Oatly Group AB (OTLY) 2 Aug 222022 Q2 Earnings call transcript

Greetings and welcome to the Oatly Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Rachel Ulsh. ahead. go Please

Hanke, thank questions. quarter and today's joining on also and us are Chief Peter Good Officer Strategy earnings you conference second will Christian Officer; Executive XXXX Petersson, available On Financial call Oatly's Officer. Toni Bergh, for morning be Chief for Chief and call webcast.

periods ended the management forward-looking statements future within Before differ detailed we XXst, to Please during fiscal on that projections note make results remember and could the currency laws today. the or to course will financial meaning These may of federal XXXX. begin, are involve statements. based or could from time-to-time from cause with please beliefs the and of call securities XX-F management on the adjusted year XXXX management's including other any Exchange today's the and including discussion certain EBITDA, this made materially refer forward-looking in a statements Securities filed current EBITDA, report events call year refer Please expressed the December Commission expectations differ risks and reports and actual annual those SEC and actual constant XXXX for of financial statements on these Form measures with forward-looking filed company's Xth, April that for from that and in to revenue. described those uncertainties on materially risks non-IFRS implied the for

for scanner comparable presented accordance with isolation or presentation While be reconciliation today's the in data release weeks intended is this financial Nielsen a presented not the will XXXX. useful on retail also XX substitute information for ended with in refer measures to non-IFRS company for note provide information for and of all June Please the these to based Please a measures IFRS. of IFRS. the investors, in the non-IFRS believes measures information financial considered accordance financial as is most

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

oat one daring proprietary users our believe differentiates and Oatly that even these each number continues brand and consumers. of become our markets is regions. We And quarter production Peter, more the consumer results. positioned and Today joining Thanks have Christian, and us scaling ahead revenue key sales business to and updated And our share review we of our mission available production strong questions. continue This our new plans. Scanner default is around of factors Good strategic on an our will you multichannel to to year-over-year strong non-dairy continue discuss Oatly category plant-based show I quarter, growth Christian to oat-based morning. performance. us in to to outlook. million and that grow each the pleased We opportunity Rachel. delivered us identifying capacity currency. appreciate constant milk to I'm our I for reflects the company provide believe XXXX I data on Then $XXX $XXX of significant approach very to financial XX% and will approximately update the other the growth combination or category. will process share results the converting the In strong be million growth performance that three gaining foodservice-led Oatly center our of we we globally. to become across to in alternatives believe XX% second of second

Sweden, specifically quarters. with partnerships. has retail, Oatly the remained space continue brand market one current that expanding speed our and and Within growth macro markets. Now, the and the elevating category Ukraine, we retail, the but In in risk in far Building in Austria, very also Netherlands. selling business retail macro our Germany, similar include more consumer we energy and stable consumer behavior spending, region dynamics be so the environment leadership moving we to uncertain and significant different. we life. new environment. based a economic to across continues to plant-based how at one change consumer UK, continues EMEA, consistency of our grow, current In despite adapting macro opportunities proven and innovation continues is inflation, on is each tremendous products globally The adopted the to war shelf in the and levels from see which changing seeing to and as this resilient existing at though Switzerland, prices, growth our effects the we're global The prior and can product in market into entering has oat to momentum number importantly, which dynamics dairy of the EMEA, challenges conditions, highly to and everyday at that to reflecting face distribution. be share performance. are with non-dairy our by the our expand the business continue consumers ripple channels spite retail and context have see we even which rapidly Even in brand be expect to the in new number these channel velocity velocity partners, and performance by demand changing XX% our their

better soft economic as soft our the in in We seeing in are choose For mega for consumers [indiscernible] price launched in discounters. ourselves which that virtually retail environment groceries, approximately shop the instance channels. to and recently stores changing we new responding Germany. by To point, maintaining XXX approximately dynamic, increasingly with same for XXX for their they discount where we're other the position to are this UK presence now includes a locations growing

XX% a focus represents our expansion in in our loss foodservice going QX it's XX%. Year-over-year, Foodservice date successful business in to too. EMEA Our March business velocity forward approximately has of [indiscernible] strong for seeing EMEA increased core in we're performance. very been and and

partnership And excited I'm to as Dunkin far the coffee with at in Oatly as capacity a due our XXX of well announce found partnered range for the further only locations. there of stores, new Barista have store our the as Within starting on constraints. markets So retail formats innovation, limited historical in growth similar our stations Chilled. We're Bahn, most accelerate Aramark. we expansion German is this still product best-selling the recently portfolio to be with year, biggest the runway chain X,XXX in SKU in Deutsche have and station introduced development, convenience of will Petrol products October. Aral, and shelf to production Tchibo, our

well occasions. launch stores new over universal as the usage With Barista of to their and Chilled same and the These new markets. X,XXX Germany health reach consumers stores drinking the UK, formats in us leader the across Netherlands, in enable as in

