Oatly Group AB (NASDAQ:OTLY) Q1 2024 Earnings Conference Call April 30, 2024 8:30 AM ET Company Participants Brian Kearney - Vice President of Investor Relations Jean-Christophe Flatin - Chief Executive Officer Daniel Ordonez - Chief Operating Officer Marie-Jose David - Chief Financial Officer Conference Call Participants Michael Lavery - Piper Sandler Ken Goldman - JPMorgan Max Gumport - BNP Paribas John Baumgartner - Mizuho Securities Operator Greetings, and welcome to the Oatly Group First Quarter 2024 E ...

The company's gross profit is surging at an impressive rate.Shares of alternative-milk company Oatly Group (OTLY 14.00%) soared on Tuesday after the company reported financial results for the first quarter of 2024. It's only a mild reprieve for a stock that's still 96% below its all-time high, but it was a welcome reprieve for shareholders, nonetheless, with Oatly stock up 15% as of 1:15 p.m. ET.A huge step forward with gross profitsWhen it comes to the top line, Oatly didn't turn any heads in Q1. The compa ...

This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any express or implied statements contained in this presentation that are not statements of historical fact may be deemed to be forward-looking statements, including, without limitation, statements regarding our financial outlook for 2024, profitability improvement, long-term growth strategy, expected capital expenditures, anticipated supply chain performance, anticipated impact ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 20-F (Mark One) ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF ...

Jean-Christophe Flatin, Oatly's CEO, commented, "I am proud of the progress that we made throughout 2023. It was a pivotal year where we executed a significant re-calibration of the entire organization to stabilize our business and ensure we are properly positioned for long-term success. We did this while driving solid top-line growth and significant improvements in our gross profit, selling, general, and administrative expenses, and operating cash flow." Flatin added, "As we enter 2024, our financial guida ...

PART I – FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements show a Q3 profit driven by financing activities and improved liquidity [Statement of Operations](index=4&type=section&id=Interim%20condensed%20consolidated%20statement%20of%20operations) Q3 2023 shows improved gross profit and a net profit driven by significant non-operating finance income Consolidated Statement of Operations Highlights (in thousands of U.S. dollars) | Metric | Q3 2023 | Q3 2022 | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | 187,595 | 183,026 | 579,227 | 527,170 | | **Gross Profit** | 32,561 | 4,982 | 104,305 | 48,974 | | **Operating Loss** | (67,348) | (104,368) | (214,397) | (270,954) | | **Finance Income/(Expenses), Net** | 112,841 | (7,491) | 99,333 | (4,507) | | **Profit/(Loss) for the period** | 44,011 | (107,949) | (118,285) | (267,398) | | **Basic EPS ($)** | 0.07 | (0.18) | (0.20) | (0.45) | [Statement of Comprehensive Income/(Loss)](index=5&type=section&id=Interim%20condensed%20consolidated%20statement%20of%20comprehensive%20income%2F%28loss%29) Q3 2023 comprehensive income improved significantly, though the nine-month period shows a comprehensive loss Comprehensive Income/(Loss) Summary (in thousands of U.S. dollars) | Metric | Q3 2023 | Q3 2022 | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | :--- | :--- | | **Profit/(Loss) for the period** | 44,011 | (107,949) | (118,285) | (267,398) | | **Other Comprehensive Loss** | (6,886) | (43,223) | (100,405) | (126,389) | | **Total Comprehensive Income/(Loss)** | 37,125 | (151,172) | (218,690) | (393,787) | [Statement of Financial Position](index=6&type=section&id=Interim%20condensed%20consolidated%20statement%20of%20financial%20position) The balance sheet reflects increased assets and liabilities due to recent financing, resulting in lower total equity Financial Position Highlights (in thousands of U.S. dollars) | Metric | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | 1,307,835 | 1,225,197 | | Cash and cash equivalents | 283,184 | 82,644 | | Inventories | 83,537 | 114,475 | | Property, plant and equipment | 501,923 | 492,952 | | **Total Liabilities** | 716,675 | 434,054 | | Convertible Notes | 281,541 | - | | Liabilities to credit institutions | 125,503 | 52,590 | | **Total Equity** | 591,160 | 791,143 | [Statement of Changes in Equity](index=8&type=section&id=Interim%20condensed%20consolidated%20statement%20of%20changes%20in%20equity) Total equity declined significantly due to comprehensive losses from operations and financing instruments - Equity attributable to shareholders of the parent **decreased from $791.1 million** on December 31, 2022, **to $589.3 million** on September 30, 2023[10](index=10&type=chunk) - The main drivers for the equity decrease were the **net loss for the period** and other comprehensive losses, including a **$(72.7) million fair value change** on Convertible Notes due to credit risk and a **$(199.2) million foreign currency translation reserve**[10](index=10&type=chunk)[85](index=85&type=chunk) [Statement of Cash Flows](index=10&type=section&id=Interim%20condensed%20consolidated%20statement%20of%20cash%20flows) Cash position improved significantly due to strong financing inflows, offsetting operational and investment cash usage Cash Flow Summary (in thousands of U.S. dollars) | Metric | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | | **Net cash flows used in operating activities** | (151,479) | (215,224) | | **Net cash flows (used in)/from investing activities** | (9,636) | 51,856 | | **Cash flows from/(used in) financing activities** | 362,033 | (9,981) | | **Net increase/(decrease) in cash** | 200,918 | (173,349) | | **Cash and cash equivalents at end of period** | 283,184 | 105,603 | [Notes to Financial Statements](index=11&type=section&id=Notes%20to%20the%20interim%20condensed%20consolidated%20financial%20statements) Notes detail segment performance, asset sales, major financing activities, legal settlements, and key subsequent events - **Segment Performance (9M 2023):** EMEA revenue grew to **$297.0M**, Americas revenue grew to **$184.4M**, while Asia revenue declined to **$97.9M**[26](index=26&type=chunk) - **YYF Transaction:** The company closed the sale of its Ogden, UT and Dallas-Fort Worth, TX facilities to Ya YA Foods (YYF) for an aggregate purchase price of approximately **$102.6 million**, including cash, a promissory note, and credits[79](index=79&type=chunk)[80](index=80&type=chunk) - **Financing:** The company issued a total of **$335 million** in 9.25% Convertible Senior PIK Notes due 2028 and entered into a new **$130 million** Term Loan B Credit Agreement[92](index=92&type=chunk)[105](index=105&type=chunk)[109](index=109&type=chunk) - **Legal