Q2 2025 Oatly Group AB Earnings Call

Operator: Second Quarter 2025 Earnings Conference Call All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Good day and welcome to the Oatley. Second quarter 2025 earnings conference call.

All participants will be in a listen-only mode.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press stars and 1 on a touch-tone phone. To withdraw your question, please press stars and 2. Please note, this event is being recorded.

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After today's presentation, there will be an opportunity to ask questions.

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Brian Kearney: I would now like to turn the conference over to Brian Kearney, VP of Investor Relations. Please go ahead. Good morning, and thanks for joining us today.

Speaker Change: I would now like to turn the conference over to Brian Kearney VP of investor relations. Please go ahead.

Brian Kearney: On today's call are our Chief Executive Officer, Jean-Christophe Platon, our Global President and Chief Operating Officer, Daniel Ordonez, and our Chief Financial Officer, Marie-José W. Before we begin, please review the cautionary statement regarding forward-looking statements and other disclaimers on slide 3, which are integrated into this presentation and include the Q&A that follows. Please also refer to the documents we have filed with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today.

Good morning and thanks for joining us today. On today's call our our chief executive officer John Kristoff pathan our Global president and Chief Operating Officer Daniel Gordon's and our Chief Financial Officer Marie Jose w.

Brian Kearney: Also, please note on today's call, management will refer to certain non-IFRS financial measures, including adjusted EBITDA, constant currency revenue, and free cash flow. Please refer to today's earnings release for reconciliation of non-IFRS financial measures to the most comparable measures prepared in accordance with IFRS.

Unknown Executive: In addition, Oatly has posted a supplementary presentation on its website for reference.

Speaker Change: Released for reconciliation of non-ifrs, financial measures to most comparable measures prepared in accordance with IFRS.

Jean-Christophe Platon: I'd now like to turn the call over to Jean-Christophe. Thank you, Brian, and good morning, everyone. Slide 4 has the key messages I want you to take away. First, we continue to make good progress on our 2025 priorities. Igniting top line momentum is our most important priority out of the three and the actions are working. We are continuing to roll out our growth playbook more broadly and we continue to see similar results. While we are confident our playbook will continue to drive results, we are reducing our four-year outlook on the top line. This reflects reduced, slower-than-expected progress in our North America segment as well as a soft macro environment in our Greater China Bid.

Speaker Change: In addition only as posted a supplementary presentation on its website for reference. I'd now like to turn the call over to Jeanne Kristoff.

Jeanne Kristoff: Thank you, Brian. And good morning everyone.

Jeanne Kristoff: Slide 4 as the key messages. I want you to take away.

Jeanne Kristoff: First, we continue to make good progress on our 2025 priority.

Jeanne Kristoff: Igniting Topline momentum is our most important priority out of the 3 and the actions are working.

Jeanne Kristoff: We are continuing to roll out our goals, Playbook more broadly and we continue to see similar results.

Jeanne Kristoff: While we are confident our Playbook will continue to drive results. We are reducing our full year, outlook on the top line,

Jeanne Kristoff: This reflects reduced slower than expected progress. In our North America segments, as well as a soft macron environment. In our case of china business,

Jean-Christophe Platon: Importantly, we plan to drive additional cost efficiencies and keep us on track on the bottom line, and we are reaffirming our adjusted EBITDA guidance.

Importantly, we plan to dive additional cost efficiencies and keep us on track on the bottom line.

Jeanne Kristoff: And we are reaffirming our adjusted a BTA guidance.

Jean-Christophe Platon: Therefore, we are refining our 2025 We know it's. Constant currency revenues of approximately flat to plus 1%. adjusted a VTA in the range of $5 million to $15 million, which represents no change compared to our prior outlook. and CapEx of approximately $20 million.

Jeanne Kristoff: Therefore, we are refining our 2025

Jeanne Kristoff: we now expect

Jeanne Kristoff: constant currency Revenue growth of approximately flat to plus 1%.

Jeanne Kristoff: Adjusted. The BTA in the range of 5 million to 15 million, which represents no change compared to our higher Outlook?

Jeanne Kristoff: And Capac of approximately 20 million.

Jean-Christophe Platon: Finally, we have decided to conduct a strategic review of our Greater China business with the goal of accelerating growth and maximizing value for this part of the business. Slide five reminds you of our three priority areas. This year, we are focused on reducing cost, igniting supply momentum, and driving profitability. We fully expect our disciplined execution of these priorities areas will set us up for long-term value creation.

Jeanne Kristoff: finally, we have decided to conduct a strategic review of our greater China business with the goal of accelerating growth and maximizing value, for this part of the business,

Jeanne Kristoff: Slide. 5. Remind you of our 3 Priority areas?

Jeanne Kristoff: This year we are focused on reducing cost. Igniting Supply, momentum and driving profitability.

Jeanne Kristoff: We fully expect our disciplined execution on. These priorities areas will set us up for long-term value creation.

Jean-Christophe Platon: I will start with Scott on slide six. We have made good progress in driving efficiency this year. In the first half of this year, we have driven down our cost of goods per litre by 10% compared to last year's first half. And Q2 is our eighth straight quarter of year-on-year reduction. We believe we still have a long way to push it lower. We also continue to reduce our SG&A overheads expenses, which provided us with additional fuel for branding investment. And we have identified additional SG&E efficiencies that will drive more impact later this year. Overall, I'm pleased with our progress on cost discipline and we will continue to drive out inefficiency.

Jeanne Kristoff: I will start with costs on slide 6.

Jeanne Kristoff: We have made good progress in driving efficiency this year.

In the first half of this year, we have driven down our cost of goods per liter by 10% compared to last year's first half.

Jeanne Kristoff: And Q2 is our eighth straight quarter of year on year, reductions.

Jeanne Kristoff: We believe we still have Runway to push it lower.

Jeanne Kristoff: We also continue to reduce our sdna, overheads expensive.

Which provided us with additional fuel for Branding Investments.

And we have identified additional sgna efficiencies, that will drive more impact later this year.

Jeanne Kristoff: Overall, I'm pleased with our progress on cost discipline and we will continue to drive out inefficiencies

Jean-Christophe Platon: Slide 7 shows the results of our deliberate and disciplined growth-focussed reinvestment. As Daniel will elaborate further, our year on international sales performance is clear proof our refreshed growth playbook is working.

Jeanne Kristoff: slide 7 shows, the results of our deliberate and disciplined goals focused on investments.

Jeanne Kristoff: As Daniel will elaborate further our European International sales performance is Clear, Proof our refreshed growth. Playbook is working

Jean-Christophe Platon: When we launched our Refresh playbook late last year, the category goals wasn't there. In the quarter, our business grew 4.7% while the category grew 1.9%. As you can see, the data is even stronger for the last four weeks. where we grew over 7%. And once again, igniting category goals and outgrowing both plant-based milk and oat milk.