While it still is data looks initial velocity early, very the promising.

markets, a expand geographic neighboring our runway Beyond footprint are into markets current for to to ripe disruption. that in we EMEA, limited have is long four which

June. we the conversion retail the in this Austria. demand opportunity excited case about [ph] in We driving very market with have are to and new in into a success a growth are globally. has In most proven and model The category Italy, to leading whitespace Netherlands, Overall, drive Esselunga, increase Despa of recent this Kona studies Switzerland and markets position. more launch led that

strong. remains products Demand Turning to Oatly Americas. equally for very

level QX X, went into and price margin to benefit double-digit realize dairy, market oat share contribution dairy second We a the total underway brand our net is fall. declined year-over-year. based plant-based Americas. we churning according of for June start oat and Difficulty] the production fastest milk full oat we'll XXXX, and the are XX% plant four The new Nielsen to and of impact of as the [Technical effect milk initial XX, Starting August in ramp-up and record We across production while standpoint, expect the milk, and one almond volumes weeks default in production continued sales our QX. quarter, category oat held to channels. number number a Ogden one data yesterday, soya in to in expansion the nondairy both see runs positive increases From with brand June milk track on And on achieved the XXXX. the the ended start based in well remain during

As ACV in with XX% only our significant capacity retail. production where US, we distribution had increase we upside in the

net the focus it finally, existing first in And However to were current COVID-XX operating close over of has team more shops Asia, and quarter. in report constant in future fill closed. revenue the channel, our $XX the million impact, managed is to current the the with efforts coffee in of the at mid-tea in lockdown. compared this adversity environment year-over-year to perspective, quarter increase rate this and X,XXX customers. the shops to like teams the our on record and I'd the Despite XX% shops, and tea XX% X,XXX growth currency second achieve XX,XXX Within lockdown, than height quarter, in gaps

better in lockdowns. However, In QX, sales of the from in XX% the volume term. strategy XX% QX, sales aggregate, us COVID-XX tea-shop lockdown by sharpen total to and multichannel community the position team our term growth the in longer up both driven used accounted near to e-commerce for

specialty least channel coffee successfully products be launched tea new is iced twice also XXX opportunity and tea products. a for the [Technical The including channel, which master size to We is of huge tea growth. in the million plant, at the Prisma, at Difficulty] a estimated

total We Oatly Tmall in [Technical XX% the plant-based position in market category Difficulty] brand. at number share continue with our to in maintain new on one category the

shopping During plant-based on in XXX largest second Oatly festivals ranked category and is of and China, headwind one beverage in Tmart. promotion the in Tmall one which number the

We the top category are on jd.com. in beverage the selling also

in and and line half to in have countries half as launch countries of year. capacity the the back in from the new expect Vietnam, Malaysia, of the Mongolia started year the new With Indonesia, such additional Cambodia in we to production the Singapore, expanding first

are variant to we diversify has COVID-XX We reach route to and out best subside. further in COVID-XX we a While our well the in believe new break Asia and completely geographic virus continue remain many strategy plan cities positioned as not headwinds our market as channel expand of to as dissipated, can. and navigating we to

million XX%. self-manufacturing production. first increased liters, in XXX to total Turning second of compared XX% quarter. production co-packing volume volume up of the the In the quarter at XX% our XX% to was and hybrid Total to

during We output line back half Ogden in year. half fully Singapore be have with continuous taking on ramped of are We're this performance year. throughout with in our second expectations. output improve further the the to in now ramp Utah facility steps of our and successfully is and pleased the recent In track we in the the to continue Maanshan Asia, increased year to

third quarter, production the million primarily our to produce XXX Asia Ogden and two to of by in liters expect improved finished driven facilities. in between million We XXX milk output

capacity infrastructure necessary do our milk $XXX towards growth. a and time that and we compromising plant-based million As into lower phasing share look taking light our any our and million end supply high-growth million cost higher our guidance drive from will consideration, unprecedented $XXX should conversion of to believe in that and lead range the company the our we in chain the would future global XXXX uncertainty is Europe. longer like the critical CapEx happy million to will reduce growth world company $XXX we are of of users construction the consumers. plan investing to have to without We expansion, around capacity $XXX adjusted for I'm adapting us In establish changing into dairy fast-growing of

supply our to is and order in speed cash execution project So, flow chain CapEx on to balance, our growth, in with we being tactical our investing with management focus market management. are

regions and are Americas will most fill investments need in the Asia. We caps the volumes to highest prioritize continue our additional rate therefore and for the production where where is our pressing

to when with We initial are produce additional The and XXXX. to year. XXXX The is open routes is expansion priority the a now to three be fall to for in now first. oat-based Millville need we expansion we the expect production continues [Indiscernible] timing planned of also that this near-term Landskrona line Peterborough is project volumes. targeted open plant in prioritizing to

and XXXX We X.X continue which expect XXXX. of rate billion to run liters, exiting liters support growth exiting through approximately approximately capacity would XXX our now XXXX million

not. clear strength very and winning the the and to our although world have changed like we make the model has So, therefore fundamentals of and ambition our it confidence that

of to months. support global expect We business the expansion the have liquidity to next our for and enough at least XX growth