Settlement:** The company reached a settlement in principle for securities class action litigation, agreeing to pay **$9.25 million**, which is contingent upon court approval[124](index=124&type=chunk) - **Subsequent Events:** The company decided to discontinue construction of new production facilities, expecting a **$110-$150 million non-cash impairment charge** in Q4 2023, and received a **Nasdaq non-compliance notice** for its stock price falling below the $1.00 minimum bid requirement[126](index=126&type=chunk)[128](index=128&type=chunk) [Management's Discussion and Analysis (MD&A)](index=36&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses strategic shifts toward profitability, improved gross margins, and enhanced liquidity [Results of Operations](index=40&type=section&id=Results%20of%20Operations) Q3 revenue growth was driven by EMEA, with significant gross margin expansion and lower operating expenses Q3 2023 vs Q3 2022 Performance | Metric | Q3 2023 | Q3 2022 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | Revenue | $187.6M | $183.0M | +$4.6M | +2.5% | | Gross Profit | $32.6M | $5.0M | +$27.6M | +553.6% | | Gross Margin | 17.4% | 2.7% | +14.7 p.p. | N/A | | SG&A Expenses | $87.1M | $103.8M | -$16.6M | -16.0% | - The increase in gross profit margin was mainly due to **price increases in EMEA** and **improved operational efficiency**, including lower inventory write-offs[166](index=166&type=chunk) - The decrease in SG&A expenses was driven by reductions in **employee-related expenses, customer distribution costs, marketing, and professional fees**[171](index=171&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity was significantly strengthened through new debt facilities and convertible note issuance - As of September 30, 2023, the company had **$283.2 million in cash** and cash equivalents and **$203.6 million available** in undrawn bank facilities[179](index=179&type=chunk)[180](index=180&type=chunk) - Financing activities in 2023 included a new **$130 million Term Loan B** Credit Agreement and the issuance of Convertible Notes totaling **$335 million** in aggregate principal amount[181](index=181&type=chunk)[184](index=184&type=chunk)[189](index=189&type=chunk) - Net capital expenditures for 2023 are projected to be **below $75 million**, reflecting a shift in capital allocation strategy[178](index=178&type=chunk) [Non-IFRS Financial Measures](index=48&type=section&id=Non-IFRS%20Financial%20Measures) Non-IFRS measures like Adjusted EBITDA and Free Cash Flow show significant year-over-year improvement Adjusted EBITDA Reconciliation (in thousands of U.S. dollars) | Metric | Q3 2023 | Q3 2022 | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | :--- | :--- | | **Profit/(loss) for the period** | 44,011 | (107,949) | (118,285) | (267,398) | | Adjustments (Taxes, Finance, D&A, etc.) | (98,800) | 25,246 | (78,815) | 60,001 | | **Adjusted EBITDA** | (35,998) | (82,703) | (138,339) | (207,459) | - **Constant currency revenue was flat** in Q3 2023 compared to Q3 2022, and **grew 11.0%** for the nine-month period[208](index=208&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to foreign exchange, interest rate, credit, and liquidity risks - Primary market risks are identified as **foreign exchange, interest rate, credit, and liquidity risk**[220](index=220&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=52&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material legal proceedings aside from a disclosed class action settlement - The company is not a party to any material legal proceedings, other than those disclosed in the financial statement notes[221](index=221&type=chunk) [Risk Factors](index=52&type=section&id=Item%201A.%20Risk%20Factors) Key risks include potential Nasdaq delisting, significant impairment charges, and ongoing litigation - **Nasdaq Listing Risk:** On November 6, 2023, the company received a notice from Nasdaq for **non-compliance with the minimum $1.00 bid price requirement**, which could result in delisting if not remedied[223](index=223&type=chunk) - **Impairment Charges:** The company expects to record non-cash impairment charges of **$110 million to $150 million** in Q4 2023 related to the discontinuation of construction at new production facilities[225](index=225&type=chunk) - **Litigation Risk:** The company is subject to securities class action lawsuits and has reached a settlement in principle for **$9.25 million**, which is pending court approval[227](index=227&type=chunk) [Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=54&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Information regarding the use of proceeds is incorporated by reference from a prior SEC filing - Information regarding the use of proceeds is incorporated by reference from a prior SEC filing[228](index=228&type=chunk) [Defaults Upon Senior Securities](index=54&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon its senior securities - None[229](index=229&type=chunk)

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[PART I – FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) Presents Oatly Group AB's interim financial statements and management's discussion for Q1 2023, covering financial performance, position, cash flows, and related notes [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Oatly Group AB's interim condensed consolidated financial statements for the three months ended March 31, 2023, including statements of operations, comprehensive loss, financial position, changes in equity, and cash flows, along with detailed notes explaining accounting policies, segment information, and specific financial line items. The company reported a reduced net loss and improved gross profit margin compared to the prior year, driven by revenue growth and strategic actions [Interim condensed consolidated statement of operations](index=4&type=section&id=Interim%20condensed%20consolidated%20statement%20of%20operations) Consolidated Statement of Operations (Q1 2023 vs Q1 2022) | Metric | Q1 2023 (USD thousands) | Q1 2022 (USD thousands) | Change (USD thousands) | % Change | | :-------------------------------- | :---------------------- | :---------------------- | :--------------------- | :------- | | Revenue | 195,645 | 166,186 | 29,459 | 17.7% | | Cost of goods sold | (161,557) | (150,338) | (11,219) | 7.5% | | Gross profit | 34,088 | 15,848 | 18,240 | 115.1% | | Operating loss | (71,569) | (92,157) | 20,588 | -22.3% | | Loss for the period | (75,577) | (87,459) | 11,882 | -13.6% | | Basic and diluted loss per share | (0.13) | (0.15) | 0.02 | -13.3% | [Interim condensed consolidated statement of comprehensive loss](index=5&type=section&id=Interim%20condensed%20consolidated%20statement%20of%20comprehensive%20loss) Consolidated