocation to benefit all three operating segments. More specifically, let's reflect on the fact that EF Pro Cycling is an American team that just finished competing in a European race that has a global audience.
Speaker Change: This partnership also demonstrates how we are continuing to be efficient with our resource allocation to benefit all three operating segments.
Operator: Procycling is an American team that just finished competing in the European race that are the global audience. Finally, our team execution of these partnerships has been fantastic so far, and nothing is right at the Tour de France media friendly kick-off and the E.S.
Speaker Change: More specifically, let's reflect on the fact that EF Pro Cycling is an American team that just finished competing in a European race that has a global audience.
Jean-Christophe Platon: Finally, our team's execution of this partnership has been fantastic so far, announcing it right as the Tour de France media frenzy kicked in. And the EF team is executing as well. Richard Carapaz wore the yellow jersey for one day early in the race and then had multiple achievements later on, which has helped draw a significant amount of attention to the team and to our brand.
Speaker Change: Finally, our team's execution of this partnership has been fantastic so far, announcing it right as the Tour de France media frenzy kicked off.
Operator: team is executing as well, Richard Carracher, who all began to judge before one day early in the race, and then, at most people's achievements later on, which has helped those significant amounts of attention to the team and throughout the race. During the quarter, we started reclaiming our why and our reasons for being.
Speaker Change: And this team is executing as well. Richard Carapaz wore the yellow jersey for one day early in the race and then had multiple achievements later on, which has helped draw a significant amount of attention to the team and to our clients.
Jean-Christophe Platon: Turning to slide seven, during the quarter, we started reclaiming our why and our reason for being. We know we have a unique brand voice that can gain a lot of attention, so we decided to pivot from using our brand voice in a slightly less self-indulgent way to lead the conversation about the necessary transformation of our food system, reconciling health for people and the planet. We run a campaign to urge European citizens to vote and to keep climate change in mind as they do so. At the same time, we engage with thousands of coffee customers and consumers, offering free oatmeal coffee to the many who want it.
Speaker Change: Turning to slide 7.
Speaker Change: During the quarter, we started reclaiming our why and our reason for being.
Operator: We hope we have a unique brand voice that can gain a lot of attention. So we decided to pivot from using our mind voice in a slightly less self-involved way, but to lead the conversation of the necessary confirmation of our system, a confiliated health, for people and the player. We are not a company to urge European citizens to vote and to keep climate change in mind as they do so. At the same time, we engaged with thousands of copy customers and consumers, offering free ultimate copy to the many good workers. We know our unique tone of voice and attention, but we also know systems generate relevance. So, as we move forward, our one company will keep the unique of the voice and we will be putting down on systems, relevance and imagination so that we can drive forward our company's mission. Before I film the coronavirus today, I want to turn the slide 11, and give you a priority for the second half of the year. The organization will be competing our work on the calibration of results, we will continue to invest in demand generation to drive conversion and an acceleration of voice. As we vet, we will maintain the copy-sip region and ensure we are focused on high-referring investments. And finally, we will maintain our not-star of driving the business towards structural, consistent, profitable voice.
Speaker Change: We know we have a unique brand voice that can gain a lot of attention.
Speaker Change: So we decided to pivot from using our brand voice in a slightly less self-indulgent way, but to lead the conversation of the necessary transformation of our food system, reconciling health for people and the planet.
Speaker Change: We run a campaign to urge European citizens to vote and to keep climate change in mind as they do so.
Speaker Change: At the same time, we engage with thousands of coffee customers and consumers, offering free oatmeal coffee to the many who want it.
Jean-Christophe Platon: We know our unique tone of voice gains attention, but we also know substance generates relevance. So, as we move forward, our Brown campaigns will keep the uniqueness of the voice, and we will be doubling down on substance, relevance, and demand generation so that we can drive forward our company's mission. Before I turn the call over to Daniel, I want to turn to slide 11 and give you our priorities for the second half of the year.
Speaker Change: We know our unique tone of voice gains attention, but we also know substance generates relevance.
Speaker Change: So, as we move forward, our Brown campaigns will keep the unique of the voice, and we will be doubling down on substance, relevance, and demand generation, so that we can drive forward our company's mission.
Speaker Change: Before I turn the call over to Daniel, I want to turn to slide 11 and give you our priorities for the second half of the year.
Jean-Christophe Platon: The organization will be completing its work on the calibration of resources. We will continue to invest in demand generation to drive conversion and an acceleration of growth. As we invest, we will maintain cost discipline and ensure we are focused on high-return investments. And finally, we will maintain our north star of driving the business towards structural, consistent, profitable growth. With that, my dear Daniel, over to you.
Daniel Ordonez: The organization will be completing our work on the calibration of resources.
Daniel Ordonez: We will continue to invest in demand generation to drive conversion and an acceleration of growth.
Daniel Ordonez: As we invest, we will maintain cost discipline and ensure we are focused on high return investments.
Daniel Ordonez: And finally, we will maintain our north star of driving the business towards structural, consistent, profitable growth.
Daniel Ordonez: Thank you, JC, and good morning, everyone. I'll begin my discussion on slide 13 with our largest operating segment, that is, Europe and international. This segment reported solid results in the quarter, with constant currency revenue growth of 7.5%, approximately in line with quarter one. Adjusted EBITDA of $12.6 million was slightly below quarter one's level, largely due to seasonality and timing of promotional events and investments. However, on a year-on-year basis, we were much higher than last year's quarter two levels. On slide 14, you can see we're seeing broad-based strength in the segment. The retail side of the business grew 7%, and the food service side grew 9% in the quarter.
Daniel Ordonez: With that, my dear Daniel, over to you.
Daniel Ordonez: Thank you, JC, and good morning, everyone. I'll begin my discussion on slide 13 with our largest operating segment, that is Europe and international.
Daniel Ordonez: This segment reported solid results in the quarter with constant currency revenue growth of 7.5% approximately in line with Q1.
Daniel Ordonez: Adjusted EBITDA of $12.6 million was slightly below quarter one's level, largely due to seasonality and timing of promotional events and investments.
Daniel Ordonez: On a year-on-year basis, we were way much higher than last year's quarter two levels.
Daniel Ordonez: On slide 14, you can see we are seeing broad-based strength in the segment.
Daniel Ordonez: The retail side of the business grew 7% and the food service side grew 9% in the quarter. As we have discussed in the past, we believe there is significant opportunity to drive solid, robust growth in the food service channel.
Daniel Ordonez: As we have discussed in the past, we believe there is a significant opportunity to drive solid, robust growth in the food service chain. On the right-hand side, you can see our established markets grew volume by a solid 6% in the quarter. These are markets where we have operated for many years, and they continue to drive solid mid-single-digit growth rates. The European markets, where we have recently expanded, drove a strong 24% volume growth in the quarter.
Daniel Ordonez: On the right-hand side, you can see our established markets grew volume by a solid 6% in the quarter. These are markets where we have operated for many years, and they continue to drive solid mid-single-digit growth rates.
Daniel Ordonez: The European market, what we have recently expanded, drove a strong 24% volume growth in the quarter. So overall, we're executing very well.