In million and the the We network of that to to review light in but opportunity $XXX reiterate $XXX constant environment our guidance $XXX are and factors to I million Asia revenue over ignore. In million demand updating we in year. Christian global in EMEA the momentarily, is. our growth especially $XXX want currency. to million operating the of revenue for year more back detail closing, accelerated strong cannot continue in this annual guidance half will we to the how expect uncertain

from our deviating projections better With innings now has last that was. the driving the joined our majority call taxing this has believe the without to healthier, few the plant That to We ever plans the early plant-based life it's continue changed are to that it's global people important global I expectations for drive the to new would The dairy changed. make of enter based. environment. shift. in the are people like but adjusting from easier in And consumers we it macro mission in accordingly, the we markets excessively resources. is the as will over plant-based to And category not We we're for conversion of and movement years. and planet's eat societal eat Christian. planet and not turn to today and What better that, as it

Thanks good you everyone. morning speak nice today. Toni It's to and to

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

currency foodservice Excluding we the the XX.X% retail been compared exchange of compared in in or last well period revenue same XX% growth a second XXXX, headwind accounted channels prior as constant service XX.X% The channel In $XX.X increase significant e-commerce quarter of across for to to broad-based China million growth quarter second XXXX, million, in for year of would experienced foreign of improved have revenue for and as of strong year. in COVID-XX the the period. an second $XXX.X sales despite quarter currency the restrictions.

on channel a compared accounted the which XX.X% was of XX.X% year basis, year-over-year placing of focus reflects to foodservice this The we to channel. prior-year expanding the on that XXXX in period. for channel reported quarter last revenue As second compared up the retail the significant QX of are XX.X%

channel to XXXX, of As by quarter second EMEA was reported net compared a on year-over-year retail exchange in Consolidated was and QX channel the customer mix the second per of foreign basis, up and sales in XXXX, in XX.X% year. last the liter a compared $X.XX of driven effects. to quarter headwind $X.XX mainly

As localized was co-pack regional price typically was with the year margin well a in-house then Asia, or and quarter. co-packers to profit the X.X% the in primarily reducing gross the and $XX.X second of production, profit XX.X% in gross and reminder, as XXX prior recorded margin of profit first we mix our in quarter EMEA in consolidation quarter had to Gross basis increased highest million of point the is XX.X% net sequential in improvement model followed increase XXXX million second EMEA. improving on sale such compared Compared our production the or last improvement, per liter as Americas period. by a implementation margin slide in sequential the This charge driven the QX, no shown charge as XX. on by reliance $XX.X

state to takes four new indicated to of lines. it we COVID-XX utilization reaches quarters and usually now facility due production the in had As at a before longer least three past, the impact steady

and utilizes ramp-up levels output steady cost structure, full state the that carry phase, facilities. yet of the production but capacity a the not reached have During fully we fixed of variable the

expansion economics With to overtime. Singapore expect volumes Ogden, region production should throughout will of gross to our improve of improve localization within accretive we continue of out production self-manufacturing and margin capacity continue profit margin production positive increased benefits multiple sequentially The time. remainder the and the at impact We our to higher the same of of XXXX. unlock the the Ma'anshan that expect share

we the offset In were the U.S. August inflation materials, as supply the labor yesterday of of price capacity both to of model in the by online, And on quarter-to-quarter. continue and for Additionally, price increases Xst increases sales channel profit on impact production coming timing a effect broad-based chain to as double-digit increases Based mix of challenges, region, variability we EMEA, price the U.S. portion we channels. new executed mix across in experiencing the May. energy globally. expect inflation went logistics, completed our and in are in well EMEA have our gross and to margin raw

impact as the on and we war consumer Additionally, geopolitical have the commercial events as on impacts the based well continue of demand. Ukraine these monitor restrictions COVID-XX in execution to

quarter the of of of the second The $XX.X million XXXX compared $XX.X was and distribution customer exchange to loss second global three foreign company $XX.X and branding lower the positive adjusted was offset related quarter scale Adjusted support quarter our million XXXX. EBITDA from EBITDA across continents primarily loss other of EBITDA to EBITDA for operations XXXX to expenses was growth Second at gross profit, million. the operating an loss by in loss expenses, higher public rates. impact costs

in stated we we first expected last expenses total our to as revenue net operating to XXXX. operating improved revenue share quarter of XX% as earnings of a As improve expenses second a in on the percent XX.X%, of the quarter, compared to – call,

as environment profitable We manage half today closely to second of given operating expect drive more and growth. we costs, to this the the achieve this trend continue year, uncertain in

and focusing our balance sheet cash Now on flow.