Jeanne Kristoff: when we launched our refresh, Playbook late last year,

Jeanne Kristoff: The category goes wasn't there.

Jeanne Kristoff: In the quarter.

Jeanne Kristoff: Our business. Grew 4.7% while the category grew 1.9%,

Jeanne Kristoff: as you can see, the data is even stronger for the last 4 weeks.

Jeanne Kristoff: Where we go over 7%.

Jeanne Kristoff: And once again, igniting category goals and outgoing boosts plant-based milks and oat milk.

Jean-Christophe Platon: Turning to our third priority, profitability, on slide eight. We continue to make good progress on profitability in the quarter. Our adjusted EBDA improved 7 million year-on-year in the quarter to minus 3.6 million, which is in line with the guidance we provided on the last quarter's call. This continued progress and the actions we are taking to drive the business give us the confidence to reaffirm our full year profitability guide.

Jeanne Kristoff: Turn into our third, priority profitability, monthly 8.

Jeanne Kristoff: We continue to make good progress on profitability in the quarter.

Jeanne Kristoff: Now, adjusted the BDA improved 7 million year on year in the quarter to minus 3.6 million which is in line with the guidance. We provide in on the last quarter score.

Jeanne Kristoff: Give us the confidence to reaffirm our full year profitability guidance.

Jean-Christophe Platon: Slide 9 shows our updated outlook.

Jeanne Kristoff: Slide 9 shows our updated Outlook.

Jean-Christophe Platon: The biggest takeaway is that we are reaffirming our adjusted BDA guidance of $5 million to $15 million, which I believe demonstrates that we have good flexibility within our business to deliver on our commitment. While we are adjusting our top-line outlook to reflect both slower-than-expected progress in North America and the continued soft macro environment in Greater China, we continue to believe that our refreshed growth playbook is working. And that we are on the right path.

Jeanne Kristoff: The biggest takeaway is that we are. Reaffirming our adjusted BDA guidance of 5 million to 15 million.

Jeanne Kristoff: Which I believe demonstrates that we have good flexibility within our business to deliver on our commitments.

Jeanne Kristoff: While we are adjusting our Top Line Outlook to reflect both slower than expected progress. In North America and the continued soft macro environment in Greater China.

Jeanne Kristoff: We continue to believe that our refreshed gross Playbook is working.

Jeanne Kristoff: And that we are on the right path.

Jean-Christophe Platon: The progress we are seeing in the Europe and international segment is clear evidence of that.

Jeanne Kristoff: The progress we are seeing in the Europe and international segments is clear evidence of that.

Jean-Christophe Platon: Finally, we have initiated a strategic review of our greater China business. We will consider a range of options, including a potential carve-out with the goal of accelerating the goals and maximizing the value of the business. Our Greater China Business has improved over the past few years. and it is much stronger now. It has been a strong contributor, delivered better results, established market leadership, and is now well-positioned for the future. We believe in the potential of this. Therefore, we believe now is the right time to conduct this review to help the business reach its future potential.

Jeanne Kristoff: Finally.

Jeanne Kristoff: We have initiated a strategic review of our greater China business.

Jeanne Kristoff: We will consider a range of options, including a potential carveout with the goal of accelerating, the growth and maximizing, the value of the business.

Jeanne Kristoff: I'll get to China business as improved over the past few years.

Jeanne Kristoff: And it is much stronger now.

Jeanne Kristoff: It has been a strong contributor delivered, better results, established Market leadership and is now well, positioned for the future.

Jeanne Kristoff: We believe in the future potential of this business.

Therefore we believe now is the right time to conduct this review to help the business reach. Its future potential.

Jean-Christophe Platon: As we conduct this strategic review, we will continue to operate in the region, including our mansion facilities. And we remain committed to our customers, our consumers, and our employees, whilst maintaining the safety and continuity of our operations.

Jeanne Kristoff: As we conduct this strategic review, we will continue to operate in the region, including our Mansion facility.

Jeanne Kristoff: And we remain committed to our customers, our consumers and our employees, whilst maintaining the safety and continuity of our operation.

Unknown Executive: I'm with notes, so...

Jean-Christophe Platon: There are no assurances that the process will result in any transaction or strategic change. We will update the market on our progress as is necessary and appropriate.

Jeanne Kristoff: I must not stop.

There are no assurances that the process will result in any transaction of strategic change.

Daniel Ordonez: Damien, over to you. Thank you, JC. Good morning, everyone. Slide 12 shows how the Europe and international segment has been performing. Strong Volume-Led Double-Digit Revenue Growth in the Quarter The steady volume-led growth, coupled with reliable operational efficiency, pushed the segment's EBITDA margin from the low double digits in early 2024. to the mid-teens in Q4 and Q1, and now north of 20% for quarter two. This segment is now focused on generating incremental consumer demand, which we expect will drive continued profit improvement.

Jeanne Kristoff: We will obtain the market on our progress, as is necessary and appropriate.

Daniel: Daniel over to you.

Daniel: Thank you. JC. Good morning, everyone.

Speaker Change: Slide 12 shows how the Europe and international segment has been performing.

Speaker Change: Strong volume Le double digit Revenue growth in the quarter.

Speaker Change: This steady volume Le growth coupled with reliable operational, efficiency pushed the segments. Evida margin from the low double digits. In early 2024,

Speaker Change: To the meetings in Q4 and q1 and now north of 20% for quarter 2.

Daniel Ordonez: Today, I will discuss how we're driving demands on our plans for the future.

This segment is now focused on generating incremental, consumers, demand, which we expect will drive continued profit Improvement.

Speaker Change: Today, I will discuss how we're driving demands on our plans for the future.

Daniel Ordonez: Slide 13 reminds you of the three pillars of a growth playbook. The first is to increase our relevance to consumers. As you saw in my first slide, we have significantly expanded our portfolio from a position of strength and uniqueness out of our iconic Barista Original Edition. We're doing so by leveraging new usage occasions and the emerging taste and flavor bonanza that Gen Z is driving, and that is evolving coffee into a much broader beverages space. At the same time, our advertising has become simpler, equally arresting and with messaging focused on the barriers to conversion.

Like 13, reminds you of the 3 pillars of our growth. Playbook. The first is to increase our relevance to consumer.

Speaker Change: As you saw on my first slide, we have significantly expanded our portfolio from a position of strength.

Speaker Change: And uniqueness out of our iconic, Barista original Edition.

Speaker Change: We're doing so by leveraging, new usage, occasions and the emerging taste and flavor Bonanza that gen Z is driving and that is evolving coffee into a much broader beverages space.

At the same time, our advertising has become simpler equally a resting and with messaging focused on the barriers to conversion.