Daniel Ordonez: So overall, we're executing very well. Slide 15 shows the retail track channel data for some of our largest new European markets. You can clearly see here that we're driving the entire category. For instance, in Spain, which is the second largest plant-based beverage market in Europe, and in Belgium, which is the oldest and where the category was first created, we only catalyze growth once we enter a market. The same dynamics we experienced when we entered markets like the U.K. or Germany in the past. I have said it before, and I will say it again and again. There is a clear difference between the underlying trends of plant-based drinks versus oat milk and then versus Oatly.
Daniel Ordonez: Slide 15 shows the retail track channel data for some of our largest new European markets.
Daniel Ordonez: You can clearly see here we are driving the entire category. For instance, in Spain, which is the second largest plant-based beverage market in Europe , and in Belgium, which is the oldest and where the category was first created.
Daniel Ordonez: In essence, only catalyzed growth once we enter a market. The same dynamics we experience when we enter markets like the UK or Germany in the past.
Daniel Ordonez: I have said it in the past and I will say it again and again, there is a clear difference between the underlying trends of plant-based drinks versus oat milk and then versus Oatly.
Daniel Ordonez: Turning to slide 16. As JC said earlier, we are refocusing our brand efforts on substance and demand generation in a thoughtful and strategic manner. Here you can see how our Europe and international segment has been using our unique voice to drive brand awareness while pushing forward on our mission to transform the food system so people do not have to choose between their health and the planet. In Spain, we're driving awareness, engagement, and our genuine commitment to transparency via a campaign idea that Brian won't let me say, but that you can read on the slide yourself. As J.C. mentioned earlier, across Europe, we ran a vote, V-O-A-T campaign during the recent elections.
Daniel Ordonez: Turning to slide 16.
Daniel Ordonez: As J.C. said earlier, we are refocusing our brand efforts on substance and demand generation in a thoughtful and strategic manner.
Jaycee: Here you can see how our Europe and international segment has been using our unique voice to drive brand awareness while pushing forward on our mission to transform the food system so people do not have to choose between their health and the planet.
Jaycee: In Spain, we're driving awareness, engagement, and our genuine commitment to transparency via a campaign idea that Brian won't let me say, but that you can read on the slide yourself.
Jaycee: As Jaycee mentioned earlier, across Europe we ran a Vote V-O-A-T campaign during the recent elections. And we recently launched in Mexico City, where we are excited to bring the Oatly Magic 2.
Daniel Ordonez: And we recently launched in Mexico City, where we're excited to bring the Open Magic 2. Slide 17 shows how we are pairing these awareness-driving campaigns with on-the-ground cultural experiences events, a proven magnet for young generations that love the Oatly brand and can experience it via surprises, new collaborations, partnerships, and crossovers with other categories. For example, for five weeks this summer, we had a pop-up store in Paris-Les-
Speaker Change: Slide 17 shows we are pairing these awareness-driving campaigns with on-the-ground cultural experience events.
Speaker Change: A proven magnet for young generations that love the Oatly brand and can experience it via surprises, new collaborations, partnerships, and crossovers with other categories. For example, for five weeks this summer, we have a pop-up store in Paris-les-Marais.
Daniel Ordonez: We are collaborating with local culturally relevant Parisian brands. This involves our two most amazing product experiences, our soft-serve, and plenty of coffee with our Oatly barista. Likewise, in Shoreditch, London, we opened the Paradise Arches, our very own pop-up club in collaboration with Malibu, where celebrities and consumers can enjoy our Pina Oprada, the perfect summer treat of a Malibu-flavored drink or soft-serve.
Speaker Change: We are collaborating with local culturally relevant Parisian brands.
Speaker Change: These involve our two most amazing product experiences, our soft serve and plenty of coffee with Oatly Barista.
Speaker Change: Likewise, in Shoreditch, London, we opened the Paradise Arches, our very own pop-up club in collaboration with Malibu, where celebrities and consumers can enjoy our Piña Otrada, the perfect summer treat of a Malibu-flavored drink or soft serve.
Daniel Ordonez: And I can go on and on, city by city across Europe, bringing our unique brand to more people in the most surprising and culturally relevant way. But, as you can see on slide 18, our brand uniqueness does not stop there. Selectively, but increasingly, we activate in-store in the same provocative way. Never transactional, always surprising. This slide shows just one recent example from Hamburg, where we built seven great pyramids in one of Germany's largest retailers. They have become true tourist attractions, with a hop-on, hop-off, tour bus, postcards, and t-shirts.
Speaker Change: And I can go on and on, city by city across Europe , bringing our unique brand to more people in the most surprising and culturally relevant way.
Speaker Change: Then, as you can see on slide 18, our brand uniqueness does not stop there. Selectively, but increasingly, we activate in-store in the same provocative way. Never transactional, always surprising.
Speaker Change: This slide shows just one recent example from Hamburg, where we built seven great pyramids in one of Germany's largest retailers.
Speaker Change: They become true tourist attractions, with a hop-on, hop-off, tour bus, postcards, and t-shirts. And you'll show surprising in-market executions with these events that drove a significant amount of consumer buzz.
Daniel Ordonez: And you'll show surprising in-market executions with these events that drove a significant amount of consumer buzz. You should expect more of this type of thoughtful, disciplined brand activity in each of our segments as we move forward. Turning to our North America segment on slide 19, this segment's quarter two results are a direct result of disciplined execution throughout the entire organization and staying true to our North Star of profitable growth. We reported nearly 10% revenue growth, and I'm very happy to report the North America segment was profitable in the quarter.
Speaker Change: You should expect more of this type of thoughtful, disciplined brand activity in each of our segments as we move forward.
Daniel Ordonez: Slide 20 focuses on our retail performance, which is just over half of the segment's net sales. The strong 13% growth in measured channels has led to market share gains in oat milk of 370 basis points year on year. Our products are showing up well on shelves, both chilled and ambient, and our dollar velocities per point of distribution remain nearly three times higher than our nearest competitor. On slide 21, you can see that segment food service sales grew nearly 9% in the quarter.
Speaker Change: Turning to our North America segment on slide 19. This segment's quarter two results are a direct result of disciplined execution throughout the entire organization and staying true to our North Star of profitable growth.
Speaker Change: We reported nearly 10% revenue growth, and I'm very happy to report the segment was profitable in the quarter.
Speaker Change: Slide 20 focuses on our retail performance, which is just over half of the segment's net sales.
Speaker Change: The strong 13% growth in measured channels has led to market share gains in oat milk of 370 basis points year-on-year.
Speaker Change: Our products are showing up well on shelves, both chilled and ambient, and our dollar velocities per point of distribution remain nearly three times higher than our nearest competitor.
Speaker Change: On slide 21, you can see the segment food service sales grew nearly 9% in the quarter. Our strategy of nurturing our existing business while expanding into the higher growth, higher margin areas of the food service channel is clearly working.
Daniel Ordonez: Our strategy of nurturing our existing business while expanding into the higher growth, higher margin areas of the food service channel is clearly working. Turning now to the Greater China segment on slide 22, volume growth has accelerated to over 26% in the quarter, which translates into 20% growth when compared to two years ago.
Speaker Change: Turning now to the Greater China segment on slide 22.
Speaker Change: Volume growth has accelerated to over 26% in the quarter, which translates into 20% growth when compared to two years ago.