As and short-term to of had equivalents $X.X institutions of outstanding debt June investments $XXX.X cash total and credit million and we've XXXX, cash million. XX, of

accordion. period. was facility period. prior-year six $XX.X compared for CapEx financing including repayment million the in Net first the the ended months operating credit revolving June due cash used to of have months in liabilities the than credit months an the activities XX the XXXX, compared reflecting during spend of phasing cash $XXX.X lease XX, our were of the activities $XXX expected repayment lower was six was for Capital June also liabilities million XXXX, in to investment. expenditures to in fully June of primarily ended $XXX.X for prior-year to million institutions. and million XXXX, approximately ended six facility unutilized XXXX, We $X.X Net $XXX.X of the million of a million half XX,

XXX guidance. to to reflects the is volume is liters, a and third a our our Turning range growth of revenue in million indicator which expectation XXX typically of expect In million we production the quarter, leading that of function production output. our

As I improve stated year. expect gross as to a a we second operating the XXXX, half second the sequentially of margin compared of this ago, of to improvement and net in few moments revenue quarter expenses share

focused achieving We on are highly profitability.

mentioned, to constant Toni primarily now range are year updating Asia. guidance to for of compared implies expect million revenue QX As revenue accelerated the rates, $XXX XX%, of an XXXX. million XX% XX% to year the a QX, of $XXX revenue fiscal from coming and $XXX this to outlook XXXX, XXXX and Expect increase midpoint. FX in our based the At increase prevailing million, to year compared at an growth XX% Americas $XXX fiscal million and we of on currency, to fiscal

currency volatile you difficult As rates know, predict. and exchange are to

guidance. accounting previous overall the XX, June on of change by as And our guidance. guidance environment. XX, of revenue our updated is was spot time million March now rates macro Our assessment of originally of driven $XX is as previous off for we range versus approximately the rates exchange at the update XXXX, our based XXXX provided to of The based the guidance guidance

that and strong at outcomes of could the specifically, approach Although, we half a Household we our key in which and on full-year business in with uncertainties our it their the interest our to there market to expand second market velocity and in EMEA, several a resilient, that And second remain in taking default. for with establish day-to-day XXXX, first reiterated remainder penetration remain category proving which oatmilk speed our foodservice at being rising competitors. consumers the to changing context. routine. are clear outlook plant-based the also guidance, outlook Ukraine particularly To was performance constant in basis share within take cautious line continues plant-based our That is markets, a itself the rates leader our earnings, the hope reinforces adopted In recruit in currency and a performance. Across in quarter we given ranging are against provide we we more new reflects markets. also more many have in environment and said, on quarter category as to EMEA, into non-dairy where external for our factors dairy to impact of the range the impacting war taking year. distribution More outperformance retail inflation pace the the for. from macro our is dynamics, footprint able are new consumers clearly the at the

growth in However, cities. still our to and COVID-XX-related accelerate place highly sub-variant are the areas virus in going out forward. in of new many Asia, remain In to the in we break COVID continues these ability all restrictions confident

that quarter. was the lockdowns of China third During the our call, assumed QX eased beginning we earnings guidance by our communicated in

slower in recovery over concerns been has so we the channel far lasting the However, because than lockdown. foodservice of expected

to feel of balance As slower a result, the prudent the it's foodservice our XXXX. for into we expectations recovery reflect

Turning to CapEx.

and that stated, this to cash more supply growth management as the flow we need focus spend order well speed, on Toni As balance are execution, environment strategically as regions managing uncertain in sooner. in geographic

for fiscal Americas expect range pacing the we to and $XXX and prioritizing projects Given XXXX. capital Asia, $XXX in now be certain expenditures to million of million the of

the and next for the will of to liquidity capital sources the our believe we least existing business months. at be sufficient projects, XX phasing that needs our With CapEx of meet

your are approximately of that expect XXX now to continue questions. Operator? take rate liters fiscal production the to end to XXXX. We be goods of capacity we by review, run ready million With finished

question-and-answer Instructions] Barclays. first be Our we of Andrew Thank [Operator Lazar you. a will question from time, Please ahead. is conducting this session. go At