Statement of Comprehensive Loss (Q1 2023 vs Q1 2022) | Metric | Q1 2023 (USD thousands) | Q1 2022 (USD thousands) | Change (USD thousands) | % Change | | :-------------------------------- | :---------------------- | :---------------------- | :--------------------- | :------- | | Loss for the period | (75,577) | (87,459) | 11,882 | -13.6% | | Exchange differences from translation of foreign operations | 7,353 | (22,954) | 30,307 | -132.0% | | Total comprehensive loss for the period | (68,224) | (110,413) | 42,189 | -38.2% | [Interim condensed consolidated statement of financial position](index=6&type=section&id=Interim%20condensed%20consolidated%20statement%20of%20financial%20position) Consolidated Statement of Financial Position (March 31, 2023 vs December 31, 2022) | Metric | March 31, 2023 (USD thousands) | December 31, 2022 (USD thousands) | Change (USD thousands) | % Change | | :-------------------------------- | :----------------------------- | :-------------------------------- | :--------------------- | :------- | | Total Assets | 1,148,580 | 1,225,197 | (76,617) | -6.3% | | Total Equity | 730,966 | 791,143 | (60,177) | -7.6% | | Total Liabilities | 417,614 | 434,054 | (16,440) | -3.8% | | Cash and cash equivalents | 78,830 | 82,644 | (3,814) | -4.6% | | Assets held for sale | — | 142,703 | (142,703) | -100.0% | [Interim condensed consolidated statement of changes in equity](index=7&type=section&id=Interim%20condensed%20consolidated%20statement%20of%20changes%20in%20equity) Consolidated Statement of Changes in Equity (Q1 2023) | Metric | Balance at Dec 31, 2022 (USD thousands) | Loss for the period (USD thousands) | Other comprehensive loss (USD thousands) | Share-based payments (USD thousands) | Balance at Mar 31, 2023 (USD thousands) | | :-------------------------------- | :-------------------------------------- | :---------------------------------- | :--------------------------------------- | :----------------------------------- | :-------------------------------------- | | Total equity | 791,143 | (75,577) | 7,353 | 8,047 | 730,966 | [Interim condensed consolidated statement of cash flows](index=8&type=section&id=Interim%20condensed%20consolidated%20statement%20of%20cash%20flows) Consolidated Statement of Cash Flows (Q1 2023 vs Q1 2022) | Metric | Q1 2023 (USD thousands) | Q1 2022 (USD thousands) | Change (USD thousands) | | :-------------------------------- | :---------------------- | :---------------------- | :--------------------- | | Net cash flows used in operating activities | (71,212) | (68,938) | (2,274) | | Net cash flows from/(used in) investing activities | 15,876 | (1,447) | 17,323 | | Net cash flows from/(used in) financing activities | 48,805 | (4,165) | 52,970 | | Net increase in cash and cash equivalents | (6,531) | (74,550) | 68,019 | | Cash and cash equivalents at end of period | 78,830 | 219,045 | (140,215) | [Notes to the interim condensed consolidated financial statements](index=9&type=section&id=Notes%20to%20the%20interim%20condensed%20consolidated%20financial%20statements) [Note 1. Corporate information](index=9&type=section&id=Note%201.%20Corporate%20information) - Oatly Group AB is a public limited company incorporated and domiciled in Sweden, manufacturing, distributing, and selling oat-based products[15](index=15&type=chunk)[16](index=16&type=chunk) [Note 2. Summary of significant accounting policies](index=9&type=section&id=Note%202.%20Summary%20of%20significant%20accounting%20policies) - Interim financial statements for Q1 2023 and Q1 2022 were prepared in accordance with IAS 34 Interim Financial Reporting, on a going concern basis[17](index=17&type=chunk) - No material impact is expected from new and amended IFRS standards not yet adopted[19](index=19&type=chunk) [Note 3. Significant accounting judgments, estimates and assessments](index=9&type=section&id=Note%203.%20Significant%20accounting%20judgments%2C%20estimates%20and%20assessments) - Significant judgments and key sources of estimation uncertainty are consistent with those applied in the 2022 annual consolidated financial statements[20](index=20&type=chunk) [Note 4. Seasonality](index=9&type=section&id=Note%204.%20Seasonality) - The Group has not experienced pronounced seasonality to date, but expects additional seasonality effects, especially in the food retail channel linked to holiday periods (e.g., Lunar New Year in Asia)[22](index=22&type=chunk) [Note 5. Segment information](index=10&type=section&id=Note%205.%20Segment%20information) Revenue and Adjusted EBITDA by Segment (Q1 2023 vs Q1 2022) | Segment | Q1 2023 Revenue (USD thousands) | Q1 2022 Revenue (USD thousands) | % of Total Q1 2023 | % of Total Q1 2022 | Q1 2023 Adjusted EBITDA (USD thousands) | Q1 2022 Adjusted EBITDA (USD thousands) | | :-------- | :------------------------------ | :------------------------------ | :----------------- | :----------------- | :-------------------------------------- | :-------------------------------------- | | EMEA | 98,216 | 90,483 | 50.2% | 54.4% | 6,584 | (5,856) | | Americas | 64,041 | 47,017 | 32.7% | 28.3% | (10,306) | (22,013) | | Asia | 33,388 | 28,686 | 17.1% | 17.3% | (16,716) | (14,967) | | Corporate | — | — | — | — | (29,435) | (28,553) | | **Total** | **195,645** | **166,186** | **100.0%** | **100.0%** | **(49,873)** | **(71,389)** | Revenue from External Customers by Location (Q1 2023 vs Q1 2022) | Country | Q1 2023 Revenue (USD thousands) | Q1 2022 Revenue (USD thousands) | | :---------- | :------------------------------ | :------------------------------ | | US | 63,213 | 46,626 | | UK | 32,373 | 31,421 | | China | 29,069 | 24,508 | | Germany | 26,183 | 21,171 | | Sweden | 12,564 | 13,421 | | The Netherlands | 7,048 | 6,974 | | Finland | 5,953 | 6,513 | | Other | 19,242 | 15,552 | | **Total** | **195,645** | **166,186** | Revenue from External Customers by Channel and Segment (Q1 2023 vs Q1 2022) | Channel/Segment | Q1 2023 EMEA (USD thousands) | Q1 2023 Americas (USD thousands) | Q1 2023 Asia (USD thousands) | Q1 2023 Total (USD thousands) | Q1 2022 EMEA (USD thousands) | Q1 2022 Americas (USD thousands) | Q1 2022 Asia (USD thousands) | Q1 2022 Total (USD thousands) | | :---------------- | :--------------------------- | :----------------------------- | :------------------------- | :---------------------------- | :--------------------------- | :----------------------------- | :------------------------- | :---------------------------- | | Retail | 82,924 | 33,252 | 6,083 | 122,259 | 76,074 | 25,386 | 3,040 | 104,500 | | Foodservice | 14,814 | 29,366 | 21,712 | 65,892 | 14,214 | 20,298 | 21,635 | 56,147 | | Other | 478 | 1,423 | 5,593 | 7,494 | 195 | 1,333 | 4,011 | 5,539 | | **Total** | **98,216** | **64,041** | **33,388** | **195,645** | **90,483** | **47,017** | **28,686** | **166,186** | - Approximately **14% of revenue** in Q1 2023 and Q1 2022 was derived from a single external customer in the foodservice channel, attributed to the Americas and Asia segments[32](index=32&type=chunk) [Note 6. Share-based compensation](index=11&type=section&id=Note%206.