Daniel Ordonez: This strong growth was largely aided by the successful limited-time offer test with China's largest coffee chain, which I mentioned in the last Quotascope. To give you perspective of this, their size and potential impact, this test has already driven them to be the segment's second largest customer base on year-to-date net sales. Over the coming months, we will be executing another test with them with a broader menu offering.
Speaker Change: This strong growth was largely aided by the successful limited-time offer test with China's largest coffee chain I mentioned on last quarter's call.
Speaker Change: To give you perspective of this, their size and potential impact, this test has already driven them to be the segment's second-largest customer base on a year-to-date net sales.
Speaker Change: Over the coming months, we will be executing another test with them with a broader menu offering.
Daniel Ordonez: Because this customer focuses on the lower-priced value tier, there is an impact on this segment's price mix line in the sales breach. However, we are comfortable with this because of the clear positive margin impact this volume drives through fixed cost absorption as well as the visible momentum it generates. Let's discuss this segment's profitability on slide 23. The segment's adjusted EBITDA was just below breakeven in the quarter.
Speaker Change: Because this customer focuses on the lower price value tier, there is an impact to this segment's price mix line in the sales bridge.
Speaker Change: We are comfortable with this because of the clear positive margin impact this volume drives through fixed cost absorption as well as the visible momentum it generates.
Speaker Change: Let's discuss this segment's profitability on slide 23.
Speaker Change: The segment's adjusted EBITDA was just below breakeven in the quarter, and importantly, though, it did report positive adjusted EBITDA for one month during the quarter.
Daniel Ordonez: And importantly, though, it did report positive adjusted EBITDA for one month during the quarter. The right side of the page shows the trend in the segment's cost of goods per liter, the 18% reduction quarter over quarter, which is largely driven by the higher volume leading to in-road absorption. So while we remain cautious and continue to monitor the consumer macro environment in the region, we're pleased with the progress so far in our Greater China segment. I will now turn the call over to MJ, Marie-Josée Davy.
Speaker Change: The right side of the page shows the trend in the segment's cost of goods per litre, the 18% reduction quarter over quarter, which is largely driven by the higher volume leading to in-broad absorption.
Speaker Change: So while we remain cautious and continue to monitor the consumer macro environment in the region, we're pleased with the progress so far in our Greater China segment.
Marie-Josée David: Thank you, Daniel, and good morning, everyone. Slide 25 shows an overview of the quarterly P&L. We reported 3.2% year-over-year revenue growth and constant currency revenue growth of 3.9%. Gross margin for the quarter was 49.2%, which is 1,000 basis points higher than a year ago. Adjusted EBITDA was a loss of $11 million, which is a $41.5 million improvement compared to last year's second quarter.
Speaker Change: I will now turn the call over to MJ, Marie-Josée David.
Marie-Josée David: Thank you, Daniel, and good morning, everyone. Slide 25 shows an overview of the quarterly P&L. We reported 3.2% year-over-year revenue growth and constant currency revenue growth of 3.9%.
Marie-Josée David: Gross margin for the quarter was 29.2%, which is 1,000 basis points higher than a year ago. Adjusted EBITDA was a loss of $11 million, which is $41.5 million improvement compared to last year's second quarter.
Marie-Josée David: Overall, we had a solid performance in the quarter and the first half. Slide 26 shows the bridging items of our Total Company Quarterly Revenue Brochure. Volume grew 9.6%, and price mix was a 5.7% headwind for a 3.9% constant current year revenue growth. Current exchange was a headwind of 0.7%, resulting in a 3.2% total revenue growth for the quarter. Slide 27 shows the revenue bridge by segment. JC and Daniel's presentations outlined everything we are doing in each region to drive solid growth.
Marie-Josée David: Overall, we had a solid performance in the quarter and the first half.
Marie-Josée David: Slide 26 shows the bridging items of our Total Company Quarterly Revenue Broch.
Marie-Josée David: Volume grew 9.6% and price mix was a 5.7% headwind for a 3.9% constant currency revenue growth.
Marie-Josée David: Current exchange was a headwind of 0.7%, resulting in a 3.2% total revenue growth for the quarter.
Marie-Josée David: Slide 27 shows the revenue bridge by segment.
Marie-Josée David: JC and Daniel's presentations outlined everything we are doing in each region to drive solid growth.
Marie-Josée David: And the other takeaway of this slide is that each region drove solid volume growth as our strategic initiatives and growth plans continue to work. Europe and International continue to report fluid growth with 7.5% constant currency revenue growth led by 5.7% volume growth. North America's revenue growth of 9.7% was driven mainly by a strong 8.3% volume growth.
Marie-Josée David: And the other takeaway of this slide is that each region draws solid volume growth as our strategic initiatives and growth plans continue to work.
Marie-Josée David: Europe and international continue to report fluid growth with 7.5% constant currency revenue growth led by 5.7% volume growth.
Marie-Josée David: North America's revenue growth of 9.7% was driven mainly by the strong 8.3% volume growth.
Marie-Josée David: Breakers China's 15.9% constant currency decline was driven largely by the actions we have taken as part of the segment strategic reset plan we announced on last year's second quarter earnings call. The sales headwinds in the quarter from the strategic retreat were partially offset by sales to a new customer that is focused on the lower-priced value tier. This customer mix has a clear impact on the segment bridge with a large volume increase and an impact on price mix.
Marie-Josée David: Breakers China, 15.9% constant currency decline was driven largely by the actions we have taken as part of the segment strategic reset plan we announced on last year's second quarter earnings call.
Marie-Josée David: The sales headwinds in the quarter from the strategic recess were partially offset by sales to a new customer that is focused on the lower-priced value tier.
Marie-Josée David: This customer mix has a clear impact on the segment bridge with a large volume increase and an impact on price mix.
Marie-Josée David: Since we will start to anniversary the reset next quarter, we expect Greater China to report more favorable constant currency growth next quarter. Additionally, since we are running another LTO with this large customer, we expect the bridging lines to continue to be impacted at least in Q3.
Marie-Josée David: Since we will start to anniversary the reset next quarter, we expect Greater China to report a more favorable constant currency growth next quarter.
Marie-Josée David: Since we are running another LTO with this large customer, we expect the bridging lines to continue to be impacted at least in Q3.
Marie-Josée David: Slide 28 shows the drivers of our 1,000 basis points year-over-year gross margin expansion. The biggest item is a 700 basis point increase driven by absorption and supply chain improvements. The 9.6% volume growth has driven it and seen our team's continued dedication to removing costs and inefficiencies. Our net pricing and product mix improved margins by 240 basis points. This was largely driven by the actions we've taken in broader China to eliminate low margin products. Foreign exchange increased our margin by 60 basis points, and inflation was roughly neutral to margin.
Marie-Josée David: Slide 28 shows the drivers of our 1,000 business point year-over-year gross margin expansion.
Marie-Josée David: The biggest item is a 700-basis point increase driven by absorption and supply chain improvements.
Marie-Josée David: The 9.6% volume growth has driven this and sees our team's continued dedication to removing costs and inefficiencies.
Marie-Josée David: Our net pricing and product mix improved margins by 240 basis points. This was largely driven by the actions we've taken done in Greater China to eliminate low-margin products.