Thanks Great. much. very

I So of there cut in get a little be the of handle first talked the for CapEx current I wanted to driven on issues. bit year. guess in you release, better And your sort a the remarks, a the of and significant due CapEx I in operating this are to concerns reduction closer-in by some the environment. that liquidity could sort move guess about

You more also time dairy plant-based a converting to mentioned difficult users.

as I a some always past, guess, a there's So, In demand-driven decision a that could well. concern be at this mentality. growth sort the any of taken cost much more of almost of,

was you one address of question. those level mentioned just hoping sort it, a That macro simply, of or bit. sort just is this I first So, of as the little be could conservatism a you would closer-in Which environment? of the given is it

you well. Toni. question. much is Thank this so you're the doing Andrew for Hi, Hope

relates the your powerful to execution, expansion, question, which are when to focused we And production adjusting need with seen to to this about unprecedented dynamics, So optimizing so is demand capacity discipline. the we execution, volumes. timing we've the the changes world, pairing additions of that expansion in capacity

without all projects, high-growth smarter compromising leader use capital company. that's phasing be a And expect just we harder and our from have from you differently. investing optimize them we're So are growth. still any business We but I what to would global work think to in

to I was… adapting sure that to not that is with fundraising the that, if the capital is So this world. us in unprecedented am happening absolutely of and has changes our the nothing -- which timing do

a X.X similar it with production were that a little does what about for I production something even now to that I significantly on. still of trying for guess -- a how should out suggest in of maybe more ramp that's to guess, XXXX in get we think the liters a go follow-up to previously. years terms looking I'm to But up versus billion to the of production quick next XXXX perspective similar place sense in is One you in would in standpoint CapEx billion Maybe a curious terms -- to X.X billion originally Yeah. or suggest ramp can to XXXX, think far looking volume from X.X this pretty XXXX. I'm slower give you're of in too couple CapEx? for I get

So we here think mean Christian like are it’s I we said the -- Andrew, by way. I

So this year billion with million liters like said, XXXX. it's -- we And as X.X to we're exit XXX as you we're still indicated. exiting we've close

about demand matching it's accordingly. the supply So all

it's dramatic perspective. And So future investing our more that from still not than we're for growth.

Got you. is just it this the you plant-based fading thing are guess of wanted to weakens, I products away really like make is environment tougher newness but Last in the not some how as a from suggesting seen consumer like you given doesn't plant-based yet perform I category. we've -- environment consumer sure would sound you're the products the I'm hearing right.

This timing growth of is nutrition -- is is This demand. of pace the and about the not fast you can Thank you. recruit Andrew. how the very No that's into space. about Plant-based sticky. right absolutely consumers how

So pace not demand.

you. Thank

Yeah. Thanks.

ahead. Please Our of Goldman go next Ken question JPMorgan. from is

build not words was there newer or I a Hi, say it's implication consumers you today the little to thank you. more some Toni, demand. think last your in clarify And on to it's just point, difficult about product. that attract But to that

this environment the read-through the about Just about right to pay But a new pricing we a just given or year. consumers are, is some EMEA really that's with demand? the coming comment the product to price than in challenging will any to maybe more to what there there for that hindrance people the is I'm the just consumers or not any of in now have bills implication little whether bit level trying implication your your can some be trying ability that it's attract obviously, that square we thought. example of your about comments

that's and good Ken, really Absolutely a question.

elasticity to price So increases. don't price due see we increased

and So our outstanding velocity stable. and performance strong remains

gaining shares are We across market Europe.

specifically. launches. are there's a in good is we yeah. initial distribution here these see XX%, recent Europe tremendous But foodservice about problem -- We We challenges And unprecedented back growing winning and goes see this well. change really performance that for futures retailers -- the as are -- and who really navigate just consumers is budget their household so for also around that here to and monitoring happening

recruit is basically it to timing So They as facing markets same the parallel exactly is of its through. things -- to has expand time And more then And people foodservice. set that all that challenges we -- are here It taking three retail. navigating that unparalleled to in factors takes this consumers takes related to planned into new expand for. different the there are at category longer into business that long unprecedented it leaders and this are into and the to seems pace pay. had impacting new is and given

about decline growing. So That Oatly And in can in one is an is we Fundamentally, is this thing point. is position. retail extremely see that this our plant-based in strong milk as pace. important in

not thing timing the So and about demand.

for Thank it that us. a may Okay. doing in follow-up, you of next phrased. overhang may my hoped believe be that was XX you lot clearly observers not of the sort to get there was maybe And for that of term? you think and a a just some the raise near cap how that Is there for then it for messaging mentioned I issue liquidity the that. months, won't I have kind have even expected behind is

comment may just desire be rather of So maybe focus than sheet sort questions? fundamentals the or now? talk how some on balance And that of little to balance need you kind your a that capital right investor can you overriding how to what desire raise shorter-term about, of bit with sort reflects

have the Ken, Christian sufficient with the you months. XX business Hi, mean said Yeah. fund as these adjustments, to for here. I we now next it's liquidity

more provide is have have we're what confident our timing in that done we multiple access options with to terms still fund flexibility So ourselves growth of and we to capital.

