Oatly Group AB (OTLY) 15 Nov 212021 Q3 Earnings call transcript

Greetings, and welcome to Oatly's Third Quarter 2021 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. I would now like to turn the call over to Katie Turner, for opening remarks. Thank you.

begin. may You

Chief thank quarter and today's joining on Peter us are Chief Christian Good Officer. Financial earnings you conference third Bergh, Officer; Executive XXXX Petersson, On Officer; call Oatly's and Toni Hanke, morning Chief for Operating and call webcast.

could we remember from forward-looking and based today's securities federal certain the today. the to measures, laws. and differ the EBITDA forward-looking time from statements to in to are XX, made from Please EBITDA May and actual Please final involve that Before those margin. could or to risks management's refer course statements management will described current beliefs on time Exchange adjusted discussion of call, the this on for refer company's begin, filed meaning forward-looking Securities that make those a any note, risks uncertainties non-IFRS of and events materially please detailed EBITDA, that and the materially results on Rule XXX(b)(X) pursuant expectations may actual management adjusted statements cause XXXX, implied during of and in within or statements. differ the perspective reports including Commission These with these expressed financial filed call, other to

measures as with today's comparable in accordance financial of or presentation Please refer investors, the IFRS. information While isolation a provide presented release to will substitute is in measures be the company prepared in for reconciliation believes financial these of information this the considered with intended measures information for for non-IFRS to most non-IFRS useful IFRS. accordance financial not the to a

Toni has on now for a Petersson. posted I to the turn its In would website call presentation over Oatly addition, like to reference. supplemental

over our and meet we morning. provide demand. we financial On our an as financial Good progress of making will results to to an global discuss this believe alternatives detail demand financial review consumer manufacturing growth oat then scale Peter an We questions. third years quarter for highlights, third before will we next benefit call, key us to today’s for strong reiterate joining review are we our update in appreciate results. acceleration continued our our overview Katie. to and the operations globally, will including is you performance, your markets, growing I dairy category the build Thanks, the quarter more we the several on strong Oatly footprint; business our provide the up our Oatly reasons in out open well-positioned to Christian and key the take from call capacity briefly

that been know in For since those transformational Oatly that following XXXX company's our have history. you is the year our most IPO,

on an at small continents leading and a production adding execute capacity to our no for are is working new our company market consumer robust meet We this X brand pace global unprecedented pandemic during demand feat. to for

channel growing believe e-commerce which food market, be billion accelerating dairy to the worth these are large estimate the approximately in footprint and from priorities service for conversion we nutrition, global sustainability, to to serve and over consumers alike emotional transparency are on focus and connection with to to We to trust best We and strong customers our profitability position growth a continuing prioritize brand. investments taste retail $XXX with critical opportunity. alone a Oatly

the category. category anywhere the transformation place has taking XX% across for of convert each increased continue is we regions figures see in consumers. XXX%, volumes. core dairy new that XXXX consumer as plant-based users to tremendous our markets We between plant-based dairy in penetration products our to These to demand based dairy milk on highlight

XX% alternatives to and Year-to-date, also in our to low manufacturing is this in dairy and of second innovation milk, we to performance markets these milk This consume consumers the a even of X at us. market in business converted show at to invested a is and that very the data and with dairy how Western to over X% use even today. the every open The the milk shelf Asia once ahead very leadership and which strong key incorporating least driving category later personnel, open our over Insights consumers meet plant-based growth. oat and over and we have According purchase still days of Utah month. However, a establishing gain continues penetration prevail consumer our our this expect limited position. repeat is footprint partnerships and across behaviors. category and dairy to to market, facilities milk Once daily the plant-based to [ph] and scatter facility shares space with in Consumer consumer we still leading the overall also rates, continues key it week. are highlights syndicator the from X -- heavily plant-based grow Singapore, Ogden, our new category other study, We’ve nearly XX% tremendous velocity capabilities we infrastructure, to ranges share significant the maintain highlights in our growth upside two clear per demand This between to XX% XX% routine. least into switch quickly see plant-based

facility the population and teams of our that these facilities two region. believe larger share gain believe XX% market can proud Asia incredibly a our China and future to strong the We over growth Oatly we heavy local of alternatives are is in global both dairy production stated in next new supply line support the the in Asia region Oatly's intolerant, production in Singapore lactose on increase adding trajectory chain the environmental We first years. the as By the will time. efforts open in we better this reliance year, the in of of will several was timelines. with positioning our authentic facilities we to and in will our procurement production to doubled to facility profitability expectations and capacity with the EMEA in be region, reduce Asia help output facilitate first of operating for economics our impact in the In production Netherlands. efficiencies, quarter, output able localized expect line at much this half achieve also Vlissingen, reduce third EMEA. this The production in and and production in the production

faced from have total, in of For million on the marketing period liters limitations. million commercial over constraints the based consistently capacity of also XXXX. XXX produced produced and second It's our XXX last of to In finished increase we last an XX liters goods sales XX volume an compared months, we teams our the liters quarter million XX%. year, same of for XX% increase the growth

more detail. dive into to highlights our Now in financial

quarter, geographies, product broad reported growth a sales $XXX.X For to and based we million, the last increase record of channels compared was XX% the across third revenue offering. third A strong year. quarter

delayed production of some product that our issue, this and you representing revenue Now $XXX billion is most we hold of year-over-year of will through approximately with growth output based have a ourselves companies primarily up will environment. to deliver in on I in But take expect of or this our be availability business high either timing XX%. execution believe growth specific bottoms execution we certain it a level and standard We view thrilled and frankly, to our the any a events geographies. operating of

about growth. our to we companies satisfied I'd supply specific experiencing not provide impacts the more we're like with no, factors and the from chain temporary grew So, marketplace global our though in revenue are the where in quarter. the details impacted growth Even tremendously third COVID-XX pressures. many

approximately COVID-XX plan. we experienced This a Based expected mechanical facility. lead production exacerbated these receive was in below delay team's our progress the manner. plan than our [indiscernible] in our timely during Ogden, ramp equipment to the August versus and pushed region, was supply in due disruptions, Americas quarter for First, Utah events, related in sales which production was are further out. $X automation to a issue which We to on the our up, This production were our trajectory million slowed to at ability primarily chain lower self-manufacturing region output our required due in three.