Daniel Ordonez: The second pillar is to attack those barriers to conversion, most notably preconceptions on taste. Anywhere we test blind, we see that around one in two people prefer Oatly to cow's milk in their coffee. This is a very persuasive tool that we expect to intensify in our communication. We add to these our elevated signature drinks experience, so relevant in these new beverages space.

Speaker Change: the second pillar is to attack those barriers to conversion, most notably preconceptions on taste

Speaker Change: Anywhere we test blind we see that around 1 in 2. People prefer only to cow's milk in their coffee.

Speaker Change: This is a very persuasive tool that we expect to intensify in our communication.

Daniel Ordonez: And the final pillar is to increase the availability of our products to consumers. We continue to add new customers and new distribution points every day. We know there's still a tremendous amount of runway ahead of us, and we're relentlessly pursuing it.

We add to these are elevated signature drinks experience. So relevant in this new beverages space,

Speaker Change: And the final pillar is to increase the availability of our products to Consumers. We continue to add new customers and new distribution points every day.

Daniel Ordonez: Slide 14 shows the early results of executing this growth playbook. We started rolling this out in Germany and the UK late last year. Given the cultural relevance of our brand in food service channels, the impact of this strategy is hitting food service first while retail following. We drove a strong growth acceleration in the German food service channel when we started our refresh strategy. Encouragingly, these strong growth rates have been sustained for several quarters. Retail is a much larger portion of the German. And we're seeing strong results there as well. We grew 5% in the last 12 weeks and a very strong 14% in the last four weeks.

Speaker Change: We know there is still a tremendous amount of Runway ahead of us and we're relentlessly pursuing it.

Speaker Change: Of executing this growth Playbook. We started rolling this out in Germany and the UK late last year.

Speaker Change: Given the cultural relevance of our brand in Food Service channels. The impact of this strategies heating food service. First, while retail following

We drove a strong growth acceleration in the German Food Service Channel. When we started our refresh strategy,

Encouraging me. These strong growth rates have been sustained for several quarters now

Speaker Change: Retail is a much larger portion of the German business.

Daniel Ordonez: On this slide, you can see an in-store retail example of how we're maximizing our expanded barista portfolio to gain incremental distribution and space in-store. This retailer is showing our entire lineup, 1.5 liters, Lighter Taste, a scannable six-pack, organic barista, and original barista. With this new enhanced portfolio, our distribution has grown over 35 percent and we're bringing new consumers into the category. After seeing traction in the first market, we rolled out the strategy to our third largest European market, Sweden. Sweden is the company's original market, where we have been operating the longest and where penetration is the highest.

Speaker Change: And we're seeing strong results there as well. We grew 5% in the last 12 weeks and a very strong 14% in the last 4 weeks.

Speaker Change: On this slide. You can see an install retail example of how we're maximizing our expanded, Barista portfolio, to gain incremental distribution and space in store.

Speaker Change: This retailer is showing our entire lineup.

Speaker Change: 1.5 liters lighter taste, a scannable, 6-pack organic Barista and original Barista with this new enhanced portfolio. Our distribution has grown over 35% and we're bringing new consumers into the category.

Speaker Change: After seeing fracturing, the First Market we rolled out these strategy to our third largest European market.

Sweden.

Daniel Ordonez: Given our long history there, we thought it might be more difficult to drive improvement. But after deploying the playbook earlier this year, I'm pleased to report that we have started to see solid, positive growth in our retail sales. Not only we're driving growth, but the velocities on our new barista product are outperforming our own expectations. These results give us confidence to say that there is still much more runway for expansion everywhere given the significant headspace we have in front of us to gain more penetration and drive further category growth. And this strategy is not only working in countries where we already have a strong presence, it is also working in our expansion markets, where we grew 40% year-on-year in Q2, as we continue to create the category.

Speaker Change: Sweden is the company's original Market where we have been operating the longest and were penetration is the highest

Speaker Change: Given our long history there, we thought it might be more difficult to drive improvements.

Speaker Change: But after deploying The Playbook earlier, this year, I'm pleased to report that we have started to see solid positive growth in our retail sales.

Speaker Change: Not only we're driving roads but the velocities on our new Barista products are outperforming our own expectations.

Speaker Change: These results give us confidence to say that there's still much more runway for expansion everywhere. Given the significant head space, we have in front of us to gain more penetration and drive further category growth.

Daniel Ordonez: From Madrid to Melbourne to Mexico City and everywhere in between, the teams are doing an amazing job connecting with customers and consumers, driving distribution gains and dominating the coffee and beverage culture around the world. Today, in Paris, two out of three cafes have adopted Oatly, driving a headline-making category explosion. In Spain, for instance, which is already one of the third largest plant-based beverage markets in Europe, our track channel data is growing over 70%, which is pushing the overall category up. And in Mexico City, we have taken the massive coffee space by storm and have become the fastest-earning retail item in less than two years.

Speaker Change: And this strategy is not only working in countries where we already have the strong presence. It is also working in our expansion markets, where we grew 40% year on year in quarter 2, as we continue to create the category.

Speaker Change: From Madrid to Melbourne to Mexico City. And everywhere in between the teams are doing an amazing job. Connecting with customers and consumers, driving distribution, gains, and dominating the coffee and the rich culture around the world.

Speaker Change: Today.

Speaker Change: In Paris 2 out of 3 cafes have adopted Oakley driving. A headline making category explosion in Spain for instance which is already 1 of the third largest plant-based beverage markets in Europe. Our track Channel data is growing over 70% which is pushing the overall category upwards.

Speaker Change: And in Mexico City, we have taken the massive cost of space by storm and have become the fastest turning retail item in less than 2 years.

Daniel Ordonez: We believe these markets have a long runway for growth, and we're excited to continue bringing the Oatly magic to more people in more places around the world.

Daniel Ordonez: To be clear, though, while we are pleased with our performance in both established and expansion markets, we're not satisfied. We have much bigger expectations on where our business can go.

We believe this markets have a long runway for growth and we are excited to continue bringing the oldley magic to more people in more places around the world.

Daniel Ordonez: That is why we're taking this strategy to the next stage.

Speaker Change: To be clear though while we are pleased with our performance in both establishment and expansion markets, we're not satisfied. We have much bigger expectations on where our business can go.

Daniel Ordonez: We're doubling down on taste with the rollout of the Oatly Loopbook, as shown on slide 17. We know one of the biggest barriers to conversion is consumers' preconceptions on the taste of a plant-based product. The Lookbook is helping us breaking down those barriers and drive incremental demands, generating excitement with codes reminiscent to fashion and unexpected recipes that totally change the way in which consumers view oat milk. Not anymore an alternative tool, but an exciting canvas to enjoy their beverage. There is a taste and flavor bonanza going on in coffee shops around the world, with Gen Z leading the way.