%20Share-based%20compensation) - Share-based payments expense decreased to **$8.0 million** for Q1 2023 from **$10.0 million** in Q1 2022[37](index=37&type=chunk) - As of March 31, 2023, **7,747,332 RSUs** and **14,206,820 stock options** were outstanding; no new RSUs or stock options were issued in Q1 2023[35](index=35&type=chunk)[36](index=36&type=chunk) [Note 7. Finance income and expenses](index=12&type=section&id=Note%207.%20Finance%20income%20and%20expenses) Finance Income and Expenses, Net (Q1 2023 vs Q1 2022) | Metric | Q1 2023 (USD thousands) | Q1 2022 (USD thousands) | | :-------------------------------- | :---------------------- | :---------------------- | | Interest income | 346 | 668 | | Net foreign exchange gain | 1,101 | 6,946 | | Interest expenses—loan from credit institutions | (2,139) | (1,227) | | Interest expenses—lease liabilities | (2,030) | (2,049) | | Fair value changes—derivatives | 971 | 616 | | Fair value changes short-term investments | — | (1,254) | | Other financial expenses | (245) | (123) | | **Total finance income and (expenses), net** | **(1,996)** | **3,577** | [Note 8. Income tax](index=12&type=section&id=Note%208.%20Income%20tax) - Total tax expense for Q1 2023 was **$2.0 million** (effective tax rate **2.7%**), compared to a tax benefit of **$1.1 million** for Q1 2022 (effective tax rate **-1.3%**)[39](index=39&type=chunk) - Unrecognized tax losses in Sweden are the main driver of the Group's effective tax rate[39](index=39&type=chunk) [Note 9. Intangible assets](index=13&type=section&id=Note%209.%20Intangible%20assets) - Total intangible assets increased to **$128.3 million** as of March 31, 2023, from **$127.7 million** as of December 31, 2022[40](index=40&type=chunk) - Amortization expense for Q1 2023 was **$1.0 million**, up from **$0.8 million** in Q1 2022[40](index=40&type=chunk) [Note 10. Property, Plant and Equipment](index=13&type=section&id=Note%2010.%20Property%2C%20Plant%20and%20Equipment) - Net property, plant and equipment increased to **$505.9 million** as of March 31, 2023, from **$493.0 million** as of December 31, 2022[41](index=41&type=chunk) - Additions in construction in progress are mainly related to investment in new and existing production facilities[41](index=41&type=chunk) - Depreciation expense for Q1 2023 was **$7.8 million**, up from **$7.2 million** in Q1 2022[43](index=43&type=chunk) [Note 11. Leases](index=14&type=section&id=Note%2011.%20Leases) - Right-of-use assets increased to **$113.3 million** as of March 31, 2023, from **$108.6 million** as of December 31, 2022[47](index=47&type=chunk) - New lease agreements commenced in Q1 2023 include a sublease related to the YYF Transaction (**$2.8 million**) and a headquarters office lease in Malmö, Sweden (**$5.6 million**)[44](index=44&type=chunk)[45](index=45&type=chunk) Lease Liabilities Maturity Analysis (March 31, 2023) | Lease liabilities | March 31, 2023 (USD thousands) | | :------------------------------------------------------------------------------------------------ | :----------------------------- | | Less than 3 months | 3,857 | | Between 3 months and 1 year | 11,570 | | Between 1 and 2 years | 17,014 | | Between 2 and 5 years | 33,430 | | After 5 years | 122,894 | | **Total lease commitments** | **188,765** | | Impact of discounting remaining lease payments | (85,625) | | **Total lease liabilities at March 31, 2023** | **103,140** | - Committed to a new R&D premises lease in Lund, Sweden (**$13.1 million** for 15 years, commencing Sep 2023) and production equipment in Ma'anshan, China (**$3.7 million** for 6 years, commencing 2024)[49](index=49&type=chunk)[50](index=50&type=chunk) [Note 12. Other non-current receivables](index=16&type=section&id=Note%2012.%20Other%20non-current%20receivables) - Other non-current receivables significantly increased to **$44.4 million** as of March 31, 2023, from **$7.8 million** as of December 31, 2022[51](index=51&type=chunk) - This increase is primarily due to a **$20.0 million promissory note** from the YYF transaction (due May 31, 2028, 8% interest escalating by 200 bps annually) and **$19.3 million** in long-term prepaid expenses related to shared assets at Ogden and Dallas-Fort Worth facilities[51](index=51&type=chunk)[52](index=52&type=chunk) [Note 13. Fair value of financial instruments](index=16&type=section&id=Note%2013.%20Fair%20value%20of%20financial%20instruments) - Financial instruments are classified into three levels based on input observability (Level 1: quoted market prices, Level 2: valuation techniques with observable market data, Level 3: significant unobservable inputs)[55](index=55&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) Recurring Fair Value Measurements (March 31, 2023) | Recurring fair value measurements at March 31, 2023 | Level 1 | Level 2 | Level 3 | | :---------------------------------- | :------ | :------ | :------ | | Financial asset | | | | | Derivatives (part of other current assets) | — | 664 | — | | **Total financial assets** | **—** | **664** | **—** | - The carrying amount of the promissory note and current liabilities to credit institutions is a reasonable approximation of fair value[59](index=59&type=chunk)[60](index=60&type=chunk) [Note 14. Inventories](index=17&type=section&id=Note%2014.%20Inventories) - Total inventories decreased to **$108.2 million** as of March 31, 2023, from **$114.5 million** as of December 31, 2022[61](index=61&type=chunk) - Inventories recognized as an expense (cost of goods sold) for Q1 2023 were **$152.9 million** (Q1 2022: **$141.9 million**)[61](index=61&type=chunk) - Write-downs of inventories to net realizable value increased to **$3.5 million** in Q1 2023 (Q1 2022: **$2.0 million**)[62](index=62&type=chunk) [Note 15. Trade receivables](index=17&type=section&id=Note%2015.%20Trade%20receivables) - Trade receivables, net, increased to **$106.7 million** as of March 31, 2023, from **$101.0 million** as of December 31, 2022[63](index=63&type=chunk) - Allowance for expected credit losses decreased from **$3.7 million** to **$1.8 million**[63](index=63&type=chunk) - Largest currency exposures for trade receivables are **EUR ($32.6 million)**, **USD ($27.1 million)**, and **GBP ($25.0 million)**[63](index=63&type=chunk) [Note 16. Other current receivables](index=17&type=section&id=Note%2016.