average volume million quarter per for month for third result, our liters the liters the a As million on of volume quarter. sold XX average expectations on sold of was our month per instead XX for

XX% Second, approximately location third in was generated quarter And Asia, we Asia. we revenue level were in closures Asia in to for of approximately foodservice $X three, the below experienced heightened our variant of million foodservice related the plan channel. COVID-XX Delta the quarter from

the third finally, We continue of Kingdom, driver partners United region. and a the The due priority. remain a shortage temporarily closely in $X to monitor consumers EMEA and our in to as approximately in restrictions of our remain effect And heightened for team, distribution health lower-than-expected throughout billion delayed was safety region the truck the quarter situation products. the

quarter, the out-of-home pandemic believe extended have quarter the XXXX noticeable company's market as of EMEA a fall. season compared of the the we higher this into restrictions summer and a share to lifted, share from EMEA second consumption In within revenue result total uplift to addition, experienced is further during XX.X% a the We as of key been the holiday in foodservice third XX.X%. of channel

believe quarter a a we is as long-term these in to ever. market viability third why we market We may like we XXXX. strong share across win And a position. key are as our I'd our maintain to growth significant will stronger Oatly globally confident that factors leading to and of stronger and share into head we scale expect a certain while our quarter operations delayed our in forward, size of continue growth quarter abate the in the to alternatives will even to key the conversion going trajectory global highlights dairy than business support few experience

has continued the IRI key for statistics. XXXX, and terms the as Nielsen October to level, Oatly growth week. the one Oatly in continues SKU our number sales oatmeal in on weeks the all data evidenced per At has primary brand value, brand excel According to by global store the velocity per following and SKU ended markets, be has scale to highest XX of Our sales the item representing both selling highest a driver market U.K., third driving the velocity selling alternative total Edition levels our brand in at In the and versus U.K., second of contributed highest was second Sweden, drinks oat our least U.S. the and brand and Barista the amount and growth the to the the category. category, unit dairy Germany SKU the in Xx In milk the plant-based growth highest category. of Germany sales the

U.S spot sales and oatmeal. brand and earnings a Nielsen food, ended plant-based see one is fastest XX the retailers of to on churning major two in and natural fraction for the Oat continues dairy SPIN as In this in number the our including velocity In X,XXX channel Our total distribution October to the presentation. the SKU oatmeal additional Foods XX to points Target, Oatly in limited two period. weeks the we sales velocity for the Original Slide the and oatmilk planned dollar of Oatly in XXXX. strong. in the Americas, in the XX, versus oatmeal two of you an dairy, is brand milk Whole in one one number and SKU According April accomplish and total brand competitors. product SKU stores remains xAOC a number also Oatly demand Walmart, latest the range Oatly incredibly and the with U.S number total is number reclaim brand number plant-based be dollar

you earnings you distribution. velocity nearly presentation, Normally, diluted at velocity returned will pre-distribution in when also notice has XX, get If increasing the levels. surge Slide our look to

X%. It there as system. than expect The each since been ago July dollar sales more more cases improve the Americas XX, This months Enforcing enter week. than increased see and since only from to of category We increased competitive revenue. oatmilk Oatly the absorb cases. three than oatmeal to that X during proven be Oatly brand more is XX, has their continue customers have July more continue is increased to an [ph] demand and continues incremental that this momentum existing have to upward approximately X% weekly XX% far excited year-to-date, grew certainly category we XX% represents quarter about. XX% the any velocities has area only same period.

flavors category growth Oatly highest three plant-based in dollar in For top example frozen velocity are excluding the cream number out desserts U.S [indiscernible], the food. one and of XX number ice the dollar in

points growing exceeded which oatmeal novelties of and on Oatly over partner will from distribution Oatly geographies. them a of them forward are spring. distribution We of in in be shelves projections launching and and new December of and with with U.S to In growth aligned X,XXX of U.S acceptance the the an frozen based commercial the midst far. Starbucks our beginning of success Current expected and we we arrive to desserts, the foodservice, possible into partner products escalate mid growing existing confirmed teams on has date. are The brand is both the the broadest is continue have with plan continue ongoing expectations supply Starbucks to to to collaborative on and bringing strong Otis oatmeal, look audience. Starbucks our across so

coffee things awareness critical we're [technical in trial the reach oatmilk do in to about can continue market a expansion with specialty multi-channel strategy. in and in people beverages together. partnership, our demonstrate educate to finally in achieved Asia, and the doing more to leadership the region And With so tea establish Asia. many able our their proven great effectiveness plant-based growth and we is the this The difficulty] for of and dairy planet

We our and on maintain fully Starbucks, continue demonstrates China distributed mainland ability Oatly's competitive we're KFC. market outperform to in highly foodservice, to in a leading In now Tmall marketplace. consistently which in position

to also are anywhere can modern than the nationwide. XX% tea we with found today. drink. customers. Oatly we XX% a U.K to in have week, great expand oat existing customers existing will stores expand brand as total tea in available two one Last where of locations in be This top distribution XX% available approximately cap just their of is McDonald's in product from opportunities We of China be launched we in example retail, doors. with first markets At more XXX can

capacity, to we Yonghui, of China's X,XXX channel For of XXX largest able example, scale just still customers supply stores progress. one total significant been distribution not with constraints once we far, so our with we in Due retail to are in chains. have in prioritized Asia existing retail present expansion retail group This make retail of but have significant the alone.

demonstrates our and successes Our Asia the ability and the product to the Europe increasing across categories for to consumers appetite strength shop. consumer multiple Oatly across the choose our travel, U.S., and brands of portfolio

shift Our towards mission quest food core and belief societal our growth. unifies purpose in a for plant-based and company driving driven our system

changes more lives to to people lifestyle relevant powerful. As disease, our humanity themselves in is faces planet. to in change massive We their climate that beneficial mission the challenges aim and of and inspire even are make small

a disproportionate of and Oatly brand Our proven And teams and multi-channel already who from health continents in-house we our the creative are have create ways successfully a consumers with we already because whitespace alternatives. conscious, continues strategy call us believe over amount global the demand us that for for next thoughtful growth. to to an competition, as to apart capture achieving building environmentally their now add turn conscious. our emotional several help and bond of In we're amount across more have with summary, business new the more three tremendous like becoming to fundamentals sets discipline years accelerate to efforts will in consumer markets. I'd We plant-based I a thank the over strong foundation Peter. team believe will for growth