Speaker Change: That is why we're taking this strategy to the next stage.

Speaker Change: We're doubling down on taste with the roll out of the Oakley Loop book as shown on slide 17.

We know 1 of the biggest barriers to conversion is consumers preconceptions on the taste of a plant-based product.

Speaker Change: The lookbook is helping us breaking down those barriers and drive incremental demands generating excitement with colds reminiscence to fashion and unexpected recipes. That totally change the way in which consumers view oatmeal.

Not anymore, an alternative tool, but an exciting canvas to enjoy their beverage.

Daniel Ordonez: and our unique barista market developers team who are intimately woven into this space are working hand-in-hand with our food service customers to revitalize their offering. A win-win that builds traffic and ticket growth with provocative, exciting, and most importantly, Oatly-based items on their menu.

Speaker Change: There is a taste and flavor Bonanza going on in coffee shops, around the world with Gen Z leading the way.

Speaker Change: And our unique Barista Market developers. Team, who are intimately woven into this, space are working hand in hand, with our food service, customers to revitalize their office.

Speaker Change: A win-win that builds traffic and ticket growth with provocative exciting and most importantly Ally based items on their menus.

Daniel Ordonez: These are not your grandparents' cappuccinos. These are premium signature drinks that tap into Gen Z's obsession with flavor and cold drinks. Can you imagine any of these drinks with cow's milk? We don't think so. Then, as these flavors gain in popularity, we are launching new products to increase their convenience. This makes the flavor profile accessible for at-home consumption while also helping us to become the vendor of choice in food service. For example, in Sweden, we have partnered with movie theaters to develop sweet and salty popcorn lattes that consumers can enjoy while there. These dreams rapidly gained in popularity, and so we launched a popcorn-flavored product in no time.

These are not your grandparents cappuccinos.

Speaker Change: Talking to Genesis obsession, with flavor and cold drinks.

Speaker Change: Can you imagine any of these drinks with cow's milk?

Speaker Change: We don't think so.

Speaker Change: Then at these flavors, gaining popularity, we are launching new products to increase their convenience.

Speaker Change: This makes the flavor profiles accessible for at home consumption while also helping us to become the vendor of choice in food service.

Daniel Ordonez: As we have moved from food service to retail, the velocities have outperformed our expectations. And now, this item will be rolled out across Europe. This new product uses our already amazing barista product as the chassis, and then adds the flavoring near the end of the production process. so our supply chain can execute this customization quickly and efficiently.

Speaker Change: For example, in Sweden, we have partnered with movie theaters to develop sweet and salty, popcorn lattes. That consumers can enjoy while their these drinks rapidly gain in popularity. And so, we launched a popcorn flavored product in no time.

Speaker Change: As we have moved from Food Service to retail, the velocities have outperformed our expectations. And now this item will be rolled out across Europe.

Speaker Change: This new product uses our already amazing Barista products as the chassis and then add the flavoring near the end of the production process.

Speaker Change: So, our supply chain can execute these customization quickly and efficiently.

Daniel Ordonez: Slide 19 shows that we don't stop there. If you look at the current version of our lookbook, which is in our company website, you will see many matcha-based drinks. And, you know, there's currently an explosion of match around the world.

Speaker Change: July 19 shows that we don't stop there.

If you look at the current version of our Loop book, which is our in our company, uh, website, you will see many matcha based drinks.

Daniel Ordonez: And we have decided to capitalize upon it. Here you can see the new Matcha portfolio that we're rolling out across Europe as we Not only you will be able to go to your favorite cafe to get an Oatly Rosemary Matcha Latte or a Smoky Matcha, but you will be able to go to your local retailer and get a carton for home use or the small, cute brick right on the go.

Speaker Change: And you know, there is currently an explosion of match around the world and we have decided to capitalize upon it.

Speaker Change: Here you can see the new matcha portfolio that we're rolling out across Europe as we speak. Not only you will be able to go to your favorite Cafe, to get an oldie Rosemary matcha latte or a smoky matcha but you will be able to go to your local retailer and get a carton for home use or the small cute break while you're on the go.

Daniel Ordonez: Turning now to North America on slide 21, where we are still in the early stages of implementing our refreshed growth plan. While we continue to face the discrete wet headwinds we mentioned last quarter, including a large customer sourcing strategy shift and the frozen SKU rationalization that were both greater than planned, we remain confident in the underlying strength of our approach. In fact, excluding these headwinds, the rest of the North America business has grown. we achieved record quarterly retail sales and the highest ever food service revenue outside our largest customer.

turning now to North American slide 21,

Speaker Change: what we are still in the early stages of implementing our refreshed growth Playbook.

Speaker Change: While we continue to face the discrete where headwinds we mentioned last quarter, including a large customer sourcing strategy shift and the Frozen SKU rationalization that were both greater than planned. We remain confident.

Speaker Change: In the underlying strength of our approach.

In fact, excluding these headwinds the rest of the North America business has grown.

Daniel Ordonez: Let me say this straight, though. Our overall results in North America were below our own expectations. Yes, we made progress, but we had higher expectations. Given the success we've seen in Europe and internationally using this same playbook, we know what's possible, and we remain committed to applying these lessons to drive the consistent performance that we expect from a North American business. who are being even more thoughtful, more deliberate, and more disciplined in executing our strategy to accelerate demand. At the same time, we continue to solidify the operational fundamentals that will generate the muscle to increase investment while we step up execution.

Speaker Change: we achieved record quarterly retail sales and the highest ever Food Service Revenue outside, our largest customer,

Speaker Change: Let me say this trade, though. Our overall results in North America were below our own expectations.

Speaker Change: Yes, we make progress but we had higher expectations.

Speaker Change: Given the success we've seen in Europe and internationally using this same Playbook, we know what's possible. And we remain committed to applying these lessons to drive the consistent performance that we expect from a North American Business.

Speaker Change: We're being even more thoughtful, more deliberate, and more disciplined in executing our strategy to accelerate demand.

Speaker Change: At the same time we continue to solve it by the operational fundamentals that will generate the muscle.

to increase investment while we Step Up execution,

Daniel Ordonez: Slide 21 shows how we started to roll out this playbook. We began to attack the barrier to conversion that is faced. Same as in Europe, we have been running these campaigns in high-impact areas to capture the opportunity in people's dormant ultimate preference, or don't. That's how a U.S. team calls it.

Speaker Change: July 21 shows how we started to roll out this Playbook. We began to attack the barrier to conversion that it stays same. As in Europe, we have been running these campaigns in high impact, areas to capture the opportunity in people's dorms oatmeal, preference or dump.

As our us team calls, it.