Marie-Josée David: For an exchange increase, our margin by 60 basis points and inflation was roughly neutral to margin.
Marie-Josée David: Slide 29 shows that the year-over-year improvement in our adjusted EBITDA was driven by a roughly equal balance between gross profit and SG&A. As we move forward, we expect gross profit to be the main driver of profit improvements as the benefits of our economic savings program eventually roll off, and we invest in demand generation. Slide 13 shows our adjusted data by segment. Each segment continues to report a significant improvement compared to the prior year, while corporate was approximately flat, as it contains the expenses related to some of the global initiatives that benefit all segments, such as the EF Processing Partnership Jean-Christophe mentioned. For the third quarter in a row, the sum total of the adjusted EBITDA of the three regions was positive.
Marie-Josée David: Slide 29 shows the year-over-year improvement in our adjusted EBITDA was driven by a roughly equal balance between gross profit and SG&A.
Marie-Josée David: As we move forward, we expect Gross Profit to be the main driver of profit improvements as the benefits of our SG&E savings program eventually roll off and reinvest in demand generation.
Marie-Josée David: Slide 13 shows our adjusted EBITDA by segment.
Marie-Josée David: Each segment continues to report a significant improvement compared to the prior year while corporate was approximately flat as it contains the expenses related to some of the global initiatives that benefit all segments.
Marie-Josée David: such as the EF Processing Partnership Jean-Christophe mentioned.
Marie-Josée David: For the third quarter in a row, the sum total of the adjusted EBITDA of the three regions was positive.
Marie-Josée David: On top of that, I am pleased our North American segment reported its first quarter of positive adjusted data, and the Western China segment was below break-even. It continues to be clear that strategic actions have been taking or driving concrete results. Turning to our balance sheet and cash flow on slide 31, the biggest takeaways are that our cash flow remains on track with our plans. We remain fully funded, and our liquidity remains strong at $345 million. The chart on the right is our quarterly cash flow bridge. In the quarter, our total cash balance decreased by $66 million compared to Q1.
Marie-Josée David: On top of that, I am pleased our North American segment reported its first quarter of positive adjusted data, and the Western China segment watched it below break even.
Marie-Josée David: It continues to be clear that strategic actions have been taking or driving concrete results.
Marie-Josée David: Turning to our balance sheet and cash flow on slide 31.
Marie-Josée David: The biggest takeaways are that our cash flow remains on track with our plans. We remain fully funded and our liquidity remains strong at $345 million.
Marie-Josée David: The chart on the right is our quarterly cash flow bridge. In the quarter, our total cash balance decreased by $66 million compared to Q1.
Marie-Josée David: Recall from last quarter, I said the cash impact from existing iron manufacturing in the UK and US will hit different parts of the cash flow statement, with some hitting free cash flow and some hitting elsewhere. In Q2, we had a net cash impact of $46 million related to this plant exit, with $34 million flowing through free cash flow. Year-to-date, we are at a net cash outflow of $13 million, and we remain on track for the exit to have no more than a $20 million total cash outflow.
Marie-Josée David: Recall from last quarter, I said the cash impact from existing iron manufacturing in the UK and US will hit in different parts of the cash flow statement, with some hitting free cash flow and some hitting elsewhere.
Marie-Josée David: In Q2, we had a net cash impact of $46 million related to this plant exit with $44 million flowing through free cash flow.
Marie-Josée David: Year-to-date, we are at a net cash outflow of $13 million and we remain on track for the exits to have no more than a $20 million total cash outflow.
Marie-Josée David: As I have said previously, improving our cash flow is a priority for me, and our organization is focused on it. Slide 32 shows our updated 2024 guidance. Now that we have completed the first half of the year and slightly exceeded our internal expectations, we are increasing our guidance for our P&L metrics and lowering our guidance for CatechSNP. We expect constant currency growth in the range of 6% to 10%, and we continue to expect foreign exchange to have a minimum impact. We continue to expect the second half constant currency growth rate to be higher than the first half.
Marie-Josée David: As I have said previously, improving our cash flow is a priority for me and our organization is focused on it.
Marie-Josée David: Slide 32 shows our updated 2024 guidance.
Marie-Josée David: Now that we have completed the first half of the year and slightly exceeded our internal expectations, we are increasing our guidance for our P&L metrics and lowering our guidance for CAPEX needs.
Marie-Josée David: We expect constant currency growth in the range of 6% to 10% and we continue to expect foreign exchange to have a minimum impact.
Marie-Josée David: We continue to expect the second-half constant currency growth rate to be stronger than the first half.
Marie-Josée David: As a reminder, starting in the third quarter, our Greater China segment will start to anniversary the strategic reset. We expect this comparison to benefit the segments in the year-over-year growth rate in the second half. Also, as a reminder, in the fourth quarter, the North American segment will anniversary the large retail distribution gains it saw from the share price set, which we expect to impact segment growth in the fourth quarter. As I just said EBITDA, we expect to report a loss of between $35 million and $15 million in 2024.
Marie-Josée David: As a reminder, starting in the first quarter, our Greater China Segment will start to anniversary the Strategic Reset.
Marie-Josée David: We expect this comparison to benefit the segments' year-over-year growth rates in the second half.
Marie-Josée David: Also, as a reminder, in the fourth quarter, the North American segment will anniversary the large retail distribution gains it saw from the share precept, which we expect to impact the segment growth in the fourth quarter.
Marie-Josée David: So I just did a beta. We expect to report a loss of between $35 million and $15 million in 2024.
Marie-Josée David: We have chosen to take a portion of our first-half profit outperformance and reinvest it in branding activities, especially in our Europe and international segments. Finally, we expect CapEx to be below $17 million for 2024, which is $5 million lower than previously expected.
Marie-Josée David: We have chosen to take a portion of our first-class profit outperformance and reinvest it into branding activities, especially in our Europe and international segments.
Marie-Josée David: Finally, we expect CapEx to be below $17 million for 2024, which is $5 million lower than previously expected.
Operator: This concludes our preferred remarks. Operator, we are now prepared to take questions. We will now begin the question and answer session. To ask a question, you may press star, then one on your touch-tone phone.
Marie-Josée David: This concludes our prepared remarks. Operator, we are now prepared to take questions.
Speaker Change: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your TouchTown phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2.
Operator: If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been answered and you would like to withdraw your question, please press star then 2. Our first question comes from Ken Goldman with J.P. Morgan. Please go ahead. Hi, thank you. I wanted to ask a little bit about the pace of pricing for the rest of the year. Obviously, there was a big deceleration in China in the second quarter. I know you had some comments about China in the back half of the year.
Daniel Ordonez: Unfortunately, I don't know if I had a tough connection or it was a little tough to hear, but if you could just repeat what you said about China's back half growth and kind of potentially weave thoughts about pricing in that segment and really around the world, that would be helpful. Thank you. Okay, how are you doing, Ken? It's Daniel here.
Speaker Change: Our first question comes from Ken Goldman with J.P. Morgan. Please go ahead.
Kenneth B. Goldman: Hi, thank you.
Kenneth B. Goldman: I wanted to ask a little bit about the cadence of pricing for the rest of the year. Obviously, there's a big deceleration in China.
Speaker Change: in the second quarter. I know you had some comments about China in the back half of the year.