Thanks, will on focus and global out. Toni. build I our capacity production

regions products output across for products. enabled capacity for to production As to globally. substantial And demand constraint previously capacity growth. made has to our to supply, shortages due investments been our scale consistent the demand massive have consumer supply quarter, on build production and communicated, our production the meet we our our begin third EMEA us to we in major In a the have the address

well the Its line expectation production July. in [indiscernible] hybrid production in and full our expanded with started progressing we've facility, for generated quarter. the facility runs Our in

for related new As discussed, was to our our we and to the Toni mechanical Utah, automation total main August, Ogden, in in Beginning [indiscernible] produced. reason facility up lower-than-expected production continue late at output as scale self-manufacturing delays

in important full of quarter liters production million first July, our have facility, an region. on hybrid will facility local The opened discussed corporate the annual Singapore milestone. call, This operating available in our facility. support XX our representing we And As Singapore two from manufacturing to XXXX, we is goods in finished at our growth we gain the excited been capacity about and from efficiency financial our Asia. we shipping products to the expect we Europe have production. are Since new

In opportunity of total to for addition Singapore, production liters Maanshan, month, of will our this open in the China million facility XXX we our region, creating second will Asia. be facility the self-manufacturing capacity in in Asia. a first

production. they ramping headwinds discussed, highest For see company's from October little to month as short-term in our contribution we the the XX. initial before history Slide no the production required perform year, financial was as on can Despite we runs tests Maanshan have expect you

our for expect of November We the December. and month again increase output production to

of our million support are end stages we the additional Like to facilities planned estimated longer These in China related existing planning continue our capacity expand finished three an the We XXX of XXXX. companies, to time facility, in our demand capacity noticing add other investments to U.K XXXX increment goods are XXXX we XXXX. and lead globally. facilities are certain for of currently in the to and liters required by U.S., and open of to for products for equipment

mix and production even trajectory expect we margin assessing delays some growth on to we to expansion we seeing any versus less on and products and to potential tale our base our and could the revenue for the sell food and the slightly project projects strong drive of products, across prioritize food oat and the have revenue further speaks XXXX. closely strategically experience rely for believe to in co-packers these items we are We planned. than capacity longer. more potential the conversion. gross XXXX But are on growth XXXX continue if demand growth monitoring other this from Based oatmilk in impact in impact We the our makes market,

For was goals. at XXXX, XX% the and XX%, total toward first X self-manufacturing progress our demonstrating production hybrid at to volume co-packing XX% of months of compared continued

As addressing is we to for products. grow, and we demand paramount footprint our Oatly owning consumer controlling the significant believe global operating

XX% have come co-packing volumes of Our from to XX% reducing to to hybrid to goal total XX% XX% from manufacturing. to is our XX% with XX% self-manufacturing,

our supply as model, hybrid of We drive our improve increasing service economies self our and economics chain profit expect and will scale localizing to and production through growth footprint, manufacturing as well which and production level.

intend build we capability, turn to forward, invest consumer Christian supporting and Going our to to expand our innovation all continue growth the to call in manufacturing our trajectory. I'll base, financials. footprint review our over our now

and Peter, you nice Thanks, to everyone. today. good morning, with It's speak

Turning third or $XX.X the XX.X% million, of third of Revenue the XXXX 'XX. an revenue increase in $XXX.X compared was quarter to for to $XXX.X the financials. million million of of quarter

the impacted minimal headwinds short-term a approximately rate described, of $X.X to in we in foreign exchange growth million the quarter. the Toni As quarter. was benefit There of delivered revenue

foreign at period prior the in versus a compared food Americas, in XXXX the in on-premise current with quarter also third quarter to Asia. from to service markets, location foodservice certain relaxation increase related second quarter partially offset of prior in faster by continued reopening exchange key to in a we the our consolidated third on the The restrictions rate but outlets the a COVID on quarter in compared closures of year COVID-XX XXXX EMEA. of comparison, excluding However, channel year grew level quarter of the

period compared XXXX, third third for of channel by channel and of EMEA third in in third retail was year. and in to XXXX. XXXX EMEA per compared foreign in the in XX.X% Asia, driven accounted FX customer positive in exchange the $X.XX revenue last The sales revenue XX.X% same channel liter quarter the offset to Asia, the to XX.X% of and $X.XX net channel the foodservice and positive XXXX, primarily quarter Americas. compared customer mix by effects XX.X% quarter the of Consolidated quarter for accounted of For

except due in customer quarter XX.X% per Utah and Our highest in to EMEA. prior The from customer third in with exceeded period. scaling decreased as EMEA in profit of our minor shipments $XX in to Americas, The by prior gross was in to to compared Asia by by of million, quarter in in Gross the segment compared in is in facility, from by to XXXX mix, Asia, Asia, line for period. regional the customer the at a and mix liter sales short-term positive the production capacity mix. change margin and challenges positive well to our production, it year third the million and compared in higher net for to Asia XX.X% followed higher year net driven expenses a points in partially where logistics per channel expectations was container sales primarily period higher XXX Americas basis rates liter as margin Americas, resulting channel primarily expectation the impact our share exchange. year our channel Gross was prior related $XX.X Ogden, the foreign up co-packing and offset the EMEA and decline

We shipment and driven an related shortage EMEA to capacity trade but the primarily EMEA, the our the Asia. in from by to the pandemic in experienced in Americas increase of and have effects costs, also

production expect these costs of offset to our to that trade within expansion continue the help and localization region capacity headwinds. some We will of the

as XXXX, as expect other supply materials of of harvest as in well as with factors, chain into sold Going number poor more different prices broadly. more inflationary result increasing pressure impact as well our packaging broadly, commodity cost and as disruptions prices goods a to we of such oat Canada, a the

with oat this food versus approximately year last second [ph] oil, of year financial quarter and our adequate cost X we total Even third Rapeseed As X% our be total XXXX. higher with points to percentage of of condition, the which and are year. goods quarter a the X of for accounts drought well-positioned goods growth sold supply for to continued to oats for reminder, accounts meet to of our cost X% sold. anticipated

the geographical of production our bringing the capacity, in-house expect including of more production offset some to pressures. We provide to inflationary localization

products price regions certain offset increase some the expected headwinds. certain and inflationary and of to logistical commodity also in help We for where necessary