Daniel Ordonez: We have also started to roll out the Lookbook with provocative flavors to enhance menus. And over the balance of the year, we will be focused on a continued discipline rollout of our playbook. We are confident that with proper execution and future steady investments, this strategy can drive incremental demand. We continue to believe there is a significant opportunity to expand distribution in the U.S. in all channels, and we have exciting upcoming tests with new customers.

Speaker Change: We have also started to roll out the loop book with provocative flavors to enhance menus.

Speaker Change: And over the balance of the year, we will be focused on a continued discipline rollout of her Playbook. We are confident that with proper execution and future steady Investments, this strategy can drive incremental demand

Daniel Ordonez: However, we remain vigilant of the consumer environment and the category dynamics, and we do not expect an immediate infection to grow until the full playbook has been deployed readily and with sufficient resources for a good period of time.

Speaker Change: We continue to believe there is a significant opportunity to expand distribution in the US in all channels. And we have exciting upcoming tests with new customers.

However, we remain Vigilant of the consumer environment and the category Dynamics, and we do not expect an immediate infection to growth until the full Playbook has been deployed steadily and with sufficient resources, for a good period of time.

Daniel Ordonez: Turning to the Greater China segment on slide 22, our Greater China team continues to execute well in a challenging consumer environment. The food service side of the business, which is the largest part of the segment, grew revenue by 12% in the first half, and we maintain strong relationship with the market's largest coffee chain. We have also continued to develop the retail channel with our entrance into club stores. In the quarter, the segment's retail volume reached an all-time high.

Speaker Change: Ments.

Speaker Change: The food service side of the business, which is the largest part of the segments grew Revenue by 12% in the first half, and we maintain strong relationship with the Market's largest coffee chains.

Marie-Josée W: I will now turn the call over to Marie-Josée. M.J., please. Thank you, Daniel. Good morning, everyone. Slide 24 shows an overview of the quarterly PMS. In the quarter, we grew revenue 3% but declined 0.2% on a constant currency basis. We continue to drive strong margin expansion with Q2 growth margin expanding 330 basis points year-over-year to 32.5%. Our adjusted EBITDA was a loss of $3.6 million in the quarter, which was approximately in line with the first quarter's level and what we guided to on last quarter's course. Both our gross margin and adjusted EBITDA are our best portfolio results as a public company.

We have also continued to develop the retail Channel with our entrance into Club stores in the quarter. The segments, retail volume reached an all-time high

I will now turn the call over to Maria MJ please.

Maria MJ: Thank you, Danielle. Good morning, everyone.

Maria MJ: Fly 24 shows an overview of the quarterly PMS.

In the quarter, we grew Revenue 3%, but declined 0.2% on a constant currency basis.

Maria MJ: We continue to drive strong margin expansion with Q2 gross margin.

Depending 350 visit points year-over-year to 42.5%.

Maria MJ: Our adjusted. Aita was a lot of 3.6 million in the quarter, which was approximately in line with the first quarter's level and what we guided through on last quarter's score,

Maria MJ: Both our gross margin and adjustability are our best portfolio result as a public company.

Marie-Josée W: Slide 25 shows the working items of our revenue group. We grew volume by 2.8% in the quarter, which was offset by a 3% decline in price. Parade Exchange was a 3.2% sell-off.

Maria MJ: like,

Maria MJ: shows the breaking items of our Revenue growth.

Maria MJ: With the volume by 2.8% in the quarter.

Maria MJ: Which was offset by a 3% decline in price.

Foreign exchange while the free cons 2% selling.

Marie-Josée W: Slide 26 shows the driver of our year-over-year gross margin expansion. The Benefits of Absorption and Supply Chain Efficiencies Improved Margin by 273 Business This reflects the benefit of closure of our Singapore manufacturing facility in December, as well as volume absorption, productivity efficiency, and improved sourcing. Pricing and product mix added 110 basis points to our world's margin kilo portion. While our revenue bridge that I discussed on the prior slide showed a headwind from price mix, we drove margin mix benefits in the quarter as we reduced sales in lower margin products and customers and increased sales in higher margin.

Maria MJ: July 26th.

Shows the driver of our year-over-year growth margin expansion.

Maria MJ: The benefits of absorption and supply chain. Efficiencies improved margins by 2173 business part.

D reflects, the benefit of closure of our Singapore manufacturing facility in December as well as volume absorption productivity, efficiency, and improved sourcing.

Maria MJ: Pricing and product. Mix added 110. This is going to our world Marketing in the quarter.

Why our Revenue bridge but I discussed on the power slide, show, the headwind from 5 minutes.

Marie-Josée W: For example, some of the newer products in large pack sizes are diluted to price mixed in the same fridge but are marginal. We experienced a 90 basis point headwind from inflation in the quarter which was mainly driven by higher labor costs in our European supply chain and certain inputs in North America.

Maria MJ: Withdrawal margins in the quarter as we reduces in lower margin products and customers and increases in higher margin ones.

Maria MJ: For example, some of the newer products in large Park, sizes are diluted to price mixed in the third stage, but our margin active.

We experience a 90 basis point has been from inflation in the quarter which was mainly driven by higher labor costs in our European by chance and certain inputs in North America.

Marie-Josée W: Finally, the impact of foreign exchange movements added 40 basis points to the report.

Maria MJ: finally, the impact of Foreign Exchange movements added 40 basis points to worth margin

Marie-Josée W: Slide 27 shows the year-over-year improvements in our adjusted EBITDA. The $7.4 million improvement compared to last year's second quarter was mainly driven by an $8.6 million increase in gross profit.

Maria MJ: Slide 27 shows the year-over-year improvement in our adjusted debt.

Marie-Josée W: The 1.2 million increase in SG&A and over mainly reflects foreign exchange movements, which were the 3.5 million headwinds in the quarter. excluding those affected with LCNA would have decreased as we continue to reduce our overhead expense.

Maria MJ: The 7.4 million improvements compared to last year. Second quarter was made driven by a 8.6 million increase in gross profit.

Maria MJ: The 1.2 million increase in FTA and over mainly reflects foreign exchange movement which were the 3.5 million headwind in the quarter.

Maria MJ: Excluding those effects, headwinds.

Maria MJ: Hna would have decreased as we continue to reduce our overhead expenses.

Marie-Josée W: Cloud28 showed ten month level data.

Maria MJ: Claim 28 shows. Segment level detail.

Marie-Josée W: European International Group Volume by 9.4%, which highlights that our growth playbook is working.

Europe and international approval by 9.4%.

Marie-Josée W: The second quarter was the segment's all-time highest volume quarter. North America's 6.8% decline in revenue was driven mainly by the change in sourcing strategy and the segment's largest customer. The segment adjusted EBITDA declined $3.5 million compared to the prior year, which was almost entirely driven by an increase in branding and advertising. Greater China to a 6.6% constant currency revenue decline, which may reflect the difficult macro environment impact on the country.