Speaker Change: Unfortunately, I don't know if I had a tough connection or it was a little tough to hear, but if you could just repeat what you said about China back half growth and kind of potentially weave thoughts about pricing in that segment and really around the world, that would be helpful.
Daniel Ordonez: I will start by addressing China, in particular, when your question is the most specific, and then I'll try to give you a color of the overall outlook on pricing, but perhaps in general, right? So in China, we've made solid progress during the quarter, knowing that the quarter two year-on-year net revenue growth does not fully reflect the progress because it's still impacted by the strategic resets we've executed over the past year. One area in which we made very solid progress this quarter, Ken, is the addition of a new, very important customer that operates in the growing and important mid-price tier sector.
Speaker Change: Okay, how are you doing, Ken? It's Daniel here. I will start by addressing China in particular, when your question is the most specific.
Kenneth B. Goldman: And then I'll try to give you a color of the overall outlook on pricing, but perhaps in general, right?
Speaker Change: In China, we've made solid progress during the quarter, knowing that the quarter 2 year-on-year net revenue growth does not fully reflect the progress because it's still impacted by the strategic resets we've executed over the past year.
Kenneth B. Goldman: One area in which we made very solid progress this quarter, Ken, is the added addition of a new very important customer that operates in the growing and important mid-price tier segment.
Daniel Ordonez: So, as we said in the prepared remarks, we are not concerned about that, and this overall value creation from the SG&A reception, the higher volume, and stronger absorption can be seen in the overall company margin performance and the segment EBITDA reported figure. So, as we move forward again in China, we expect to solidify this quarter 2 performance held by a more favorable base as we left the last year's reset. So, it's all the price mix and the effect of the reset overall.
Kenneth B. Goldman: So as we said in the prepared remarks, we are not concerned about that.
Speaker Change: and this overall value creation from the SG&A reset.
Speaker Change: The higher volume and stronger absorption can be seen in the overall company margin performance and the segment EBITDA reported figures.
Speaker Change: As we move forward again in China...
Speaker Change: We expect to solidify this quarter 2 performance held by a more favourable base as we left the last year's reset. So, it's all the price mix and the effect of the reset overall.
Daniel Ordonez: Then, when it comes to general pricing assumptions, again in terms of outlook in Europe, expect consistent year-on-year solid performance across the P&L lines. And in North America, we expect consistent performance and a slight improvement driven by a more favorable overall base and fewer headwinds thanks to the new terms agreed with that important customer in food service we've mentioned before. So, as you can see, I'm not addressing pricing specifically, but you can see the different mix volume growth effects and the overall equation again and I hope that's okay. That's helpful.
Speaker Change: Then, when it comes to general pricing assumptions, again, in terms of outlook,
Kenneth B. Goldman: in Europe expect consistent year-on-year solid performance across the P&L lines.
Kenneth B. Goldman: And in North America, we expect consistent performance and a slight improvement driven by more favorable overall base and less headwinds.
Kenneth B. Goldman: thanks to the new terms agreed with that important customer in food service we've mentioned before. So as you can see, I'm not addressing specifically pricing, but you can see the different mix, volume, growth effects, and the overall equation, Ken, and hope that's okay.
Jean-Christophe Platon: Thank you. And just a follow-up question, if I may, as you think about the ranges of your top and bottom line guidance, are there any particular risks or upside scenarios that we should think about that might be the most important, just as you were kind of crafting the updated guidance? Any particular underlying factors we should think about that might lead to the higher or lower end. Thanks Ken for the follow-up question; JC speaking.
Kenneth B. Goldman: That's helpful, thank you. And just a follow-up, if I may, you know, as you think about the ranges of your top and bottom line guidance, are there any particular
Kenneth B. Goldman: risks or upside scenarios that we should think of that might be the most important, just as you were kind of crafting the updated guidance, and any particular underlying factors we should think about that might lead to the higher or lower end.
Jean-Christophe Platon: First, I think it's important to know that we are pleased with our performance in the first half of the year, and we have outperformed our internal expectations. Specifically, on the top line, as we said, we have delivered the expected gains in distribution in both new and existing markets. We've made progress on selling our new products to customers, and we've made progress as well driving trials with consumers. On the bottom line, we've just shared with you the progress we have made, both on the supply chain recalibration as well as SG&A recalibration.
Kenneth B. Goldman: Thanks Ken for the follow-up question, JC speaking. First, I think it's important to know that we are pleased with our performance in the first half of the year and we have outperformed our internal expectations.
Kenneth B. Goldman: Specifically on the top line, as we said, we have delivered the expected gains in distribution in both new and existing markets. We've made progress on sending in our new products to customers and we made progress as well driving trial with consumers.
Kenneth B. Goldman: On the bottom line, we've just shared with you the progress we have made, both on the supply chain recalibration as well as SG&A recalibration.
Jean-Christophe Platon: So the fact that we are seeing our actions, both on resource calibration and demand generation, deliver the expected results has led us to update our guidance. Now, double-clicking on your question, how have we calibrated our new guidance trend? Since we have been seeing good traction in many of our demand-generating activities, we've decided to take a portion of our first half performance and reinvest it into additional demand-driving investments to help further accelerate growth in the second half and going into 2025.
Kenneth B. Goldman: So, the fact that we are seeing our actions, both from resource calibration and demand generation, deliver the expected results, has led us to update our guidance.
Speaker Change: Now, double-clicking on your question, how have we calibrated our new Guidance French?
Speaker Change: Since we have been seeing good traction in many of our demand-generating activities,
Speaker Change: We've decided to take a portion of our first half out performance and reinvest it into additional demand driving investments to help further accelerate the growth in the second half and going into 2025.
Jean-Christophe Platon: As a consequence, the unfavorable end of our EBITDA range now assumes that these investments would not bring the full return we saw in H1. The next question comes from Michael Lavery with Piper Sandler. Please go ahead.
Speaker Change: As a consequence, the unfavorable end of our EBITDA range now assumes that these investments would not bring the full return we saw in H1.
Kevin: Thank you, Kenneth.
Kevin: The next question comes from Michael Lavery with Piper Sandler. Please go ahead.
Jean-Christophe Platon: Thank you. I just was wondering if you could unpack the ibada thinking a little bit and maybe just, you know, any... Cadence, you know, is there. You've shown, like, say for the gross margin, a kind of pretty steady improvement. Should we just think about EBITDA the same way through the back half? And can you give a sense, and sorry if I might have missed this, but any updated thoughts on when total company positive EBITDA would be within reach? Thank you so much, Michael.
Kevin: Bye.
Michael Scott Lavery: Thank you. I was just wondering if you could unpack the EBITDA thinking a little bit.
Speaker Change: Maybe just, you know, any cadence, you know, is there, you've shown, like say for the gross margin, a kind of pretty steady improvement. Should we just think about EBITDA the same way through the back half?
Speaker Change: And can you give a sense, and sorry if I might have missed this, but any updated thoughts on when total company positive EBITDA would be within reach?
Jean-Christophe Platon: JC, again, good to hear from you. I think, let's be super clear upfront. Achieving profitable growth is and remains our unique North Star, and I am, and we are fully committed. Clearly, as you have just heard, we are pleased with the significant structural progress we have made so far, illustrated in Exhibit 1, growth margin increase, and Exhibit 2, SGA recalibration that we have highlighted in our prepared remarks and just in our conversation with Kenneth.