We as expect we by output. in manufacturing revenue well the in our margins on sales in margin our with XX%. continue goal as mix an starting gross On to geography of and mix basis, expect continue a to primarily our XXXX annualized quarter-to-quarter, see year-over-year the to variability based channels of improvement long-term of gross

cash Now focusing sheet on balance our flow. and

to the September million period. IPO, invested we As company in equivalents investments, repayment of September XX, XXXX, $XXX.X prior liabilities credit of million activities $XXX.X of repayment cash XXXX the was the from of and had XXXX of outstanding were secure cash year short-term compared Cash Capital September XX, activities $XXX.X investments. prior $X.X in during short-term The a XX, million. to used months total from million proceeds $XX.X million, Net $XXX.X of shareholder institution, the year flow of and IPO credit period. expenditures million $XX.X to ended reflecting million portion to compared X X institutions financing net ended were and in the for operating in $XXX.X for debt the loan. the months million, proceeds cash the

Turning to the guide.

of note XXXX. exceed expected is $XXX QX that based of the contribution fourth The revenue. increase QX for will mentioned, is regions get by in fiscal reduction forecasted XXXX, and implied now this revenue on and each us to from important fiscal in region [ph] year we to million $XXX are and or XX% annual revenue revenue million, growth quarter revenue balanced broken $XXX previous million now of the revenue our to year million for million growth to compared than follows. $XX revenue of our to greater outlook, across them. due It $XXX of $XXX for For million we expect primary is as reason as for Toni XX%, Strong which an in down

we than COVID EMEA to pace new an is given a is in we as share primarily expect retailers we our to believe of supply approximately the environment. shelf new of consumer velocities existing in build First, $XX markets which first the open supply increased at half to We operating increase demand. our revenue and we navigate space and expected strong this to level. anticipated by in dynamic issue, But starting to lowering million. XXXX, EMEA, revenue we meet have timing up In slower at and a current retail, are

on business it's context in our distribution with which our sales year, remember was partners team point XXXX EMEA, [ph] space incredibly working this greater to For plan during important a at and that shelf for supply commercial on was last time regional our constrained.

sold As XXXX we had our countries a our scale on historically to fact a fall that for we result, lack the we back less we constraints of that in that based produced. all XX prior for distribution and last evidence than fact started years, XXXX supply have space shelf inventory, with EMEA. have of is products the Further of our

excited complete. [indiscernible] better and about expect discussions in we EMEA, regional are share having the we partners with we shelf of are the a once We or our have to

will we to drive to velocities expect XXXX. we new leading continue the We region, all across from and are which of in -- countries, industry entering benefit

the in pleased improvement we quarter. Second, output Americas, facility Utah production the are with at in today Ogden, fourth the weekly our

to our of chain production strict versus approximately increase navigating health are in measures we cases outlook, sales in public effect a an revenue environment, variant. COVID-XX million. due Delta Asia, in volume And reducing lower Although the $XX finally and we remain expect prior challenging by supply

We the remain are closely and situation the team. health on focused monitoring and our safety of

view $X our reducing revenue a taking ongoing the on we restrictions, for by quarter, our more given However, the conservative growth fourth are million.

fourth where exchange we half Assuming no to single-digit are be rates significant of to XXXX. a changes tailwind quarter compared today, the second the expect from we

previous to million, $XXX flow. our from expect to to due million estimate of a We timing $XXX of capital million, all between be $XXX expenditures decrease cash

continue We to revenue our expect to lower of sufficient goods scale production expect margin of Toni fiscal a end adjusted benefit finished capacity than greater generate much that to revenue With with from will to be the gross provide approaching XX% amount of XXXX a footprint economies by annual we an outlook. and closing growth. now approximately of margin XXX strong globally, capacity million Long-term as reach we XX%, self-manufacturing continued greater few EBITDA and liters review, remarks.

want long-term Thanks, outlook that and reiterate objectives Christian. to remain our I unchanged.

continue to based ahead of Oatly online. will our What still consumers. new production is from converting variability we to the top experience growth tremendous Although remains in our coming time, into of line pace us clear time dairy on opportunity users

to data of highlight supply scanner when we continues distribution. the the outperformance our on clear syndicated shelves All the and have velocity

operating navigating Although thank a amount for global driven I'd capture category employees we're to that of and reach that the growth global Oatly's are advance the on your more scale. disproportionate our forward. questions. of continues efforts With available now expect impact to I to mission continue like turbulent for a currently environment, we going and Christian overview, a COVID and the to dedication Operator? Peter, and

with from your Please of question proceed Lazar questions. [Operator Our Instructions] is coming Barclays. the with line first Andrew

for of liters you're Great. capacity a everybody. I Thanks for 'XX. looking I as much, X.XXX very run guess, billion still rate start off, just next year

in much expectation, start I'm much into timeframe is other the terms little that by the highlighted Some resets guess and have been quarter flow like And the quarter in if shelf some what secondly, So in year? where on a reach third sound with that level, up your running this things, into I of little of a what’s along delayed that like? there first initial on challenges still in expectation then how off, all how the year. expectations you've impact a you of getting while so back. you're highlighted leeway confused that fourth you Do 'XX trying just for sense capacity to you impacting your based you've Does some of given get these would bit. I'm -- that to revenues of building EMEA of versus a getting anticipate Thanks much. and next

can maybe Peter, Hi, by question? the first please way. you address Andrew, Andrew's

Yes. Hi.

we is of experienced on unchanged, XXXX, variability new that What to time online. want tailwind. from production in in robust long-term Hi, growth constant based objectives top pace time remains our of industry terms Yes, line outlook I although our remains and the our to coming Andrew. reiterate

mind, as XXXX. milk significantly Oakley. alternative plant-based volume XXXX using Also with globally have in bear more are moving from to compared transition in We and consumers we year increasingly a

In our terms expect back of strategically the for and other what to we oatmeal conversion. of drive I growth coming to prioritize to versus earlier, said XXXX, products base oat production

more could this we But gross impact plants. our for trajectory as and revenue growth So, speaks tail the less liter our and co-packers have per and from believe mix we we these even in makes of rely revenue sales margin the the said, products sell I on further and net item growth XXXX. food potential terms If to longer. in

right So we now. monitoring are there because disruption supply many are still chain the situation

we working times example, and the seeing for For we as as make are to monitoring possible. lead are longer closely certain and we the hard are equipment situation little impact

need for just are delays, a We compared next still in when XXXX, So, we XXXX. monitoring. year, expanding have much and volumes to plans but facilities. our Millville maybe we to expansion the months, of matter monitor It's Landskrona Ogden, will more

not to the of So huge look at also risks. a possibility because to mitigate impact. co-packers we -- And bring

Great.