Maria MJ: Which highlights that our growth Playbook is working.

Maria MJ: The 7 quarter was the segment of time. Highest volume quarter.

Maria MJ: North America. 6.8% decline in Revenue was driven mainly by the change interesting strategy and the segments larger customer

Maria MJ: The segments are just a daily side decline, 3.5 million compared, to the prior year, which was almost entirely driven by an increase in branding and advertising.

Maria MJ: Greater China to a 6.6.

Maria MJ: Currency Revenue decline.

Maria MJ: Which mainly reflects the difficult macro environment impact on the consumer.

Marie-Josée W: Turning to our balance sheet and cash flow on slide 29. Our business plan remains fully funded.

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

Marie-Josée W: I hope at the end of the quarter, we have $68 million of cash and $221 million of credit that is. The middle of the slide shows our pre-cash flow improvement. The Q2 cash outflow of $5 million was our best quarterly performance as a public company and confirmed our progress in developing a cash culture mindset in the company. In the quarter, our total trade work in capital balance was the lowest since 2021, when our business was much smaller. And our quarterly cash conversion cycle was the best in our IPO, driven by strong processes to manage inventory, collections, and payment terms. I am seeing good progress throughout the company and we continue to believe there is still room to improve.

Maria MJ: Our business plan remains fully funded.

Maria MJ: I hope the end of the quarter, we have 68 million of cash and 221 million of credit facilities.

Maria MJ: The Q2 cash outflow of 5 million was our best quarterly performance as a public company and confirmed, our product in developing a cash culture mindset in the company.

Maria MJ: In the quarter, our total trade working. Capital balance was the lowest since 2021 when our business was much smaller.

Maria MJ: And our quarterly cash conversion cycle was the best in our IPO driven. By Trump processes to manage inventory, Collections and payment terms.

Maria MJ: I am seeing good progress throughout the company and we continue to believe there is still room to improve.

Marie-Josée W: Slide 30 shows our redefined outlook, which continues to include the Greater China Segment. We now expect Goldstein Parenteer Revenue Group in the range of approximately flat 2.1%.

Maria MJ: Slide 30 shows our redefined Outlook which continues to include the greater China segment.

Marie-Josée W: We have reduced our outlook to reflect slower-than-expected progress in North America executions, as well as softer macroeconomic conditions in the greater China region. In addition, our prior outlook assumed that foreign exchange would be a 100 basis points headwind to next step. Based on recent FX rates and assuming they hold for the balance of the year, we now estimate FX to be an approximately 160 basis points to fully earn itself.

Maria MJ: We now expect constant currency Revenue growth in the range of approximately flat to plus 1%.

Maria MJ: We have reduced our Outlook to reflect slower than expected progress in North America execution, as well as software macroeconomic conditions in the greater China region.

Maria MJ: In addition, our prior output assume that foreign exchange would be a 100 basis points had been connected.

Maria MJ: Based on recent affect rates and assuming they hold for the balance of the year. We now estimate effect to be an approximately 150 basis on turning to fully ourselves.

Marie-Josée W: For adjusted EBITDA, we are reaffirming the range of $255 to $15 million. We continue to expect gross profit dollars to improve in the second half compared to the first half, benefiting from best-in-class supply chain purchases combined with higher sales. We have also identified additional HCNA savings. We plan to drive the savings by accelerating our work of eliminating inefficient spend in areas such as indirect procurement, which we expect primarily hit the corporate segment, with the impact starting to hit into three and then growing into four. While some of these savings are one-time in nature, such as incentive pay, we expect a large portion to benefit us beyond this fiscal year.

For adjusted. The Visa, we are reaffirming the range of positive 5 to 15 million.

We continue to expect rates to improve in the second half compared to the first half, benefiting from best-in-class supply chain practices combined with our higher self.

Maria MJ: We have also identified additional lgna savings.

Maria MJ: We plan to drive the savings by accelerating our work of eliminating inefficient spend in areas such as in direct procurement.

Maria MJ: Which we expect primarily if the proper segment.

Marie-Josée W: Our guidance assumes no direct impact on tariffs since we expect the products that we import to the U.S. to be exempt to the U.S. MTA. We also assume that the current economic conditions and consumer behavior will remain largely consistent for the rest of the year.

Maria MJ: with the impact, starting to heat into 3 and then growing into 4 while some of the savings are 1 time in nature such as incentive pay, we expect a large portion to benefit us Beyond this pixel year

Maria MJ: Our guidance Associates. No direct impact on T. Since we expect the product that we import to the US to the exempt, to the US MTA

Maria MJ: We also assume that the current economic conditions and consumer Behavior will remain largely consistent for the rest of the year.

Marie-Josée W: Finally, we now expect Capex to be approximately $20 million for the full year. We have continued to drive efficiency in our supply chain, and we believe this is an appropriate level of investment. where we are continuing to invest in our business while being disciplined in our capital.

Maria MJ: Finally, we now expect to be approximately 20 million for the full year.

Maria MJ: We have continued to drive efficiencies in our supply chain and we believe this is an appropriate level of investment.

Where we are continuing to invest in our business.

Operator: This concludes our prepared 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 1 on your touchtone 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.

Maria MJ: Why being disciplined in our capital?

Maria MJ: This concludes our prepared remarks.

Operator. We are now prepared to take questions.

Speaker Change: We will now begin the question and answer session.

Speaker Change: to ask a question, you may press star then 1 on your touchtone phone,

If you are using a speaker-phone, please pick up your handset before pressing the keys.

Operator: At this time, we will pause momentarily to assemble our rockets.

Speaker Change: if at any time your question has been addressed and you would like to withdraw your question, please press star then 2

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Kaumil Gajrawala: The first question today comes from Kaumil Gajrawala with Jeffrey. Please go ahead. Hey everybody, good morning, or good afternoon.

Speaker Change: The first question today comes from Camille guala with Jeffrey. Please go ahead.

Jean-Christophe Platon: I guess a couple of things on the decision on the Strategic Review of China. The first maybe is, why is now the right time? But maybe more importantly, what does an optimal outcome look like? To give you, maybe make it a multiple choice question is, is the preference to sell it, is the preference to raise some capital through a JV? Is the preference to find a strategic that helps improve the condition of the business? If you can maybe just help us out with where you hope to get to with this review.

Speaker Change: Hey everybody. Good morning or good afternoon? Um, I guess a couple of things on the decision on uh, the Strategic review of China. The first maybe is, you know, why is now the right right time. Um, but maybe more importantly, what is an optimal outcome look like, and to give you maybe make it a multiple choice. Question is, is the preference to sell it is the preference to, you know, raise some Capital through a JV, uh, is the preference to, you know, find their strategic that helps improve the condition of the business. If you can. Maybe just help us out with where uh, you you hope to get to with this review.