JC: Thank you so much Michael. JC again, good to hear you. I think let's be super clear upfront. Achieving profitable growth is and remains our unique North Star and I am and we are fully committed to it.
Speaker Change: Clearly, as you have just heard, we are pleased with the significant structural progress we have made so far, illustrated in Exhibit 1, gross margin increase, Exhibit 2, SGA recalibration, that we have highlighted in our prepared remarks and just in our conversation with Kenneth.
Jean-Christophe Platon: Having said this, we know we still have plenty of work to do to get to our longer-term targets. And this is exactly why we know, because we know we still have a progress journey in front of us, with three segments in three different situations of maturity, execution, and performance, that I don't want us to come to a specific date of reaching profitability. We want to continue to make the right decisions, day by day, one after the other, to bring this business to profitable growth as quickly as possible, and I don't want us to make this decision for what is... I want us to make this decision for what is right for the business and not to lend on a specific date.
Speaker Change: Having said this, we know we still have plenty of work to do to get to our longer-term targets.
Speaker Change: And this is exactly why we know, because we know we still have the remaining progress journey in front of us, with three segments in three different situations of maturity, execution and performance, that I don't want us to commit to a specific date of reaching profitability.
Speaker Change: We want to continue to make the right decisions.
Speaker Change: Day by day, one after the other, to bring this business to profitable growth as quickly as possible.
Speaker Change: And I want us to make this decision for what is right for the business and not to lend on a specific date.
Marie-Josée David: Okay, that's helpful, and then, follow up on SG&A, I guess tied to corporate costs. You've talked about some of the SG&A cost savings, but corporate at least has been pretty flat. Is that the right expense level? Should we expect it? to stay there?
Speaker Change: Okay, that's helpful.
Speaker Change: Just to follow up on SG&A, I guess tied to corporate costs, you've talked about some of the SG&A cost savings, but corporate, at least, has been pretty flat. Is that the right expense level? Should we expect it?
Marie-Josée David: Is there any room for improvement, you know, going forward there? Or just how should we think about what the SMA impact is on corporate life? Hi Michael, this is Marie-Josée speaking. You're right.
Speaker Change: to stay there. Is there any room for improvement, you know, going forward there or just how to think about what the SG&A impact is on that corporate line?
Marie-Josée David: We mentioned that it's pretty flat compared to last year, but we also mentioned, right, that it includes expenses related to some global initiatives that benefit all sectors. So this is the takeaway for the quarter. Now, we definitely continue to work on SG&A recalibration. We have done some, and if you recall, we have already shared that we have done two rounds of savings programs. We continue to work on that, and we continue to deliver on a long-term target, as JC just mentioned. So corporates, we expect corporates to be approximately flat going forward. So all the SNA cuts are just in the segments then, is it just that simple? and Michael.
Speaker Change: Hi Michael, this is Marie-Josée speaking. You're right, we mentioned that it's pretty flat compared to last year, but we also mentioned that it includes expenses related to some global initiatives that benefit all segments.
Speaker Change: So this is the takeaway of the quarter. Now, we continue to work, definitely, on sGNA recalibration. We have done some, if you recall, we have already shared that we have done
Speaker Change: two rounds of savings program. We continue to work on that and we continue to deliver on a long-term target as JC just mentioned.
JC: So, corporates, we expect corporates to be approximately flat going forward.
Speaker Change: So all the SNA cuts are just in the segments then? Is it just that simple?
Marie-Josée David: Do that again? Well, so yeah, so I guess at least where it nets out, if you're making these SG&A cuts, they really are within the segments, and corporate costs are just, you know, kind of running steady. Was that the right way to think about it? Yes, absolutely, and more than yes. Okay. All right. Thanks a lot. And the next question comes from Kaumil Gajrawala with Jeffreys
Speaker Change: I did not understand the question. Sorry, Michael. Do that again? Well, so yeah, so I guess at least where it nets out, if you're making these SG&A cuts, they really are within the segments and corporate costs are just, you know, kind of running steady. Is that the right way to think about it?
Michael Scott Lavery: Yes, absolutely. All four yes.
Speaker Change: And the next question comes from...
Speaker Change: Kaumil Gajrawala with Jeffreys. Please go ahead.
Daniel Ordonez: Hey guys, good morning, or I guess good afternoon, depending on where you are. We're hearing a lot about the slowdown in away from home consumption at coffee shops and food service across sort of the board. As you think about sort of that incremental upside that you're reinvesting in the business, can you maybe just talk about is it in an effort to sort of bend the curve on what's happening on that side, or is it more broad in terms of where you're spending it? Kaumil, how are you doing? This is Daniel.
Kaumil S. Gajrawala: Hey guys, good morning, or I guess good afternoon, depending on where you are. We're hearing a lot about, you know, the slowdown in away-from-home consumption at coffee shops and food service and across sort of the board. As you think about sort of that incremental upside that you're reinvesting into the business,
Speaker Change: Can you maybe just talk about, is it in an effort to sort of bend the curve on what's happening on that side, or is it more broad in terms of where you're spending it?
Daniel Ordonez: Just to double-check on your questions, make sure I understand and I responded properly. Are you talking about the generalized market slowdown, or are you referring to us?
Speaker Change: Kaumil, how are you doing? This is Daniel. Just to double click on your questions, make sure I understand and I responded properly. Are you talking about the generalized market slowdown or are you referring to us?
Daniel Ordonez: Okay. Thank you. Thank you for your question. No.
Speaker Change: generalized market slowdown. Okay, thank you. Thank you for your for your question. No, I have to go back to not just to these prepared remarks but to the few few last ones which we don't see such a slowdown for ourselves.
Daniel Ordonez: I have to go back not just to these prepared remarks but to the last few ones, where we don't see such a slowdown for ourselves. We have consistently invested resources, both quality and quantity, across the three regions, and we're pretty pleased with the progress we are making. You will recall significant growth in the channel, which I have referred to on a few occasions for us, has different layers within the channel, different sub-segments in which we balance both accelerated growth and profitability, margin, and profitability.
Speaker Change: We have consistently invested resources, both quality and quantity, across the three regions and we're pretty pleased with the progress we are making. You will recall significant growth.
Speaker Change: in the channel, which I have referred in a few occasions for us, has different layers within the channel, different sub-segments in which we balance both accelerated growth
Daniel Ordonez: So we see a good picture ahead of us that you can see already in the numbers, and the outlook is positive too. We will continue to invest in this because this is where we bring the Oatly magic. JC talks about it in every single remark.
Speaker Change: and Profitability, Margin and Profitability. So, we see a good picture ahead of us.
Speaker Change: that you can see already in the numbers and the outlook is positive too. We will continue to invest on this because this is...
Speaker Change: where we do bring the Oatly magic. Jaycee talks about it in every single remark. This is where the consumers experience the brand and we see a bright outlook for us, Kaumil. I hope that's helpful.
Daniel Ordonez: This is where the consumers experience the brand, and we see a bright outlook for us, Kaumil. I hope that's helpful. Thank you. Yeah, that's really helpful. And then when I think about, or I guess when we all think about the exit costs, some of a lot of these sort of one-time cash or non-cash exit costs for things, are we largely complete? Or should we expect more over the course of the year? So this is Marie-Josée. It's a very nice meeting you.