Okay.

million will the you go, got the in like next revenue of are Do target. you by could And flow is in sounds issues So next the year? behind EMEA? issues second get Like, time late of that your to chain. based you from the some, X,XXX terms question those you've was oat get then just supply are some facing the I it -- somewhat products, be shortfall? or part does just shift monitor volatile highlighted be that of would think those the the things second -- part the the the shelf Aside versus XQ, just to you that how many question. revenue as my versus to around oatmilk But in delay sort other And all my give many if in to on my you into of just still you expectations? that sort guess, liters year you of be how resets

do. Absolutely, Andrew, we

But business having very we expansion retail resets based and now. retailers we're across performance, so environment that feel with right So, the feel in we of recognized out half the about dynamic all on very, optimistic and working partners. discussions by we're at that Europe, the with we confident very -- a fundamentals, looking is It's the very, of first our XXXX. our

Thank you.

So anymore, our across to about entering nothing performance have we we There's the monitor. is right. called this it confident we that we good that a do environment, see again, is a solid But but markets, feel normal feel feel timing shift and XXXX. all dynamic we

Yes. you. Thank

Yes.

Thank you.

the line is Our Please with next Parikh Rupesh of with questions. proceed coming Oppenheimer. your question from

Erica taking Eiler is morning. Good question. Rupesh. This Thanks our actually for for

pricing. first, touch wanted So, on I to just

lever, So, pressures, putting a the is the pricing it now inflationary light table. obviously, you're in like of on sounds

could little pricing what competitors about power regards date? business, for you're how maybe and to seeing about from talk So you in you're to bit just pricing a thinking your

that it's date, Sure, up I we inflationary hitting bit a for it's currently in about speak maybe on only results markets. pressures impact mean, But inflation moderate I'll But XXXX. XXXX. stepped of levels expect see that -- our to we do our first, all

where So for as some they’re fourth in increase X in XX% the and fourth oats and versus us rapeseed we for terms quarter, to levels except increase QX, the for the moderate in X outlook see see company. fourth at quarter the Still to be flat we we see relatively also oil, in material quarter in oil Europe, a U.S percentage of points. rapeseed for a packaging manageable

X of costs turning to X in in XXXX. to our Now expect hit to by year, range in the total, -- total of do an percentage increase next inflation we points

material our input our key impact range also site. And XX% of driven also that inflation increase total add will X%. XXXX. in But versus X% percentage of the that COGS, impact a oats then material several freight in see components then of another point for [ph] in further XXXX remaining expect by total related packaging points so major X cost ingredients in the We percentage the rapeseed we material a for and see to to -- increase and on and and another of region And oil cost between XX%. an core we to to depending COGS on of XX% XX% to X

So that X to point. X percentage adds the to

this effect mix margin do inflation initiatives to -- but chain. and we and within expect the savings to of EMEA headwinds, -- price we able up to localization the highlight the in driven the view. inflationary that to that by a facilities, of our It's of supply respond new have improve and we most the increases quarter-by-quarter ramp product optimization know also despite was expect is by I question of there, and XXXX, compensate gross past. So production, if in That's as important U.S., the channel in the don't together with including to high-level your discussed I

No, businesses, push I power was -- you seeing pricing just your are curious, as date to those increases in if was you're just from as regards yes, -- competitors in for how you terms thoughts what And any through? just I of to pricing about you're price well? thinking there's

be a price still to brand we we I a what that's going believe and premium because think premium expect maintain we asking have to and premium we you're that Yes, expect a our premium precision, forward brand, in -- for.

not that's to change. So going

Thank Okay, guys so much. you great.

Thank you.

you. Thank

question next your with of coming Gajrawala Kaumil from line Our Crédit Suisse. is questions. with the Please proceed

there are. good had like losses. which there sure that specific depending not properly, are went production -- at actually might at And which I it on pace this ramping understood way shelf were from think space areas, It in like growing has be morning, understand something production declined the that be opposed you or want to Good other gone heard while unless afternoon, guess I sounded I to where prepared not as I to space rate some anticipated. the sounded some guys. you the I almost expected. EMEA it has make shelf the wrong, I Hi, at remarks at maybe that. you Maybe where up may had

just can me clarify bit. little that a So you for

Yes.

to And through many, what's just different many QX we greatest walk the colors shelf not So have you And We better to me on that what's give distribution reasons. did on did in to and from if here. happened better going lose due let is I space expect to QX more QX. -- -- space. here to you just

market to XX relationship we for lower consequences losing on were leading great lower constraints a shares, in So during rates, QX, growth XXXX. pressure rate, QX, supply due lost fill retailers, markets to strained with

environment supply turbulent in QX, to was the leading Europe. turbulent, in is retail high Now very here shares. greater and output sales -- really being velocities, growth, market during regaining the And this really, QX, turbulent

we events, out and pandemic such seen we’ve softer related the consumption at food had U.K. we home, pandemic So in in had more general of trucker home as shortage U.K.,

velocity they're able shelf of the getting when clearly from under summer. really back significantly And in the sales of retailers was levels even going it's are are changes So not we supply. negotiated for material terms COVID really, still to U.K., we X% distribution of XX% constraints premium better QX, make than as we're one as post the grocery in the year, competitors. shelves this in to heavy And though navigating environment, And example, expected these in remainder facing to not space. turbulent because just drive XXXX, an that were we

that summer So see. normally, you Europe do after we not did see in changes

So it's It's timing pushed. that here a now. all is happening thing right

sort better give suffering your Thank in Can folks on of in constraints. the ability a to split what domestic their similar supply if the States of these of Got then be competition? It's versus just what guess on supply competitively to may or your position, are ask [ph]? you're seeing you your terms just ability best they looks you. like could from versus some some -- of it. And in least useful. the best at your Or guess condition I United

we far in here as entering on are we haven't we case across and board of know that And multiple do issues. every more demand especially ship and that we know capacity stronger system coming we U.S. even as Well, we that We ever that's We growing we and are XXXX. we know, know. produce bringing balancing the supply our channels, heard is that all building the months in that it's and know than about demand

you. great. Thank Okay,

Thanks.