Jean-Christophe Platon: Hi, Kaumil, Jean-Christophe, thank you so much for the multifaceted questions on the same topic. So let me address them one by one. First, why? The why we're doing that is because we believe in the future potential of this business. And we are looking to maximize shareholder value.

Jean-Christophe Platon: Your second question was, why now? And the why now is that after the resets that we conducted in this business in 23 and 24, we believe this business is now leaner and stronger. And therefore, it's a good time to step back and evaluate how to accelerate its goals and maximize its value.

Speaker Change: Hi, thank you so much for the question on the same topic. So let's catch them 1 by 1 first why the why we doing that is because we believe in the future potential of this business and we are looking to maximize sell the value.

Jean-Christophe Platon: The next thing I want to tackle is your question about what are we looking for. As we said, we are considering a range of options, including a potential carve-out. Of course, we are not going to speculate today on the ultimate outcome of this strategic review, and we will provide updates on this strategic process as appropriate and when relevant. The final thing I want to insist on is that as we conduct this review, we remain fully committed to our team, to our customers and suppliers in Greater China.

Speaker Change: I'm still the recent that we conducted in this business in 23 and 24. We believe this business is now linear and stronger and therefore it's a good time to step back and evaluate how to accelerate it goals and maximize its value.

Speaker Change: The next thing I I want to um, tackle is your question about, what, what are we looking for?

Speaker Change: As we said we are considering a range of options including a potential car out. Of course, we are not going to speculate today on the ultimate outcome of this strategic review and we will provide updates on this strategic process as appropriate and when relevant

Speaker Change: The final thing I want to insist on is that as we conduct this review, We remain fully committed to our team, to our customers and suppliers in Greater China.

Kaumil Gajrawala: Okay, great. Got it. So looking forward to hearing about progress.

Daniel Ordonez: On North America, I think the business was flat, excluding business losses or discontinuations. Flat still sounds like a challenged market to some degree. So why do you think that is? And what do you think you can do to turn that around? Again, excluding any of the sort of discontinuations or business loss. Thank you, Kaumil.

Speaker Change: Okay, uh, great got it. So looking forward to hearing about progress on um on North America. If you know I think it's uh the business was flat excluding uh business losses or discontinued. Um flat still sounds like a challenge to Market in to some degree. So um why do you think that is and and what do you think you can do to to turn that around again? Excluding any of the

Speaker Change: Sort of a, you know, discontinuation or business losses.

Daniel Ordonez: Daniel here. Good to speak to you again. Ethan, it's important to accentuate what you said, right? So when we exclude these two one-offs that we are going through this year and that we expect to affect us for a year to go on a full year basis, we see a solid performance in a challenged market, as you said. The market continues to show softness, Kaumil, but as we discussed, it's plateauing. The underperformance of the market is plateauing and slightly inflecting that curve, right?

Speaker Change: Thank you, Camille, Daniel here. Um, good to speak to you again. Um, listen, uh, it's important to accentuate what you said, right? So when we exclude these 2 1 off, uh, uh, that we are. Um, uh,

You know, going through this year and that we expect to affect us for the year to go on a full year basis. Um, we see a solid performance in a challenge Market, as you say, the, the market continues to show softness Camille, but as we discussed,

Daniel Ordonez: So for the future, while in the short-term performance is below our expectations, and our expectations, as we discussed before, is for the North American segment to be our largest and softest growing, the opportunity remains intact for two reasons. In one hand, the mechanical growth, be it distribution, be it category growth, and be it operational excellence, it's still to be deployed, if I'm brutally honest. On the second hand, we have every confidence that the early signs of significant improvement we're seeing in Europe can be fully deployed in North America. If you want, I can elaborate why, but the consumer and the demand situation in Europe compared to North America is similar.

Speaker Change: Um, it's plateauing. Uh, the the, the, the, the underperformance of the market is plateauing and slightly, uh, uh, infecting that curve. Right. So, um, for the future, uh, while in the short term performance, it is below our expectations and our expectations. Uh, as we discussed before is for the North American segments, to be our largest and fastest growing. Um, the opportunity remains intact for 2 Reasons in 1 hand. The mechanical growth, the distribution be it category growth and be. It operational excellence. It's still to be deployed if I'm brutally honest. On the second hand we have every confidence that the early signs of significant Improvement. We're seeing in Europe can be fully deployed in North America if you

Daniel Ordonez: You know, beyond the most, you know, vegan and climate-focused consumers, the barrier beyond those tastes continues to be the number one barrier to consumption. North America and Europe are identical. Whether we taste in Germany or the UK or in the U.S., One out of two Americans prefer Oatly to cow's milk in their coffee. The brand is equally strong and equally hot in both markets. And also, the way coffee is developing in Europe and in North America is identical. It's going from the old latte cappuccino, warm, mostly in winter, to a raft of choices and signature drinks, mostly cold.

We want that kind of elaborate why? But the the consumer, uh and the demand situation in in Europe, uh, Compared to North America is similar. Um, you know, beyond the, the most, um, you know, uh, vegan and climate focused consumers. Um, the barrier Beyond those tastes continues to be the non number. Number 1 barrier to consumption. North America and Europe are identical.

Speaker Change: whether we taste in Germany, or the UK, or in the US,

Speaker Change: 1 out of 2 Americans prefer oldley to cow's milk in their coffee.

Speaker Change: The brand uh is equally strong and equally hot in both markets, and also the the way coffee is developing in Europe.

Kaumil Gajrawala: So all of that combined proves to us that when we are able to execute the playbook and invest accordingly in full, Kaumil, the same dynamics will provide. Great, thank you. Thank you.

Speaker Change: And in North America is, identical, is going from the old latic cappuccino 1, mostly in Winter to a raft of choices and signature drinks, uh, mostly cold. So, all of that combined, uh, process that when we are able to execute the Playbook and invest accordingly in full Camille, uh, the same Dynamics, uh, will provide

Speaker Change: Great. Thank you.

Speaker Change: Thank you.

John Baumgartner: The next question comes from John Baumgartner with Mizuho. Please, please go ahead. Good morning. Thanks for the question.

Speaker Change: The next question comes.

Speaker Change: With muo, please, please go ahead.

Speaker Change: Good morning. Thanks for the question.

John Baumgartner: Maybe first off, Daniel, if I could come back to North America and just keep on this topic. I think just given the magnitude and duration of the volume declines at this point for the category, we're four or five years into this. It seems like it's become less of an issue of maybe reduced frequency by existing households and more just folks leaving the category. I appreciate the growth playbook and flavor innovation, but to what extent is this weakness just simply the protein content in the U.S. relative to traditional dairy, whether it's protein and trans, GLP-1s, whatever it may be, which might limit the ability or ease of duplicating some of the turnarounds that you've highlighted in your article.