%20Other%20current%20receivables) - Other current receivables increased to **$32.2 million** as of March 31, 2023, from **$17.8 million** as of December 31, 2022[64](index=64&type=chunk) - Includes **$13.7 million credit** toward future capital expenditures related to the YYF transaction for oat base capacity completion at Dallas-Fort Worth[64](index=64&type=chunk) [Note 17. Cash and cash equivalents](index=18&type=section&id=Note%2017.%20Cash%20and%20cash%20equivalents) - Cash and cash equivalents decreased to **$78.8 million** as of March 31, 2023, from **$82.6 million** as of December 31, 2022[65](index=65&type=chunk) - Comprises short-term deposits (**$25.0 million**) and cash at bank and on hand (**$53.8 million**)[65](index=65&type=chunk) [Note 18. Non-current assets held for sale](index=18&type=section&id=Note%2018.%20Non-current%20assets%20held%20for%20sale) - On March 1, 2023, Oatly closed the YYF Transaction, selling its manufacturing facilities in Ogden, Utah, and Dallas-Fort Worth, Texas, to Ya YA Foods USA LLC (YYF) as part of a strategic manufacturing alliance[68](index=68&type=chunk) - Oatly retained full ownership and operation of proprietary oat base production lines in each facility and entered into a contract manufacturing agreement with YYF[68](index=68&type=chunk) - Consideration for the transaction was approximately **$102.6 million**, including **$52.0 million cash**, a **$20.0 million promissory note**, and credits toward future use of shared assets and capital expenditures[69](index=69&type=chunk) - As of December 31, 2022, assets held for sale amounted to **$142.7 million**, with an impairment of **$38.3 million** recognized[66](index=66&type=chunk)[67](index=67&type=chunk) [Note 19. Share capital and other contributed capital](index=19&type=section&id=Note%2019.%20Share%20capital%20and%20other%20contributed%20capital) - As of March 31, 2023, and December 31, 2022, **68,847 thousand warrants** were outstanding[70](index=70&type=chunk) - As of March 31, 2023, **592,320 thousand ordinary shares** were registered, with **107 thousand** held as treasury shares[72](index=72&type=chunk) [Note 20. Liabilities to credit institutions](index=19&type=section&id=Note%2020.%20Liabilities%20to%20credit%20institutions) - Total liabilities to credit institutions increased to **$105.5 million** as of March 31, 2023, from **$52.6 million** as of December 31, 2022[73](index=73&type=chunk) - This includes **$96.4 million** outstanding under the Sustainable Revolving Credit Facility (SRCF) and **$3.7 million** under the European Investment Fund (EIF) Facility[74](index=74&type=chunk)[75](index=75&type=chunk) - A new RMB 150 million working capital credit facility with China Merchants Bank was entered into in November 2022, with **$4.4 million** outstanding as of March 31, 2023[76](index=76&type=chunk) [Note 21. Provisions](index=20&type=section&id=Note%2021.%20Provisions) - Total provisions as of March 31, 2023, were **$9.6 million**, comprising **$2.2 million** for restructuring and **$7.4 million** for decommissioning costs[79](index=79&type=chunk) - Additional restructuring provisions of **$1.1 million** were recognized in Q1 2023[79](index=79&type=chunk) [Note 22. Accrued expenses](index=20&type=section&id=Note%2022.%20Accrued%20expenses) - Total accrued expenses decreased to **$117.7 million** as of March 31, 2023, from **$123.0 million** as of December 31, 2022[80](index=80&type=chunk) - Key components include accrued personnel expenses (**$31.6 million**), production expenses (**$25.6 million**), and variable consideration (**$18.0 million**)[80](index=80&type=chunk) [Note 23. Related party disclosures](index=20&type=section&id=Note%2023.%20Related%20party%20disclosures) - The Company expensed **$0.4 million** in Q1 2023 (Q1 2022: **$0.1 million**) pursuant to a Distribution Agreement with Chef Sam, a company 33% owned by a Board member[82](index=82&type=chunk) [Note 24. Loss per share](index=20&type=section&id=Note%2024.%20Loss%20per%20share) - Basic and diluted loss per share was **$(0.13)** for Q1 2023, an improvement from **$(0.15)** in Q1 2022[84](index=84&type=chunk) - Weighted average common shares outstanding were **592.3 million** for Q1 2023[84](index=84&type=chunk) - Potential dilutive securities (RSUs and stock options) were anti-dilutive and not included in calculations[85](index=85&type=chunk) [Note 25. Commitments and Contingencies](index=21&type=section&id=Note%2025.%20Commitments%20and%20Contingencies) - Incurred **$1.8 million** in volume shortfall expenses in Q1 2023 (Q1 2022: **$4.8 million**) due to consolidated use of co-packers in Americas[86](index=86&type=chunk) - Committed to **$27.2 million** for production equipment in Peterborough, UK, and **$3.4 million** in Dallas-Fort Worth, Texas, as of March 31, 2023[87](index=87&type=chunk) - Involved in securities class action lawsuits alleging violations of the Securities Exchange Act of 1934 and Securities Act of 1933, which the company intends to vigorously defend[89](index=89&type=chunk) [Note 26. Events after the end of the reporting period](index=22&type=section&id=Note%2026.%20Events%20after%20the%20end%20of%20the%20reporting%20period) - Issued **$300 million** aggregate principal amount of **9.25% Convertible Senior PIK Notes due 2028** in March and April 2023, with an initial conversion price of **$2.41 per share/ADS**[90](index=90&type=chunk)[92](index=92&type=chunk) - Existing shareholders and institutional investors purchased the notes for an aggregate **$291 million** (3% original issue discount)[91](index=91&type=chunk)[149](index=149&type=chunk) - Amended and restated the SRCF Agreement in April 2023, resetting term to 3.5 years, reducing commitments to **SEK 2,100 million ($202.4 million)**, and resetting financial covenants[93](index=93&type=chunk) - Entered into a Term Loan B Credit Agreement for a **$130 million term loan facility** in April 2023, with a five-year term and 1% annual amortization[94](index=94&type=chunk) - Agreed to sell an additional **$35 million** in convertible notes to Hillhouse Investment Management Ltd. in May 2023, with an initial conversion price of **$2.52 per ADS**[97](index=97&type=chunk)[99](index=99&type=chunk) - Announced Jean-Christophe Flatin as the new CEO, effective June 1, 2023, with Toni Petersson transitioning to Co-Chairman of the Board[100](index=100&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Oatly's financial condition and operational results for the three months ended March 31, 2023, highlighting strategic actions, macroeconomic impacts, detailed analysis of revenue, expenses, and profitability, liquidity, capital resources, and non-IFRS financial measures. The company reported significant revenue growth, improved gross profit margin, and reduced operating loss, driven by pricing actions, supply chain optimization, and strategic partnerships, while also securing substantial new financing [Special Note Regarding Forward-Looking