Thank you.

your coming is questions. Bryan question of Bank line America. with Spillane proceed next the Please from with Our of

taking and everyone. for good afternoon, morning the question to Thanks Hi.

So my sounds question -- be retain talk bit a little a expected. is capacity to manufacturing you little capacity. just bit you And may could you co-packing wanting like about originally it around co-manufacturing than maybe more

actually then is there And out capacity, there competitive there I into so, retain? capacity is are retain there the twofold. second, And co-man One, enough certainly because is my market. it actually -- guess to come competitors question more co-man is becoming to

viable to maybe that much pathway understand oat And that how soaked And up is? to more you that capacity? been of if capacity by has competitors? are add really how trying just just co-man adding So could

Peter, anything? is there

Bryan. Hi, Yes.

said … As before

Hi, Bryan.

… produce it in-house. technology, always core that I would and will we is our

up deals new to base all areas. new operations that team So And it's constantly co-packing co-packing other we new looking oat regions. enter co-packing linked likely filling we network, in formulation facilities. our get that are we we most reviewing evaluate mostly opportunities. -- about will partnership to opportunities our at. opening constantly are chain supply then in and And we And linked And are and opens new

So is constantly the What's efficient, do how most way something we to reviewing. this we get fastest market.

market, -- lot EMEA actually market the a guess Is capacity available I is and And more just question two. just capacity? risk? Okay. just is investors into concern that third-party into we and hear I the true? what's entrants really about the will coming the there there more capacity from U.S., present that how And coming up. question ramping the I just many my guess is Is a underneath especially then just about in

Ogden. East China now we as outpaced have want and to. more production, on and utilize it's need have opportunities Coast. more example, China, both for on have in up And outpaced now, co-packing can West West we Coast that we that U.S if And the in opened then production we the we to now and Yes, Coast, co-packing

about that. So it's mainly

base constrained of because it's been an have capacity oat localized. We from where

open get regions. facilities new up more we into and Now

Understood. one clarification. Understood. And then just

completely did I of for cash this CapEx the Or because why to in understand in capital down the spending year, reduction for or you didn't quite On come say maybe flow? hear 'XX. reason down that it's

here. to Hey, expect million. range million point. -- million Christian end between be to that and compared so $XXX $XXX of to the we previously low million $XXX Bryan, On the just $XXX communicated a it's year the range clarify full basis, to No of

related the plant of cash But an on the So communicated due is And timing to that of as in is U.K., this in XXXX. mainly expansion and outflow to effect a flow actually payments you cash timing that of part projects roadshow XXXX shifting to to the our capacity third third is total overall Asia. the in we plant level what U.S compared to still remains. process, the

you. Thank Understood. Okay.

today capacity are have benefit in forward. instance, our built and just network ecosystem going from the our going know to we for Within the in can Bryan, U.S., also? that is we that co-packing are network clarify I something we that out,

Understood. Thanks, Thanks, Toni. guys.

Thanks.

you. Thank

Our next is Ken Please the proceed line your Goldman with coming with from question questions. JPMorgan. of

limited. on little build appreciate Andrew. questions you. Hi. Thank to wanted of from is a I first bit I the that visibility one

word of over next the of looking totally is, right the situation dynamic, now. $XXX street million. use you the huge understandable course, think currently I year which given one of sales But for is

far to a I kind you sense whatever but get ask it's think word till do of year. just given the the first million already. realize visibility to -- down. for use that think you to quarter come almost of again, of I in of specific limited, sort to to these that to a I'm needs are I would model we are below at safe dissipate, of half prudent, that want is, the But smart, is to question next $XXX maybe lot that XXXX down it's headwinds And going not will year, go. closer investors back I your guess how say trying for

number to get to where trying needs for go. that sense just So a

question. I Ken, So, your appreciate

guidance. So that. don't we We quarterly can't do give

can to that. we're market, on products with now, And really, positive distribution. we We bring really we what is feel where feel with right about good really control, work the And work really, -- more we are on XXXX, we to focusing I do say want velocity, are. which

So quarterly. guidance humming the can't considering any give we circumstances, right. concede, But the

I have have that line And that I than thing think guess be might for said had one on that will said, drinks, he the an milk XXXX. and Peter impact top originally more the we communicated might

is there. out think that I So

Okay.

just their my exception quarterly quickly. give some even question activity policy it's guidance least though the And not respect very And an to of some make companies situation. to directional that. now, given But long-term, are at then second I sort right electing or give

in I to regions. all I think means you and certain that not price expect regions. products said assume you products and increase

taking pricing So which and products, you why? not which regions are

think that to across have evaluate I something No, U.S and by teams. the finance EMEA we strategically regional it's

of neutralize the inflationary the to that offsetting With purpose that for we're COGS XXXX. headwinds level seeing impact on

Thank you.

Thanks, Ken.

Thank you.

Our next Sandler. question line is Lavery questions. Michael Piper proceed Please coming from your the of with with

clearly you. Good little now EMEA, determined you happened Do thought sometime back getting a have know to Or understand just fourth But you have morning. ones want that those in and the just timing? it now set? that to resets shelf you're are saying that by in confirmation I this specifically had be so? pushed quarter is come or are out. indefinitely that, would you in bit And I Thank to better.

markets you our well. May. is beginning Europe in doing for shelf of retailers you're you're some drawing instance. for in in performance definitely to Hope data see, we And changes shelf Well, January the Michael. less I And But in available across year. mean, Hi, disproportionate growth can with these there and significant discussions everybody from ongoing have Europe, next what see for the resets all see. space we're all to between our key going on

an much driving it's growth given that what deserve, are discussion. It's space in how we ongoing than shelf across we nobody's favor, So have we regions. less these

one the foodservice And helpful. then just that's on side. Okay,

could understand You outside that of put where Kong in it's page potentially expand or focused. United America's Bottle at But Hong well that partnership entry springboard, the -- and the and so States work given Japan? and also you the It's called into I out the least only as certainly or Blue for on that's highlighted Korea you slide.

