Oatly Group AB

Good morning and welcome to the Oatley Fourth Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Brian Carney, Vice President of Investor Relations. Please go ahead.

Good morning, and thanks for joining us today. 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 David. Before we begin, please review the disclaimer on slide three. During this call, management may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our future results of operations and financial position, industry and business trends, business strategy, market growth, and anticipated cost savings. These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could differ materially from actual events or those described in these 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 that, on today's call, management will refer to certain non-IFRS financial measures, including adjusted EBITDA, constant currency revenue, and free cash flow. While the company believes these non-IFRS financial measures will provide useful information, The presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with IFRS. Please refer to today's release for reconciliation of non-IFRS financial measures to the most comparable measures prepared in accordance with IFRS. In addition, OLE 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. Slide five has the key messages I want you to take away from today's presentation. First, let me tackle in France our 2024 performance versus guidance. Despite the very robust volume goals of plus 8.8% versus 2023, our 2024 top-line results came in below our guidance at 4.8% in constant currency revenue goals. At the same time, our profitable growth focus has delivered our adjusted EBITDA at the favorable end of our guidance range. This demonstrates that Oatly is a much stronger company than it has been two and a half years ago. Over the past two years, we have indeed executed a significant transformation where we now have a much healthier business with clear strategy, clear accountability, stronger margins, and significantly improved profitability. Looking ahead to 2025, we expect to drive our first full year of profitable growth. Specifically, we expect constant currency revenue growth in the range of 2% to 4%. As you saw in our press release, we expect an approximately 300 basis point impact to our growth, from a change in sourcing decisions at our largest US customer. Absent this impact, our guidance range would have likely been five to seven percent. We expect adjusted BBA in the range of five to 15 million, and we expect capital expenditures in the range of 30 million to 35 million. We expect to drive these profitable goals by leveraging our brand to ignite positive momentum in the category while simultaneously driving additional efficiencies. So let's dig in. Slide 6 outlines the significant transformation that we have methodically executed over the past two years. One area of change has been in our supply chain. Today, we have a more simplified supply chain that has become a strategic asset, In December, we announced we were closing our Singapore facility, and today we are announcing that we have discontinued construction of our second Chinese facility. With those two announcements, we have five manufacturing plants globally with no additional plants being built. These five plants can produce approximately 900 million liters of product. We are guiding to 30 to 35 million of capex, which is approximately 4% of revenue. And I am pleased to report that we achieved 99% customer fill rates in 2024, which highlights the significant benefits of increased focus. We have also made significant changes outside of our supply chain. First, we have significantly simplified our overhead structure, Today, we are much leaner, with approximately 1,500 employees, down 500 over the past two years. When it comes to mindset, as Profitable Growth is our North Star, we now make deliberate, margin-focused decisions about channels, customers, and products. We have also augmented our approach to marketing to focus on relevant and integrated brand activations. Slide 7 shows the financial impact. On our second quarter 2023 earnings goal, I said that we must have a stronger business before we have a significantly bigger business. I am pleased to report that we have strengthened the business. Versus 2022, our revenue grew by approximately $100 million, or 14%. Our gross margin expanded 18 percentage points, and our adjusted EBITDA improved by over 230 million. We are clearly making good, healthy progress. Slide 8 further highlights our healthy progress. Each of our three operating segments improved their adjusted EBITDA by over 70 million in the past two years. while we also made good progress in reducing our corporate expenses. Our teams embraced the challenge, made the necessary changes, and drove those vehicles. To be clear, we have executed this transformation in order to enable our mission. Our mission is an important part of our culture, and I believe it makes Oatly truly unique. We have maintained our mission and purpose throughout our transformation, and we remain committed to it going forward. As we look ahead to 2025 on slide 10, we now expect to enter our profitable growth era by driving top-line growth and positive adjusted EBITDA. While our constant currency revenue growth rate is expected to be impacted by approximately 300 basis points, from a sourcing decision at our largest US customer, we believe the underlying growth rate of our business remains healthy with further expected distribution gains in all channels and innovation performance that Daniel will detail for us later. Slide 11 shows our priorities for 2025. Our top priority is to ignite category momentum. To do that, we will continue increasing our relevance, aggressively attack the barriers to conversion from dairy, and increase the availability of our products to both new and existing consumers. As we are igniting this category momentum, we intend to continue our aggressive pursuit of cost efficiency. Over the past two years, we have built a strong efficiency muscle and we intend to flex that muscle in 2025 again to drive margin expansion, simplify for speed and impact, and provide further fuel for growth-driving reinvestments. Our final 2025 priority is to fulfill our financial commitment of delivering our first full year of profitable growth as a public company. With that, I turn the call to Daniel.