Statements](index=25&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Statements) - The report contains forward-looking statements subject to known and unknown risks, uncertainties, and other factors, which may cause actual results to differ materially[102](index=102&type=chunk)[104](index=104&type=chunk) - Key risks include a history of losses, COVID-19 impacts, raw material availability, success of strategic partnerships (YYF), capital needs, brand reputation, competition, and operational challenges[105](index=105&type=chunk)[106](index=106&type=chunk) [Overview](index=27&type=section&id=Overview) - Oatly is the world's original and largest oatmilk company, with over 25 years of expertise in oat-based products, committed to transforming the food industry towards sustainable, plant-based alternatives[108](index=108&type=chunk) [Components of Results of Operations and Trends and Other Factors Affecting our Business](index=27&type=section&id=Components%20of%20Results%20of%20Operations%20and%20Trends%20and%20Other%20Factors%20Affecting%20our%20Business) [Strategic actions – an update](index=27&type=section&id=Strategic%20actions%20%E2%80%93%20an%20update) - Implemented strategic actions to adapt supply chain, simplify organizational structure, and drive profitability with an asset-light strategy[110](index=110&type=chunk) - Consummated a long-term strategic partnership with YYF on March 1, 2023, converting Ogden and Fort Worth facilities to a hybrid manufacturing model, retaining oat base production lines[111](index=111&type=chunk) - Recorded **$1.2 million** in restructuring costs in Q1 2023 related to organizational simplification, with further opportunities expected throughout 2023[113](index=113&type=chunk) [Impact of the Current Macroeconomic Environment on our Results](index=27&type=section&id=Impact%20of%20the%20Current%20Macroeconomic%20Environment%20on%20our%20Results) - COVID-19 pandemic in mainland China continued to impact business in Q1 2023, but improvement is expected throughout the remainder of 2023[114](index=114&type=chunk) - Forecasts continued cost inflation, but expects it to be offset by improved facility utilization, supply chain improvements, and pricing actions in EMEA and Americas[114](index=114&type=chunk) [Revenue](index=28&type=section&id=Revenue%20%28MD%26A%29) - Revenue is generated primarily from oatmilk and other oat-based products across EMEA, Americas, and Asia, sold to retailers, e-commerce, coffee shops, and foodservice[115](index=115&type=chunk) - Oatmilk accounted for over **90% of consolidated revenue** in Q1 2023[116](index=116&type=chunk) - Key drivers for net revenue growth include expanding household penetration, increasing distribution across channels (food retail, foodservice, e-commerce), extending product offerings, entering new international markets, and optimizing global production capacity[120](index=120&type=chunk) [Cost of goods sold](index=28&type=section&id=Cost%20of%20goods%20sold%20%28MD%26A%29) - Cost of goods sold consists primarily of raw materials (oats), packaging, co-manufacturing fees, direct labor, overhead, warehousing, and transportation[118](index=118&type=chunk) - Expected to increase in absolute dollars but decrease as a percentage of net revenue over time due to business scaling and production footprint optimization[118](index=118&type=chunk) [Gross profit and margin](index=28&type=section&id=Gross%20profit%20and%20margin%20%28MD%26A%29) - Gross profit margin benefits from localized production capacity and is expected to improve through manufacturing operational performance, leveraging fixed costs, and procurement efficiencies[119](index=119&type=chunk) - Pricing actions have been implemented to partially offset significant inflation, with further actions possible[120](index=120&type=chunk) [Operating expenses](index=29&type=section&id=Operating%20expenses%20%28MD%26A%29) - Research and development expenses are focused on product and process enhancements, expected to increase in absolute dollars but slightly decrease as a percentage of revenue[121](index=121&type=chunk) - Selling, general and administrative expenses include personnel, brand awareness, marketing, distribution, and public company compliance costs, expected to increase in absolute dollars but decrease as a percentage of revenue over time[122](index=122&type=chunk) - Other operating income and (expenses), net, primarily consists of net foreign exchange gains/losses on operating activities[123](index=123&type=chunk) [Other](index=29&type=section&id=Other%20%28MD%26A%29) - Finance income and (expenses), net, includes interest on loans and leases, and foreign exchange gains/losses on financing arrangements[124](index=124&type=chunk) - Income tax (expense)/benefit represents current and deferred income taxes, reflecting earnings and applicable tax rates in various jurisdictions[124](index=124&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations%20%28Detailed%20Analysis%29) [Revenue](index=29&type=section&id=Revenue%20%28Detailed%20Analysis%29) - Revenue increased by **$29.5 million (17.7%)** to **$195.6 million** in Q1 2023, driven by sold volume growth and price increases[127](index=127&type=chunk) - Excluding a **$9.6 million foreign currency headwind**, constant currency revenue increased by **23.5%** to **$205.3 million**[128](index=128&type=chunk) - Sold finished goods volume increased to **128 million liters** in Q1 2023 from **118 million liters** in Q1 2022[128](index=128&type=chunk) - Revenue growth was experienced across retail and foodservice channels, with EMEA, Americas, and Asia contributing **50.2%**, **32.7%**, and **17.1%** of total revenue, respectively, in Q1 2023[129](index=129&type=chunk)[130](index=130&type=chunk) - Volume growth in EMEA was driven by overall plant-based category growth and focus on core/adjacent markets; in Americas by stable supply and expanded distribution; in Asia by expanded distribution and new products[131](index=131&type=chunk) [Cost of goods sold](index=31&type=section&id=Cost%20of%20goods%20sold%20%28Detailed%20Analysis%29) - Cost of goods sold increased by **$11.2 million (7.5%)** to **$161.6 million** in Q1 2023, primarily due to higher revenue[132](index=132&type=chunk) [Gross profit and margin](index=31&type=section&id=Gross%20profit%20and%20margin%20%28Detailed%20Analysis%29) - Gross profit increased by **$18.2 million (115.1%)** to **$34.1 million** in Q1 2023, with gross profit margin increasing by **7.9 percentage points** to **17.4%**[133](index=133&type=chunk) - Improvements were primarily due to pricing actions (**10.5 percentage points** offset by **2.1 percentage points** inflation), production and supply network improvements (**1.9 percentage points**), partially offset by supply-chain reset in Americas (**1.2 percentage points**) and