So through year. capital fund raise is CapEx this of is still of to all million reason a looking we our we're sort that previous XXXX. that's this why fund is to in the the also it projects the much to that -- put or of out amount growth. there required said good estimate we And capital the $XXX number how And

the need capital also the raise year we longer amount minimizing to capacity an well. flexibility we're to the this with phasing some objective have corporate in and made schedule. entire of of single capital CapEx as match with we no So a We the approaching raise transaction phasing. the And this

Great. Thank you.

Ken. you, Thank

from is ahead. Credit Suisse. of Kaumil go question next Our Please Gajrawala

Hi. in to Thank macro think you. Europe. talk your the how on Can a some just harder forward be about as just might on expectations be going of you we may that and into of these stuff. particularly for the I about at answer in issues, and what macro get getting commentary we your are winter When little question beginning Ken's conversions that, your

top what chance just just expectations can expecting So you for talk do six this about more so? line to adjustment that get or the in the you're what observing And might or far, is next about observing? you have versus materially is the what -- you're months so things you're worse

Asia especially that So Europe end in yes, way reflects and see The this opening for. then the what up run the would revised absolutely the we not hope is rate of is massive. guidance year, back we

very that right? it definitely here our anybody in even environment the shaky, costs household proven the Oatly's Europe is stable resilient in are monitoring price be that performance is budget and People living -- if is But and increases. has to is So the increasing. with understand

soft We more moving into also see are discount. that people

in And changed. see changed. Utah I have when sentiment Ogden, that are close also is deals. in space velocity markets takes None performance runway more -- longer is new expanding those have people that in launching are expanding. add, discounts. we more massive. the with of consumers happening saying the we that the fundamentals we everything take have. That that, it to world. It's to business are hasn't the enormous absolutely And want into there's of just What us So distracted foodservice the And we for an else to is white in

nothing the this than remainder is So to us. about XXXX, of and more that according

sorry I'm And relates as increases, the Okay. ahead. price go Got then it. it to

just year. said, the half can, I we add. growth last That of expecting Ken accelerated company the for are the for

your Got also you we players are and thinking world a between space as going talk little you by price increases price region? you of then on it. about price price maybe can just space? about about increases are your other increases the Okay. then the how your bit And competition And versus maybe – thinking maybe this are price caps bit how in you're the a offering different typically a premium some the yourself gaps into macro of of in more

Very good question.

and price that competition between also So made we And first increased same. is overall due Europe. the the increases gaps price relative elasticity, the us no all, price in to of

nothing So from really that changed has perspective.

you. Thank Great.

are place price And in US including double-digit starting the in we the increase yesterday.

Great. it. Got

from ahead. next Oppenheimer. Rupesh question of Parikh is Please Our go

Thanks taking my for morning. Good question.

you're cost to was on that So of update facing. terms hoping side, an the the cost in pressures I get

think now cost X% curious Just the of you're had quarter? you to level inflation X% I the right expectations seeing versus last to

it's inflation relevant. here. we year, it's at now world. Good course, speak But Christian understand, of today's course, of in Rupesh, I all. it's Hi, interesting question. more topic didn't about an Last

quarters inflation X% in in second to So the X% coming in get increase we where we'll expect total, we our quarter. the today and cost, another compared are to to total

have slightly or our compared to inflation we we reported versus expectations, XXXX earnings we first in So, levels XXXX were when increased call. where

consequence Europe, energy were on in level have we previously, we globally. but And coming consolidated of this we single also as the Now, the war it's double out situation, high in low macroeconomic a here cost a costs the And digits is primarily of elevated of digits. impacting materials. – Ukraine expect with

or so next expect contemplated pressures, year? actions year you would to these pricing your be far more incorporate or the later do cost in And adjustments additional

increases price evaluating are in additional Europe. We

And follow-up maybe question. Great. one then Okay.

gross margin the front. on Just

in saw for we shake margin where exit last margins we QX guys the I at obviously gross frame But year. XX%-plus rate the some you an from could providing sequential line? did aren't So on exact know maybe for year, out full Any improvement the QX. but to how like gross range you – way have any guidance

where communicated compared have in remain sort in we the we exiting to think QX. past of I what that mid-XXs range of

Thank Great. Okay. you.

next from Please Piper Sandler. ahead. is go Michael Our of question Lavery

reduction just macro your given or been so color, year. you're the a come Good morning. but you've Thank on also the to some revenue you. calling have you're to understand for of that I and and environment guidance, expectations holding out the capacity capacity and back I constrained you're want –

do do a customer on how Should How levels we service So, we tie reconcile expect XXX% all just the I demand for weaker together? that year those? the and rest of profile?

then increasing Toni, would It's definitely in. about into year output -- from demand it's Mike mean a issue. I and us our in all will I the facilities, half think not new be second jump converted and the that of the revenue.