Blue Bottle mean specifically? you Do

that obviously that's in partner least. geography have because at you Yes, a one

Yes.

different do regions the accounts. a They we bigger chain. So here. premium are regionally is normally with Blue organizations across the Bottle working have

We Blue chain haven't on [ph] we the with the us service Europe, allow which to bringing the capacity across if regions, these are we right. instance, board, the open able change in -- we right? all properly, have supply at discussions to all will you QSRs planned more been for So for to due different constraints, now we good have time, situation anything course, up biggest don't XXXX food we as Bottle collaboration do all in of that with very have a discussions, we specifically. is ongoing a do have from that them. of But don't with partners supply of different have. period coming long also course, And given we the And, for that look approach

and to different discussions, in well, going Now volumes the we're more to going be factories go more and in giving be up forward. open for goes an pursuing broad those up more -- Two that offence situation, as on us Asia be opening -- right. Asia,

great. That's Okay, helpful.

Thank you.

line the with is Our questions. proceed your next question coming from with Please Laurent of Grandet Guggenheim.

Hey, well. you're afternoon, everyone. doing good hope morning, I

questions. EMEA, So Two to I'd actually. like to come back

is revenue by that in I about our mean, one about that's quarter, I entering you mentioned countries, I'm as significant. XX% fourth despite in last the $XX first than new if the lower you So correct. quarter, lower mean, million,

would So supply, the from gap, the what be if packaging quality you mentioned. potentially the shelf issue you reset, with were coming to back at set

in to as getting were SKUs you you more if as Is expected? So the not [ph]. And what mean, it you're out-of-stock mentioned, I velocity down. reset, are you then you grime expansion at get losing? shelf mean, your it's I it break many do space you Or

So shelf I as [ph] what's much not expected? consequence understand of like would to space as the natural you having of

shelf and So shelf again, space that retailers have I significant substantial. that is Again, U.K example our driving the biggest U.K., the and space mentioned regions. thing. the quite And is biggest second one in extreme key disproportionate across like being XX% all right? of mean, markets, is do our it's I we Yes,

the So, we space. sales of X% XX% were from shelf driving again

You same disproportionate has countries numbers that Germany significant see in other the and impact.

will nothing of and of more we we know supply, during behind all we half we building right, our So, during our so the today more velocity will in performance that nothing the the which have QX, very will -- can more sales lows happen happened during velocity terms build And are XXXX. from see, that in offence performance eventually yes, happen increase first put increase solid summer continue will extremely markets, well. from of we positive to we where in velocity. in branding key And we as terms do summer

We branding, right. of anything done haven't in terms

operating markets taking going to environment reality. the the that longer with as the related we that are the this an well. a opening retailers the is which COVID-XX old markets is that forward opportunity to also and So we that in have XXXX, situation closed new up timing then there's that that thing due And in back that's

And jumping with -- distribution a well can increased just as to So partners sales. levels say point. I on Laurent, look we higher bridge, also, also major want multiple into -- we to is multiple existing a distribution

And Thanks, thing Toni. [indiscernible]. more one

your you precious Europe some said inventory. in prepared your you're in investigating one a facility and remarks, mean quality issue I will destroy You in of

is that should So I how what something is? this [indiscernible] time to it we mean it time? expect is is big and And

a first Landskrona and maintenance Yes, quality weekend, as always during of immediately identified is things historically. safety you self procedures. we, plant we -- issue. running assessment a things potential product quality part this facility not the food we're right. and it's at a running initiated a like frequently too And know, we put a quality activated in and our relevant just these frequently, this always food stop But company, present company, And

inventory destruction are We is our There loss. and in corresponding the assessment sales and this products, full of result potential precaution conducting for in may traceability EMEA have the the all that assessment. region. as Lost

to However, will not achieve outlook. do expect we our ability this our limit XXXX

you. Thank

will we we when information more -- more. can have we And provide

much. very you Thank it will on. Thank I very pass much. you

Thank you. you. Thank

you. Thank

your questions. question Morgan from Stanley. with next line proceed is with Our Dara the Mohsenian of coming Please

guys. Hey,

look of is could but just first, specifically to it's EMEA, a So quality to issue of quantify early trying is just sort significant that across it in it, we larger much revenues? product portion you at what sort categories? Obviously, QX understand, it and it versus an it one something question be Is QX. to comfortable does as implied we guidance, Ogden But that expected like conceptually, just originally than is of disappointments saw the seem shape. not be that issue elsewhere? And issues as is in the then what is like the Perhaps Asia, as you in not better better an QX. And more are as of they're should relative pressure more getting to these it's plant there's not seems many isolated some related foodservice It issue? in that closures. of much broader

run issues seems where there through QX, of the might as to seems impact in greater of you some conceptually. understand sort just various why relative these trying So like QX to magnitude progress be it

Yes. Hi, Dara.

just facility. quality it's one here, yes, the thing it's on same, So the

we is as still as possible, soon information assessing clearly are we that identified And if necessary. will provide situation. the So more and

So we're still in assessing situation. the

Dara, our not limit to achieve I we mean, ability say expect this I 'XX currently think that we do will can our that outlook.

is Yes, correct. correct. That

In … terms of

Okay.

we conservative right? today. deliver and down we're production U.S., the in ensure Europe, delivery delays, in bigger, QX, the manufacturing And Yes, our biggest the to Ogden look COVID being and, the three by equipment. with the what here, sales. at components it of But … on driven output, there regions you if of of because it's to terms updated the related slowed for you XQ we've was XX% in region magnitude, be on it's may Dara, that here, definitely

think redirect terms less We XXXX. us saw to the for developed we can business shifting and that And with is our develop potential have quickly durance everything with SKUs offering there. to both were able Europe. have last growth business more time. further magnitude we're foodservice formats retail expand And we we to one height resurfaced for was we new at our we months, massive aware and from which we think that, supply remember about business major I I of in And And weren't starting only mentioned and e-comms now is because in the were the stability the of quickly of is we see but retail and COVID a out-of-home in working very the in going there. our the And the again on on more related consistent are in want consumption, of aware in over the we SKU constraints. and see planograms resets, multiple addition, the what's portion summer, We the there output dynamic turbulent to -- and during situation rebuilding navigate the it COVID Ogden and we to China, issues. of the year, pandemic, to consumer And relying in thing during of of sales [indiscernible] our that terms basically all China. China And with trying environment e-comms just of performance. to that a in