foreign exchange headwinds (**1.4 percentage points**)[134](index=134&type=chunk) [Research and development expenses](index=31&type=section&id=Research%20and%20development%20expenses%20%28Detailed%20Analysis%29) - R&D expenses increased by **$1.5 million (34.0%)** to **$5.7 million** in Q1 2023, primarily due to increased employee-related expenses, and increased as a share of revenues from **2.6%** to **2.9%**[133](index=133&type=chunk) [Selling, general and administrative expenses](index=31&type=section&id=Selling%2C%20general%20and%20administrative%20expenses%20%28Detailed%20Analysis%29) - SG&A expenses decreased by **$5.2 million (5.0%)** to **$98.9 million** in Q1 2023, and as a share of revenues, decreased from **62.6%** to **50.5%**[134](index=134&type=chunk) - Decrease was driven by reduced branding, advertising, marketing, customer distribution costs, and external consultant fees, partially offset by a **$5.1 million increase** in employee-related expenses and **$1.2 million** in restructuring costs[134](index=134&type=chunk) [Other operating income and (expenses), net](index=32&type=section&id=Other%20operating%20income%20and%20%28expenses%29%2C%20net%20%28Detailed%20Analysis%29) - Shifted from an income of **$0.3 million** in Q1 2022 to an expense of **$1.1 million** in Q1 2023, primarily due to foreign exchange gains and losses on operating items[135](index=135&type=chunk) [Finance income and (expenses), net](index=32&type=section&id=Finance%20income%20and%20%28expenses%29%2C%20net%20%28Detailed%20Analysis%29) - Shifted from an income of **$3.6 million** in Q1 2022 to an expense of **$2.0 million** in Q1 2023, a decrease of **$5.6 million**, primarily due to net foreign exchange losses of **$5.8 million**[136](index=136&type=chunk) [Income tax (expense)/benefit](index=32&type=section&id=Income%20tax%20%28expense%29%2Fbenefit%20%28Detailed%20Analysis%29) - Income tax expense was **$2.0 million** in Q1 2023 (effective tax rate **2.7%**), compared to a benefit of **$1.1 million** in Q1 2022 (effective tax rate **-1.3%**), mainly driven by unrecognized tax losses[137](index=137&type=chunk) [Seasonality](index=32&type=section&id=Seasonality%20%28MD%26A%29) - No pronounced seasonality observed to date, but expected to increase with company growth, especially in the food retail channel linked to holiday seasons (e.g., Lunar New Year in Asia)[138](index=138&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) - Oatly's primary requirements for liquidity and capital are to finance working capital, capital expenditures (**$180-$200 million** for 2023), and organizational capabilities[139](index=139&type=chunk) - As of March 31, 2023, cash and cash equivalents were **$78.8 million**, with access to **$259.7 million** in undrawn bank facilities[140](index=140&type=chunk)[141](index=141&type=chunk) - Post-reporting period, the company undertook a significant refinancing, including a senior secured revolving facility (**SEK 2,100 million / $202.4 million**), a **$130 million term loan facility**, and **$291 million** from Convertible Notes, expected to provide sufficient liquidity for the next 12 months[142](index=142&type=chunk) [Sustainable Revolving Credit Facility and Term Loan B Facility](index=32&type=section&id=Sustainable%20Revolving%20Credit%20Facility%20and%20Term%20Loan%20B%20Facility) - SRCF Agreement amended and restated on April 18, 2023, resetting term to 3.5 years, reducing commitments to **SEK 2,100 million ($202.4 million)**, and resetting financial covenants[143](index=143&type=chunk)[145](index=145&type=chunk) - Entered into a Term Loan B Credit Agreement on April 18, 2023, for a **$130 million term loan facility**, with a five-year term and 1% annual amortization[146](index=146&type=chunk) - Debt under SRCF, EIF Facility, and Term Loan B ranks pari passu and shares the same security and guarantees via an Intercreditor Agreement[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk) [Convertible Notes](index=34&type=section&id=Convertible%20Notes) - Issued **$300 million** aggregate principal amount of **9.25% Convertible Senior PIK Notes due 2028** in March and April 2023, with an initial conversion price of **$2.41 per share/ADS**[148](index=148&type=chunk)[150](index=150&type=chunk) - Existing shareholders and institutional investors purchased the notes for an aggregate **$291 million** (3% original issue discount)[149](index=149&type=chunk) - Agreed to sell an additional **$35 million** in convertible notes to Hillhouse in May 2023, with an initial conversion price of **$2.52 per ADS**[151](index=151&type=chunk) [Other Credit Facilities](index=36&type=section&id=Other%20Credit%20Facilities) - EIF Facility: **€3.4 million ($3.7 million)** outstanding as of March 31, 2023, with term extended to October 2025[153](index=153&type=chunk) - CMB Credit Facility: **RMB 30 million ($4.4 million)** outstanding as of March 31, 2023, from a RMB 150 million working capital facility entered in November 2022[154](index=154&type=chunk) [Cash Flows](index=36&type=section&id=Cash%20Flows) [Net cash flows used in operating activities](index=36&type=section&id=Net%20cash%20flows%20used%20in%20operating%20activities) - Net cash used in operating activities increased by **$2.3 million (3.3%)** to **$71.2 million** in Q1 2023, primarily driven by a loss from operations[157](index=157&type=chunk) [Net cash from/(used in) investing activities](index=36&type=section&id=Net%20cash%20from%2F%28used%20in%29%20investing%20activities) - Shifted to a net cash inflow of **$15.9 million** in Q1 2023, from an outflow of **$1.4 million** in Q1 2022, an increase of **$17.3 million**[158](index=158&type=chunk) - Driven by **$44.0 million** net proceeds from assets held for sale (YYF transaction), offsetting **$27.2 million** in property, plant, and equipment investments[158](index=158&type=chunk) [Net cash from/(used in) financing activities](index=36&type=section&id=Net%20cash%20from%2F%28used%20in%29%20financing%20activities) - Shifted to a net cash inflow of **$48.8 million** in Q1 2023, from an outflow of **$4.2 million** in Q1 2022, an increase of **$53.0 million**, primarily related to another drawdown under the revolving credit facility[159](index=159&type=chunk) [Contractual Obligations and Commitments](index=36&type=section&id=Contractual%20Obligations%20and%20Commitments) - Refer to Note 25 Commitments and Contingencies for details on contractual commitments[160](index=160&type=chunk) [Non-IFRS Financial Measures](index=36&type=section&id=Non-IFRS%20Financial%20Measures) [Definitions and Reconciliations](index=36&type=section&id=Definitions%20and%20Reconciliations) - EBITDA is defined as loss for the period attributable to shareholders of the parent adjusted for income tax expense, finance expenses, finance