Camille: Thank you, yeah that's helpful. And then what I think about, or I guess when we all think about the exit costs, a lot of these sort of one-time cash or non-cash exit costs for things, are we largely complete or should we expect more over the course of the year?
Marie-Josée David: In the prepared remarks, you saw that we called out $13 million year-to-date out of the $20 million that we announced a quarter ago, two quarters ago. So we have $7 million to go. Those $7 million will occur as we have already planned, which is through the end of fiscal 2025. So definitely, we're on track and really nothing to call out. Okay, great. So nothing else.
Camille: So, this is Marie-Josée. Very nice meeting you. In the prepared remarks, you saw that we have called out, year-to-date, 13 million out of the 20 million that we have announced a quarter ago, two quarters ago.
Speaker Change: So we have 7 million to go. Those 7 million will occur as we have already planned, which is through the end of fiscal 2025. So definitely we're on track and really nothing to call out here.
Marie-Josée David: Everything is according to plan, I guess. Yep, correct. Great, thank you.
Speaker Change: Okay, great. So nothing else.
Speaker Change: Everything according to plan, I guess.
Operator: The next question comes from Dara Mohsenian with... Morgan Stanley, please go ahead. Hi guys. Just to follow up on Michael's question, any flavor on Q3 versus Q4 EBITDA progression, specifically in the back half of the year? Just trying to frame the quarterly EBITDA progress as we think about your path to profitability. And specifically, as you look out to 2025, I know you won't lay out goals today, but can you just discuss, conceptually, are there additional cost savings you think you can go after for 2025, just after the profitability focus here in 2024? Thanks. Thank you so much, Dara.
Speaker Change: Yep, correct. Great, thank you.
Speaker Change: Thank you.
Speaker Change: The next question comes from Dara Mohsenian with...
Dara Mohsenian: Morgan Stanley , please go ahead.
Dara Mohsenian: Hi, guys. Just to follow up on Michael's question.
Dara Mohsenian: Any flavor on Q3 versus Q4 EBITDA progression, specifically in the back half of the year? Just trying to frame the quarterly EBITDA progress as we think about your path to profitability.
Speaker Change: And specifically, as you look out to 2025, I know you won't lay out goals today, but can you just discuss conceptually, are there additional cost savings you think you can go after for 2025, just after the profitability focus here in 2024?
Jean-Christophe Platon: Great to have you on the call. JC speaking. So first of all, on your quarter on quarter comparison, I think, broadly, you can expect Q4 to be better than Q3. But of course, as you know, we will not be guiding by quarter.
Speaker Change: Thanks.
Speaker Change: Thank you so much, Tara. Great to have you on the call. JC speaking. So, first of all, broadly, on your quarter, on quarter comparison, I think,
Speaker Change: Broadly, you can expect Q4 being better than Q3, but of course, as you know, we will not be guiding by quarter, so that's the trend I want you to have.
Jean-Christophe Platon: So that's the trend I want you to have. And just building on your second point, which is SG&A and building on what Marie-Josée has well explained earlier. First, let's share our belief. Our belief is that in any business, the chase for efficiency should never stop. We constantly and will always dynamically look for ways to become more efficient. It's the competitiveness duty of any business to permanently adapt and adjust, and this applies across the entire company. So that's what we will keep doing. Clearly, we are not trying to signal that we are planning new massive SDNA reductions.
Speaker Change: And just building on your second point, which is SG&A, and building on what Marie-José has well explained earlier, first, let's share our belief. Our belief is that in any business, the chase for efficiency should never stop.
Speaker Change: We are constantly and will always dynamically look for ways to become more efficient.
Speaker Change: It's our competitiveness duty of any business to permanently adapt and adjust, and this applies
Speaker Change: across the entire company, so that's what we will keep doing.
Speaker Change: Clearly, we are not trying to signal that we are planning new massive SDNA reductions. What we are saying is we want to complete.
Jean-Christophe Platon: What we are saying is that we want to complete our work on the previously communicated reductions, and then we believe that once this is done, we believe that our SDNA structure in total will be the appropriate size for the company. So there is more work to do, a mindset of permanent efficiency change overall in the company at the service of our mission. Great, thanks. And the next question comes from John. Baumgartner with Mizzouho, please go ahead.
Speaker Change: our work on the previously communicated reductions.
Speaker Change: And then we believe that once this is done, we believe that our SG&S structure in total will be the appropriate size for the company. So, more work to do, a mindset of permanent efficiency change overall in the company at the service of our mission.
Daniel Ordonez: and Daniel Ordonez.
Daniel Ordonez: Great, thanks.
Speaker Change: And the next question comes from John Baumgartner with Mizzouho. Please go ahead.
Marie-Josée David: Hi, good morning. Thanks for the question. Maybe first off, for Maria Jose, in terms of free cash, what was behind the provision that was recorded in Q2 in cash from operations? That line's been volatile in the last couple of quarters and had a big impact on Q2 cash. I guess, aside from that, what are your expectations for cash burn in the back half of the year and is it possible to see cash from operations turn positive at some point, or is that still a little bit optimistic? Hi there. Let me just answer the first question.
Speaker Change: Hi, good morning. Thanks for the question.
John Joseph Baumgartner: Maybe first off, for Maria Jose, in terms of the free cash, what was behind the provision that was recorded in Q2 in cash from operations?
John Joseph Baumgartner: That line's been volatile the last couple of quarters and had a big impact on Q2 cash. I guess, aside from that, what are your expectations for cash burn in the back half of the year? And is it possible to see cash from operations turn positive at some point, or is that still a little bit optimistic?
Marie-Josée David: Provisions-wise, we are talking about the legal settlement and severances. So these are the two big pockets. When it comes to our liquidity position, we remain strong in our liquidity position, right? We are at $335 million, and our cash positions remain sufficient to fully fund our business. Now if you look at what happened in this quarter, you have noticed as well in the past quarter that we caused exceptional elements such as closing our factories. Looking forward, those elements will not happen.
Speaker Change: Hi there, let me just answer to the first one. Provision-wise, we are talking about the legal settlement, we are talking about the severances.
Speaker Change: So this is the two big pockets.
Speaker Change: When it comes to our liquidity position, we remain strong in our liquidity position, right? We are at $335 million and our cash positions remain sufficient to fully fund our business plan.
Speaker Change: Now, if you look at what happened in this quarter, you have noticed as well the past quarter that we have caused exceptional elements, such as exiting our factories.
Marie-Josée David: So when you look at the way you want to model our liquidity, keep in mind that we had, over the past two quarters, some exceptional elements that saved up to $31 million that will not happen moving forward. This is what I can say. I'm not going to give you guidance on the phasing, but keep in mind strong cash, 335 million, exceptional elements as we speak, and definitely, what I want to say is that big focus on liquidity, big focus on cash through what we already discussed, which is improvement in adjusted EBITDA, which is improvement in net working capital metrics. And as you notice this quarter, we have reduced, so through capex management.
Speaker Change: Looking forward, those elements will not happen.
Speaker Change: So when you look at the way of how you want to model our liquidity, keep in mind that we had over the past two quarters some exceptional elements that saved up to $31 million that will not happen moving forward.