Europe, pace I strong is the on driven very different. expect, macro consolidated Americas Asia, CapEx in phasing also and Asia. But environment. and growth have we of think solid what in earnings but And more a specifically level, a the prioritizing about which we from It's and still a we're bit to calls. point spoken growth of by during talked have we US view,

There whole gaps spread to Yes. is we some throughout fill-rate specific the XX% field out Europe, the We're Michael, there. more the still in clarify US, range. increased just we rate. and products product In do in at again, XX% to on a -- have the throughout and it's gaps, time up be from demand gain to But to over that's catch-up it's XX% since plus to going not us. rate thing, fill -- a the here. increase for continue going to quarter closed or it's the

going demand on board. for for is definitely our to the mentioned, close it's if be always continues increase to us But more coming we gap. difficult to As production product,

yes, hope next be to they're progress here we great quarter. So for going

part last of the So year.

a If to if more supply the try, is I conservatism in saying terms then issue [ph] and me to mean if issue someone update tells lower of maybe demand don't change, no there's no but there's be you're guidance? dense, one it just

different right on right mean natures, Well, forget on the not full we Ogden the getting board are end Millville, completely right? US, this also we have fee. And from in there at year. output of are I coming to at

So supply our that's ability driven to there. by completely

just EBITDA. with then, more one do Okay. And the if I color could on

top You positive on But called a headwind on it's the currency obviously, a out line. contribution. the translation

there's just that explain impact So you there. some presumably, works? transactional Can how

Yes.

from versus out are of is that the US But So, have with have see. we on point year was but like it that I a million yes, $X.X which net-net we mean, a and headwind you FX, QX. calling do tailwind translation European about which depreciated you dollar, COGS revenue, on pretty last significantly OpEx. impact neutral said, compared that for of as currencies, have profit. It's if gross a both in or you think we to Translation. view have saw tailwinds But we OpEx, in something we and like quite

So, it's SG&A driven?

Correct. SG&A driven. Yes, Yes.

Okay. Thanks so much.

Jon is Andersen question next Blair. from go Please ahead. Our William of

Yes. Hi. Thanks.

quarters the in below or the wanted basis, question, first relatively was the four the you've growth $XX IRI my quarter around It the the in looks been For I focus to an reported, Americas. bit million like Also on in absolute that shipment takeaway dollars quite on past Americas, flattish America over sales data. the your retail a so. Nielsen

from So to be to levels. expect, kind guess just, of you standpoint? demand could to what's you do -- capacity more give able update happening shift a us and I a meet what's bit of fully And on when an consumption again

I'm well. and chime I'll as sure then mean in I So, will start Toni,

and to compared related that's your more and will all having retail to facility our in of it's And what scale mix So in Ogden, us our that sort performance seeing, allocation. help you're of from customer channel expectations. terms ability supply to a

strategic allocation it's So, doing. that a we're

And the to by with our hit of month around adjusted XX line it's in expectations. the see end comes second we in -- great we And liters million per in when US, it production we progress quarter Ogden. saw --

from quarter uplift big a So, one.

it and -- what to customers. some we takes expect get And of that out that's three course, So four. time quarter for then, to and quarter

and production output Asia. America great improvement in both in So,

we channel mix, balance also we on. have And have I there's the that to is also to want still add that and

that. follow-up So on quick a just

that just point So is expect on this rates at be able at XX%, semi is or comfortable be of uncertain comfortable too XX% Ogden saying, kind to this ramp time we upgrade at there fill frame across would where to point? and the a Millville channels that based continued at or ship you

very in we Yes. on uncertain, continues to ACV we very do this but we do that went numbers, expect improve velocity to do We but we with are from that strong year, It really expect improvement increase QX. QX. in see to is still and definitely Demand strong. XX% but hope we XX%

Okay. follow-up. And quick just one

So more you recruit time it's to talked challenging a into plant-based. about new consumers

so plant-based of focus products leveraging existing I'm if a on might range Oatly wondering plant-based across And broader products. you consumers

on, term is outside that customers and the more or moment? milk bit something of or Thanks. even you're effort in makes focusing the at though converting near sense that with things a it's challenging So, the milk. Is again