income, and depreciation and amortization expense[161](index=161&type=chunk) - Adjusted EBITDA is EBITDA further adjusted to exclude share-based compensation expense, restructuring costs, and asset impairment charge and other costs related to assets held for sale[162](index=162&type=chunk) - Constant Currency Revenue is calculated by translating current year reported revenue amounts into comparable amounts using the prior year reporting period's average foreign exchange rates[163](index=163&type=chunk) EBITDA and Adjusted EBITDA Reconciliation (Q1 2023 vs Q1 2022) | Metric | Q1 2023 (USD thousands) | Q1 2022 (USD thousands) | | :-------------------------------- | :---------------------- | :---------------------- | | Loss for the period attributable to shareholders of the parent | (75,577) | (87,459) | | Income tax expense/(benefit) | 2,012 | (1,121) | | Finance (income) and expenses, net | 1,996 | (3,577) | | Depreciation and amortization expense | 12,233 | 10,731 | | **EBITDA** | **(59,336)** | **(81,426)** | | Share-based compensation expense | 8,047 | 10,037 | | Restructuring costs | 1,195 | — | | Costs related to the YYF transaction | 221 | — | | **Adjusted EBITDA** | **(49,873)** | **(71,389)** | Constant Currency Revenue by Segment (Q1 2023 vs Q1 2022) | Segment | Q1 2023 Reported (USD thousands) | Q1 2022 Reported (USD thousands) | Foreign Exchange Impact (USD thousands) | Q1 2023 Constant Currency (USD thousands) | % Change Reported | % Change Constant Currency | | :-------- | :------------------------------- | :------------------------------- | :-------------------------------------- | :--------------------------------------- | :---------------- | :------------------------- | | EMEA | 98,216 | 90,483 | 7,495 | 105,711 | 8.5% | 16.8% | | Americas | 64,041 | 47,017 | — | 64,041 | 36.2% | 36.2% | | Asia | 33,388 | 28,686 | 2,118 | 35,506 | 16.4% | 23.8% | | **Total** | **195,645** | **166,186** | **9,613** | **205,258** | **17.7%** | **23.5%** | [Off-Balance Sheet Arrangements](index=38&type=section&id=Off-Balance%20Sheet%20Arrangements) - The company did not have any off-balance sheet financing arrangements or relationships with unconsolidated entities during the period[171](index=171&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=38&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) - Interim condensed consolidated financial statements are prepared in accordance with IFRS, requiring estimates and assumptions[172](index=172&type=chunk) - No material changes to critical accounting policies and estimates from those discussed in the 2022 Annual Report[174](index=174&type=chunk) [Recent Accounting Pronouncements](index=40&type=section&id=Recent%20Accounting%20Pronouncements) - Refer to Note 2 Summary of significant accounting policies for discussion of recently adopted and issued accounting pronouncements[175](index=175&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Oatly is exposed to certain market risks in the ordinary course of its business, primarily foreign exchange risk, interest rate risk, credit risk, and liquidity risk. Further discussion and sensitivity analysis of these risks are available in the company's 2022 Annual Report - The company is exposed to foreign exchange risk, interest rate risk, credit risk, and liquidity risk[176](index=176&type=chunk) - Further discussion and sensitivity analysis of these risks are available in Note 3 Financial risk management to the audited consolidated financial statements for the year ended December 31, 2022, included in the 2022 Annual Report[176](index=176&type=chunk) [PART II – OTHER INFORMATION](index=40&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) Covers legal proceedings, risk factors, unregistered sales of equity securities, defaults, mine safety disclosures, and other information [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings other than those described in Note 25 Commitments and Contingencies - The company is not currently a party to any material legal proceedings, including any such proceedings that are pending or threatened, of which it is aware, other than as described in Note 25 Commitments and Contingencies[177](index=177&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) Investors should carefully consider the risks outlined in the 2022 Annual Report and this 6-K, as there have been no material changes to the company's risk factors - Investors should carefully consider the risks described in Item 3.D. 'Risk Factors' in the 2022 Annual Report and other information in this Report, including unaudited condensed consolidated financial statements and related notes[178](index=178&type=chunk) - There have been no material changes to the company's risk factors since those reported in the 2022 Annual Report[178](index=178&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Information regarding the use of proceeds from unregistered sales of equity securities is incorporated by reference from a previous 6-K filing - The information contained in Item 2 in Part II of the Company's Report on Form 6-K filed on November 15, 2021, is incorporated by reference herein[179](index=179&type=chunk) [Item 3. Defaults Upon Senior Securities](index=40&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There have been no defaults upon senior securities - None[180](index=180&type=chunk) [Item 4. Mine Safety Disclosures](index=40&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - Not applicable[181](index=181&type=chunk) [Item 5. Other Information](index=40&type=section&id=Item%205.%20Other%20Information) No other information to report in this section - None[182](index=182&type=chunk) [Signatures](index=41&type=section&id=Signatures) Contains the official signatures, confirming the due authorization and filing of the report by Oatly Group AB's Chief Financial Officer [Signatures](index=41&type=section&id=Signatures) This section contains the official signatures, confirming the due authorization and filing of the report by Oatly Group AB's Chief Financial Officer - The report was duly caused to be signed on behalf of Oatly Group AB by Christian Hanke, Chief Financial Officer, on May 9, 2023[184](index=184&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk)

Oatly Group AB (NASDAQ:OTLY) Q1 2023 Earnings Conference Call May 9, 2023 8:30 AM ET Company Participants Toni Petersson - Chief Executive Officer Christian Hanke - Chief Financial Officer Daniel Ordonez - Chief Operating Officer Jean-Christophe Flatin - Global President Brian Kearney - Investor Relations Conference Call Participants Michael Lavery - Piper Sandler Rob Dickerson - Jefferies Peter Galbo - Bank of America John Baumgartner - Mizuho Operator Good morning and welcome to Oatly 2023 First Quarter ...

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