into a each massive beginning velocity XXXX. aligning market are key are won't our of amount We It we bringing until categories, markets. on of gains. of happen that our And the growth share

have down of But of environment, company. beliefs business. the navigating as we're as a in the pandemic well the and see Germany, we [Indiscernible] what closing that's high again, our we kind navigating societies in through sort shutdowns fundamentally,

continue that shelf You're in and XXXX. we maybe the right, lockdown makes make the -- if believe again. we until recalibration And Netherland that Christian. by Germany is to markets it neighbors Nordics. level We on And recently majority EMEA our which will all know down well, COVID-XX heavily the locked the just think have won't of happen our see retail impacted of key we the certain first us and us doesn't half know

Okay, thanks.

Dara. Thanks,

you. Thank

questions. next Holland of your line proceed Our question Please Brian with is the Cowen. from with coming

in tracked what's the the share that the some I Yes, of situation the to in exclude looking a week small SPINS for still get initiatives, to we that improving appreciate And retail situation you're to half in channels, such multiple as start your dynamics thanks. are at a mind stabilization part in you but U.S. back U.S. channels, better U.S across might your XXXX, fairly you retailers? trained Hello. are channel distribution this at the initiatives are you're maybe completely the obviously conversation the timing as you conventional points business. on shorting of which I'm I'll you -- in curious, maybe is if data? But you every see data where around are lot the investors Again, navigating referenced first focus think of other in want EMEA, earlier, a A in-stock that position going grocery primarily

a so Hi, Yes, here. things Brian. couple of

significantly So that increasing lows And is volume. a the improved here, we continuously still we are velocity growing positive direction. fill on the that had rate, since see in we and very it's pre-summer in also the

system when we more very like said into serve demand close rate get we positive continues channels. feel do last do So, accelerate? what how going do how we that. brought again, -- Again, other the to build XXXX, considerably at we and gap, not And to rates Well, that the for fill into the the rate. anywhere. we rate, time, demand -- of full need summer. between we gap, also not can fill at But full that want here. about that it's us, balance various fill we But channels fill are we rate strategically We're to improved we fill since

color. me. the question last for then Okay, And appreciate

secondary you call I they'll XXX% commentary quarter, suggested you to Their said sources. at at back to think a on Starbucks. few expected last weeks continue back be supply

that anything's So to will the demand be end, relationship, call meet maybe an there on is now -- would that in just they changed just update and appreciated? Thanks. full of if any the secondary your sources expectation curious, there in on supply

of success thrilled just and the both with about excellent. excited opening the we're And our Again, there. relationship Yes. Starbucks is launch

of network XXX And February will serve -- end We December and the and stay XXXX. through White service in the calendar enter Label Starbucks will XXX% January. of

growth XX% that topic production, and the how increase balance sales coffee more returning. to unit But and we U.S., great drive and profitability. But internally -- thinking a approximately also for confident [ph] to capacity network will we our said, So about more we our channels. feel since Label our during generate around we after and as supply Starbucks our And for bring from will we our us reach is service of total XX% in can XXXX, channel off the we're retail we needs constantly White allocation serve to expand very sure. economics brand awareness, this as strategic we

Toni. of Best luck everyone. Thanks,

Thank you.

you. Thank

of Jon Blair. coming with next is with from questions. Please Andersen your proceed line William question Our the

period milk, context rate use that plan? should improvement for of that Is XXXX? anticipated of ask, of limited to margin you're about that But there more Thanks than pushed in co-packers significant were for everybody. have longer manufacturing out? or the say of more the so to wanted we about the XXXX. the the think some delays, hi, you improvement gross margin for focusing originally I a know, in what other on I significant, get around able Does Oh, perhaps improvement food, time, of production you question. XXXX. than hearing moderate the some you're pretty in how original maybe commentary the pretty just capacity expectations today And in

the this Hi, the Jon, each Ogden, in And localization self ramp production there. it's general -- the of and on experiencing well, Christian increasing in sales do and and case making inflationary facilities, in of headwinds, new of were freight despite as costs here. self-manufacturing margin the what gross in coming -- volumes them share fundamentally, their the and of the sufficient of improvement each in first Yes, and up own complications volumes, we despite region, localization XXXX, is so the of to the expected I is quarter-by-quarter we that think, from the distribution all, region. a sort by that improve our production of believe capacity driven over improvement is the

less? of gross Now, to quarter fourth say what back will be might that's a that doing we margin we would call. probably But terms are I earnings come have improvement when our will in slightly assessment. indicated fair the before we

now share. U.S., have but market up. high from a in to distribution the bring if scale to much Okay, brand kind I more thanks. wondering, like? trial your the maybe kind at might an your or of perhaps look I giving And and and I This was up ACV a generate guess, while just working that that preference, to one narrow of visibility or distribution at ACV number opportunity and of timeframe I hear half One quick you're to follow-up. is brand earlier, of window kind the by guess, addressed XXs gap One concerns I'm this retail, broader competitors you think and try is plan of time what retail that

thoughts there be would your Thanks. So helpful.

Absolutely.

XX% today biggest you're ACV right in brand has ACV, there. So the absolutely Hi, Jon. U.S and right. is XX%

If more XX you points, distribution total like times points. look distribution at

because number we of That on is demand capacity data board. our versus I ACV And or -- the always for work So is room to us for we distribution it's our close us. and the gaps, we rate like to in over performing of fill -- in so priority retailers for with brands very continues is as increase retail, number is which that best performance terms very, competition. bring positive that have. one, there's one That the flexibility over so time working timing indexing is have more think in terms the

the Jon, we So than solid because the about have, U.S. runway, have anything it especially just in speaks performance more of we the

Thank you.

you. Thank

like time. turn to back at for closing remarks. Thank I'd to management further are questions you. no this There call the over

it for you look our thank with today dialogue continuing So appreciate questions. appreciate really here. your and We our forward you and to discussions

So have everybody. a great day

We appreciate today's teleconference. This participation. conclude does your

disconnect at Have your time. day. this may lines You a great