I question. that's a That relevant think

and in company. is for contributor focus said just of milk to the be not And going up set see need to we definitely, previously, of production have We're us. produce subcategories to the biggest big Our a the opportunity products here. we growth that's -- as throughout those we the absolutely type

Thank you.

you. Thank

go Please next Our question from Bill ahead. Chappell of Truist. is

of kind or morning Good good you. couple Thanks. follow-ups. afternoon to A of

space you North and question meet going meet rates, US half, been driven foodservice or capacity to of largely that shelf as still you is of I or the be the fill America foodservice? again that's or of in come through that of to you -- the lot going I not kind fill the retail, back back guess, for can thought past most year has rates, of or the the get Do you Looking to a at to some you were you said do is that shelf acceleration the as think space shipping of full the at retail. growth you kind lost guess

lose And of growth channels. US. a first balanced it's the in space didn't between these So, to going we all be shelf any all, then

So, are grow. going channels to all the

have but competitors filled seems lose tangential of space. not lot a it guess I shelf Okay. like

you be retail? sound just like adding space here. it from at So will it's sell-through It's doesn't more shelf

rate going be by one US share the certainly one end to And and overall to But outperformed on it's all this really in to fill again market multi-channels Ogden of expanding net gaining US which sorry existing that of have help two the year. the we gaps close new is still in coming board you this and visible number the is or of terms in multi-channel, the to at us another hopefully first going in sales. It's Millville greatly number with the in -- we are customers. the in

it to competitors. Okay. soy question follow-up almond, dairy, plant-based premium a there's a or they're the others put I at premium you trading mean gaps trading within as does Kaumil's more versus the oat -- a pricing And between necessarily around? of not switching a But direct then even less how between will pricing or on between of more your the up or change

no. No,

-- crops and strong, in don't Europe I increased has extremely this any We our especially, see think we extreme. by prices changes competition. Dairy through which is see Sweden, remained turmoil. between XX%. position we What can in

on But intact. balance is stands what the than out see other we like that's market. that what in So the

you. Thank Great. Okay.

you. Thank

is Baumgartner Please John question ahead. next of Our from Mizuho. go

can you morning. as those to line wondering obviously else. think mean reductions number the leverage anything we the in is well. moderate ability on costs more in really adjustments it's the whether the I'm pretty there how growth to discretionary But business. And Thanks moderate the focus begin to for still for revenue and question. think wanted or that compression I more do relative your a as middle is P&L Good that. do line. and size timing outright consultants think the big see cost about costs? When external you how I SG&A the on about within It's of the you of

Hi, It's related operations. activities in we already are business I think, more here. disciplined I today our Christian to spending and mean, day-to-day our John.

we're the of revenue is as is over level time for of relation a that of how we're looking in But the growing to looking company. ensure are you part our that sort we we so that to half how an a this this And being we're second growing pool. cost at strategic as have are believe as grows. also our then But that best bit manage SG&A to area we year also finding right that

second in year a that well. as of take you grow just will growing our if sort keep mind the customer is top-line And distribution is So to that link in the of revenue expenses our direct half as growth. to SG&A

delaying seen macro growth of, rate for you Thank of where North countries some how Thanks, years Europe. pains I'm off in places sort think of places been levels per forward? of America of ever going that it When pressures the environment of, sort of sort even And just I in Spain. just coming given over the your feels it's independent the in a the reinvigorated in sort of than of prompted sort Europe? has like macro consumption increases, a the maybe consumption some what than around. Because where I'm curious like a moderation a period in company at Christian. the new It's consumption of growing higher you consumers we about, lot backdrop. be long there. just even you. the independent of get may lower And capita in Have macro follow-up. category of just thoughts curious this your look

this the -- been penetration household category once way No, don't driving from at sticky. data very into get low And if the is a early such the a see look have And try still space we and get in volume you very any very to we we perspective in we're the yes, -- it's once things. still. we it

our back. go see that's across what don't And markets. You we all

Europe said people can This for else about is -- we very is is fast we and said for like is changed. world, important that be right? how What happening consumers has So as opportunity also massive. space when the pace, This true. fundamentals increasingly absolutely new still Now in given will important much you the this if flies. drive all it's that in along is increasingly time everything it's -- the into especially, the an

Okay. very you much. Thank

[Operator Instructions]

rest joining next summer. we to the great all for So everyone to Thank you. has call And right? look questions, forward earnings for November. us of everybody So hope with thank I today on in we the certainly a want just you and speaking our

Thank This us. today's for concludes you joining conference.

disconnect lines. You your may now