Speaker Change: This is what I can say. I'm not going to give you guidance on the phasing, but...
Speaker Change: Keep in mind, hope...
Speaker Change: Cash, $335 million, exceptional elements as we speak. And definitely what I want to say is that big focus on liquidity, big focus on cash.
Speaker Change: for what we already discussed, which is improvement in adjusted EBITDA, which is improvement in net working capital metrics, and as you noticed this quarter, we have reduced as well our CAPEX, so for CAPEX management.
Daniel Ordonez: Daniel, in terms of your newer markets in Europe, in some of these markets like Spain, it's more of a private label market with smaller brands and, you know, sort of lacks a dominant branded leader. Then you have other markets like France, where you've got one big branded company with a dominant market share, and the influence of private label and smaller brands is comparatively lower. To what extent are you managing your entry approaches differently based on the different competitive landscapes in these markets? I'm curious how you're navigating that and what you're seeing in terms of the competitive response. Fabulous. Thank you, John. Good to speak to you today. One of my favorite topics.
Speaker Change: Hope that helps, okay.
Speaker Change: Thanks for that. And then, Daniel, in terms of your newer markets in Europe , in some of these markets like Spain, it's more of a private label market with smaller brands and, you know, sort of lacks a dominant branded leader. Then you have other markets like France where you've got one big branded company with dominant market share and the influence of private label and smaller brands is comparatively lower.
Speaker Change: To what extent are you managing your entry approaches differently based on the different competitive landscapes in these markets? I'm curious how you're navigating that and what you're seeing in terms of the competitive response.
Daniel Ordonez: Listen, you're absolutely right to call out that we don't take any market as equal. As you have just seen, for instance, which has recently launched in Mexico, no market is alike. What is alike, obviously, is our model, which has proven to work in any of them so far.
Daniel Ordonez: Fabulous. Thank you, John . Good to speak to you today. One of my favorite topics. Listen, you're absolutely right to call out that we don't take any market as equal. As you have just seen, for instance, we just recently launched in Mexico. No market is alike.
Daniel Ordonez: What is alike, obviously, is our model, which has proven to work in any of them so far.
Daniel Ordonez: So I will put a spin on your question, if you don't mind, but first, by giving you an overall view of the new markets. We're really, really excited about the progress we're making. And we, as you can imagine, thought long and hard about starting to show progress in these quarterly calls. Every city we land in, we now have proof that the magic of the brand and how these markets are prepared to welcome Oatly with open arms is really material. So that's number one there.
Speaker Change: So, I will put a spin on your question if you don't mind, but first by giving you an overall view about the new markets. We're really, really excited about the progress we're making and we, as you can imagine, we thought long and hard about starting to show progress in these quarterly calls.
Speaker Change: Every city we land, we have now proof that the magic of the brand and how these markets are prepared to welcome Oatly with open arms is really material.
Daniel Ordonez: When we are executing the model that I just called out, like in France, Spain, or Belgium, we are growing by triple digits. It's pretty impressive. And you see the impact. No matter how different the market is, it seems to be lifting overall category growth to very significant levels. Whether it's France or Spain, I wouldn't categorize them as private label or not, but that's what you may see in the numbers. The reality is we're looking at the level of maturity, which is totally different.
Speaker Change: So that's number one there. When we are executing the model that I just called out, like in France, Spain or Belgium, we are growing in triple digits. Yeah, it's pretty impressive. So.
Speaker Change: and you see the impact, no matter how different the market is.
Speaker Change: It seems to be lifting the overall category growth to very significant levels, whether it's France or Spain. I wouldn't categorize them as private label or not, that's what you may see in the numbers, the reality is we're looking at the level of maturity, which is totally different.
Daniel Ordonez: The uptake in the coffee space, which you cannot see in numbers in any market data, is tremendous. And the speed at which we also reached the number one velocity in the retail space in this market is extraordinary. We are now the number one turning brand in Spain, France, and Belgium. It's pretty impressive.
Speaker Change: The uptake in coffee space, which you cannot see in numbers in any market data, is tremendous.
Speaker Change: And the speed which we also reach the number one velocity in the retail space in these markets is extraordinary. We are now the number one turning brand in Spain, France and Belgium. It's pretty impressive.
Daniel Ordonez: This is how we should look at the expansion, which is that we do it in a disciplined manner. We talked very briefly about this, but it's super important to us. We use efficiently the installed capacity, and also we have a lot of overhead synergies in the regions, right? So we're pretty pleased. And again, now back specifically to your question, I wouldn't necessarily name or tag Spain as a private labor market.
Speaker Change: This is how we should we should look also at the expansion which is we do it in a discipline manner We talked very briefly about this, but it's super important to us. We use efficiently the installed capacity
Speaker Change: And also we have a lot of overhead synergies in the region, right?
Speaker Change: We're pretty pleased. Then, again, now back specifically to your question.
Daniel Ordonez: There are very, very important brands there. But what Spain does not have, or Spain has been deprived of, is a distinctive, disruptive brand that will drive the oat milk category as Oatly is doing today. And that's what consumers are enjoying, and that's why you see the Oatly brand growing as it is growing, for instance, where the market is potentially so much stronger; you see some exponential growth rates because of the lack of maturity. The French population has been deprived of oat milk in general, right?
Speaker Change: I wouldn't necessarily name or tag Spain as a private labor market. There are very, very important brands there.
Speaker Change: What there is not in Spain, or Spain has been deprived from, was a distinctive, disruptive brand that will drive the...
Speaker Change: Oat milk category as Oatly is doing today. And that's what consumers are enjoying and that's why you see the Oatly brand growing as it is growing. In France...
Speaker Change: For instance, where the market is potentially so much stronger, you see some exponential growth rates
Speaker Change: because of the lack of maturity. The French population has been deprived of oat milk in general, right? And you see they are welcoming us with open arms. So, pretty pleased.
Daniel Ordonez: And you see, they're welcoming us with open arms. So, pretty pleased. In a nutshell, the model seems to be working; no matter what the level of maturity of the market, the news value of the brand makes a difference.
Speaker Change: In a nutshell, the model seems to be working, no matter what level of maturity of the market, the news value of the brand makes a difference. John , that's the headline that I will leave you with.
Daniel Ordonez: John, that's the headline that I would leave you with. Thanks, Daniel. This concludes our question and answer session. I would like to turn the conference back over to Brian Kearney for any closing remarks. Thank you everyone for joining us. Feel free to send me an email, and we can set up a follow-up call if you're interested.
John Joseph Baumgartner: Thanks, Daniel.
Brian Kearney: Thanks a lot. Bye. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? In the name of the Father, and of the Son, and of the Holy Spirit, amen. Kaumil Lavery, Kaumil Gajrawala, Kenneth Goldman, John Baumgartner, Brian Kearney, Max Gumport, Andrew Lazar, Christian Junquera, Daniel Ordonez, Oatly Group
John Joseph Baumgartner: This concludes our question and answer session. I would like to turn the conference back over to Brian Kearney for any closing remarks.
Brian Kearney: Thanks everyone for joining us. Feel free to send me an email and we can set up a follow-up call if you're interested. Thanks a lot. Bye.
Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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