The protein content in the US relative to traditional Dairy, whether it's, you know, protein and trans glp1, whatever it may be, which might limit the ability or ease of duplicating, you know, some of the turnarounds that you've you've highlighted in Europe.

Daniel Ordonez: That's a very provocative question. You make the point that you have done in the past about, you know, frequency and penetration, John, and I totally get it. If we go through some facts, the reality of the penetration numbers is not necessarily showing that. Penetration for oat milk in the U.S. is stable, and in the case of Oatly, has shown consistent decimals of growth in our yearly and monthly penetration. So there is a relevance and there is a frequency topic that we are addressing and points taken about protein. The reality, as we have discussed in previous calls and one-on-one, the protein topic is more of a value phenomenon in North America, less than a volume phenomenon when you look at the dairy category.

Speaker Change: That's a, that's a very provocative question. Um,

Speaker Change: You, you make the point that you have done in the past about, you know, frequency and penetration John and I totally get it. Um,

Daniel Ordonez: We will be hand-in-hand focused on driving relevance. We don't make a choice between health, protein, fibers, and we strongly believe that we are focused on driving both penetration and frequency in that order. penetration and frequency in that order, taste remains the number one barrier to consumption for plant-based products, and certainly for oat milk and plant-based meals.

Speaker Change: if we go through some facts, um, the reality of the penetration numbers is not necessarily showing that, uh, penetration, uh, for oat milk in, in the US, it's stable. And in the case of Oakley has shown consistent decimals of growth, uh in our, in our yearly and monthly penetration. Um, so there is a relevance and there is a frequency topic that we are addressing and points point taken about about protein, um, the reality as we have discussed in previous calls and 1-on-1. The protein, uh, topic is more of a value phenomenon in North America, less than a volume phenomenon. When you look at the dairy, uh, the dairy category we will be, uh, hand in hand, uh, focused on driving relevance.

Speaker Change: Um, we don't make a choice between health.

Speaker Change: Uh protein fibers uh and we strongly believe that we are focused on driving both penetration and frequency in that order.

John Baumgartner: So you will see us, without ignoring the point about protein, a lot of focus on the health topic via enhanced fiber content, wholeheartedly driving the taste strategy, which is starting to prove to work in Europe, Okay, thanks for that.

Speaker Change: Penetration and frequency in that order, taste Remains the number 1 barrier, to consumption for brand plant-based products and certainly for oatmeal and plant-based meals. So, um, you will see us, um, without ignoring the point of our protein, a lot of focus on on the health topic, via enhanced, fiber contents, um uh wholeheartedly driving, The Taste strategy, which is proven uh it's starting to prove to work in in Europe uh job.

Marie-Josée W: And then, you know, a follow-up on the P&L. You identify these incremental SG&A savings for this year and moving forward as well. Can you detail a bit more, you know, where these savings are derived? I think you mentioned some procurement, but I mean, I guess what prompted these reductions right now? Can you isolate the savings between corporate expenses relative to the individual segments? And then I guess, you know, to what extent should investors feel confident that you're not cutting too close or begin to sacrifice resources for growth?

Speaker Change: Okay, thanks for that. And then you know a follow-up on on the p&l. Uh you identify these incremental sgna savings for this year and moving forward as well. Can you detail a bit more you know worthy savings or drive? I think you mentioned some procurement. But I mean I guess what prompted these reductions right now? Can you isolate the savings between corporate expenses relative to the individual segments?

Speaker Change: And then I guess, you know, to what extent should investors feel? Confident that you're not cutting too close or it begins to sacrifice resources for growth.

Marie-Josée W: Hey, John, this is Marie-Josée. I expected this question, to be honest. But first, as you know, over the past three years, we've gone through two big savings programs, which allow us to look at all the details and understanding in a very deep detail our contract.

Speaker Change: Hey John this is Marie. I expected this question to be honest but first as you know over the past 2 years, we've gone through 2, big saving programs which allow us to look at all the details and understanding in a very deep detail. Our constructure

Marie-Josée W: So what does it mean? It means that this approach led us to be in a place where either we want to be aggressive at all costs, which is absolutely not the way that we are looking at it. We are looking at it with the approach where we want to be aggressive, but with the right level of efficiency and refueling as well the top line. So the way that I want you to think about this is it's about efficiency without hurting the business, and it's about what we have identified as additional SG&A savings. With that said, let me double-click on those additional SG&A savings.

Speaker Change: So what does it mean? It means that this approach led us to be in a place where either we want to be aggressive at all costs, which is absolutely not the way that we are looking at it.

Marie-Josée W: Most of it will come from corporate, just to answer to your question. Yes, it's a part of the indirect savings, which will come from initiatives, right? I mean, I'm not going to tell you all the initiatives, but it could be just like centralizing some contracts. It could be like professionalizing our way of negotiating. So that's one thing. The other things are coming from the efficiencies that we have been looking at, analyzing and making sure that they will come through as we go into the year. So clearly, corporate segments, aggressive as we can without hurting the business, on both sides, efficiency, and incremental accounting direct.

Speaker Change: We are looking at it with the approach where we want to be aggressive, but with the right level of efficiency and refueling as well, the, uh, the top line. So, the way that I want you to think about it is, it's about efficiency without hurting the business and it's about what we had identified as additional senior savings with that said, let me double, click on those additional sgna feelings.

Speaker Change: Most of it will come from corporate just to answer your question. Yes. It's a part of the indirect savings, which we will come from initiatives, right? I mean, I'm not going to to tell you all the, the initiatives that it could be just like centralizing some contracts. It could be like professionalizing, our we don't negotiating. So that's 1 Thing. The other things are coming from the efficiencies that we have seen uh, looking at analyzing and making sure that they

Speaker Change: Will come through as we go into the year.

Speaker Change: So, clearly corporate segment.

John Baumgartner: Code this answer. Great.

Speaker Change: Have received as we can without working the business on both sides efficiencies and incremental from indirect.

Speaker Change: Hope this answer.

Unknown Executive: Thank you very much.

Speaker Change: Great, thank you very much.

Speaker Change: John.

Unknown Executive: This concludes our question and answer session.

Unknown Executive: I would like to turn the conference back over for any closing remarks. Great, thank you everyone. If you have any follow-up questions, feel free to reach out to me at Investor Relations. Have a great day.

Speaker Change: This concludes our question and answer session, I would like to turn the conference back over for any closing remarks.

Speaker Change: Great. Thank you, everyone. If you have any follow-up questions, feel free to reach out to me and investor relations have a great day.

Operator: The conference is now concluded. Thank you for attending today's presentation.

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