Oatly(OTLY) - 2022 Q4 - Annual Report

Overview and Highlights Fourth Quarter & Full Year 2022 Performance Oatly's Q4 revenue grew 4.9% to $195.1M (13.9% constant currency), full year up 12.3% to $722.2M (20.1% constant currency), with improved gross margin and adjusted EBITDA loss Q4 2022 Revenue by Segment (in thousands of U.S. dollars) | Region | 2022 | 2021 | % Change (Reported) | % Change (Constant Currency) | | :--- | :--- | :--- | :--- | :--- | | EMEA | $89,974 | $88,881 | 1.2% | 15.4% | | Americas | $64,386 | $55,487 | 16.0% | 16.0% | | Asia | $40,708 | $41,557 | -2.0% | 7.6% | | Total | $195,068 | $185,925 | 4.9% | 13.9% | Full Year 2022 Revenue by Segment (in thousands of U.S. dollars) | Region | 2022 | 2021 | % Change (Reported) | % Change (Constant Currency) | | :--- | :--- | :--- | :--- | :--- | | EMEA | $345,509 | $336,452 | 2.7% | 15.5% | | Americas | $223,880 | $179,830 | 24.5% | 24.5% | | Asia | $152,849 | $126,908 | 20.4% | 25.8% | | Total | $722,238 | $643,190 | 12.3% | 20.1% | Q4 2022 Key Financial Metrics | Metric | Q4 2022 | Q4 2021 | Change | | :--- | :--- | :--- | :--- | | Revenue | $195.1M | $185.9M | +4.9% | | Gross Margin | 15.9% | 15.9% | Flat YoY | | Net Loss | $125.2M | $79.8M | Increased Loss | | Adjusted EBITDA Loss | $60.5M | $65.6M | Improved by $5.1M | Financing and Strategic Updates Oatly secured $425 million in financing for growth and completed a strategic transaction with Ya YA Foods for an asset-light manufacturing model - Secured $425 million in financing commitments to fund growth investments and reach financial self-sufficiency[1][3][4] - Completed the Ya YA Foods (YYF) transaction to establish a strategic hybrid manufacturing alliance in North America, moving towards an asset-light model[3][13] - Management stated that bold actions were taken in 2022 to strengthen the management team, transition the supply chain, and simplify the cost structure[3] Financial Performance Consolidated Financial Results (Q4 2022) Q4 2022 revenue grew 4.9% to $195.1M, with gross margin improving to 15.9% sequentially, but net loss widened to $125.2M due to asset impairment - Q4 revenue growth was primarily driven by price increases implemented in EMEA and the Americas, with sold volume increasing to 137 million liters from 124 million in Q4 2021[8] - Gross margin improved sequentially by 1,320 basis points from Q3 2022, driven by supply chain improvements (660 bps), easing COVID restrictions in Asia (430 bps), and pricing actions (140 bps)[10][14] - Selling, general and administrative (SG&A) expenses decreased by $11.0 million to $107.9 million, mainly due to a $9.3 million reduction in branding and marketing expenses[11] - Other operating expenses were $41.1 million, compared to income of $2.3 million in the prior year, primarily due to an asset impairment charge related to the YYF transaction[12] Segment Performance (Q4 2022) In Q4, EMEA revenue grew 15.4% in constant currency with Adjusted EBITDA turning positive at $1.7 million. Americas revenue grew 16.0% driven by pricing, with Adjusted EBITDA loss narrowing to $4.7 million despite significant one-time charges. Asia revenue grew 7.6% in constant currency despite COVID-19 headwinds, but its Adjusted EBITDA loss widened to $21.0 million due to investments in growth Q4 2022 Segment Adjusted EBITDA (in thousands of U.S. dollars) | Segment | Q4 2022 | Q4 2021 | | :--- | :--- | :--- | | EMEA | $1,735 | ($2,779) | | Americas | ($4,661) | ($8,708) | | Asia | ($21,004) | ($14,948) | | Corporate | ($36,534) | ($39,174) | | Total | ($60,464) | ($65,609) | EMEA - Revenue increased 1.2% as reported to $90.0 million, but grew 15.4% on a constant currency basis, driven by growth across all markets and channels, particularly the Barista oat drink[23] - Adjusted EBITDA improved to a profit of $1.7 million from a loss of $2.8 million in the prior year, primarily due to lower operating expenses, including reduced branding and advertising spend[24] Americas - Revenue increased 16.0% to $64.4 million, primarily due to price increases on oat drink products, while sold volume remained flat at 36 million liters[26][27] - EBITDA loss widened significantly to $45.8 million from $9.9 million, largely due to one-time impairment charges and costs related to the YYF transaction[28] - Adjusted EBITDA loss improved to $4.7 million from $8.7 million in the prior year period[28] Asia - Revenue decreased 2.0% as reported to $40.7 million but increased 7.6% on a constant currency basis, despite impacts from COVID-19 in China. Sold volume grew to 27 million liters from 22 million in Q4 2021[29] - Adjusted EBITDA loss widened to $21.0 million from $14.9 million, driven by higher operating expenses to scale operations and lower gross profit margin from higher production costs[30] Corporate Expense - Corporate expense, consisting of unallocated general overhead costs, decreased by $1.8 million to $42.5 million in Q4 2022, primarily due to lower professional fees[31] Financial Position and Cash Flow Balance Sheet and Cash Flow Summary As of Dec 31, 2022, Oatly held $82.6M cash and $52.6M debt; FY2022 net cash used in operations was $268.9M, with capex at $201.7M Key Balance Sheet and Cash Flow Data (as of Dec 31, 2022) | Metric | Amount (USD) | | :--- | :--- | | Cash and cash equivalents | $82.6 million | | Total outstanding debt | $52.6 million | | Net cash used in operating activities (FY 2022) | $268.9 million | | Capital expenditures (FY 2022) | $201.7 million | Business Outlook Fiscal Year 2023 Guidance FY2023 guidance projects 23-28% constant currency revenue growth, gross margin improving to high-20%s by Q4, capex $180-200M, targeting positive adjusted EBITDA in FY2024 - Revenue growth is projected to be 23% to 28% on a constant currency basis[34] - Gross margin is expected to improve sequentially each quarter, reaching the high-20%s in Q4 2023[34] - Capital expenditures are guided to be between $180 million and $200 million[34] - The company believes its 2023 progress will lead to a full year of positive adjusted EBITDA in fiscal 2024[13][33] Long-Term Targets Oatly's long-term targets include a gross profit margin of 35-40% and an adjusted EBITDA margin in the mid- to high-teens - Targeting a long-term gross profit margin of 35% to 40%[34] - Aiming for a long-term adjusted EBITDA margin in the mid- to high-teens[34] Appendix Non-IFRS Financial Measures Reconciliation This section reconciles IFRS to non-IFRS measures, showing Q4 2022 net loss of $125.2M adjusted to an Adjusted EBITDA loss of $60.5M Reconciliation of Net Loss to Adjusted EBITDA (Q4 2022, in thousands $) | Line Item | Q4 2022 | Q4 2021 | | :--- | :--- | :--- | | Loss for the period | (125,169) | (79,753) | | Income tax (benefit)/expense | 3,236 | (5,434) | | Finance (income) and expenses, net | (3,098) | (7,480) | | Depreciation and amortization | 13,835 | 10,836 | | EBITDA | (111,196) | (81,831) | | Share-based compensation | 7,741 | 9,598 | | Restructuring costs | 3,410 | — | | Product recall expenses | — | 1,654 | | Asset impairment & related costs | 39,581 | 4,970 | | Adjusted EBITDA | (60,464) | (65,609) | Consolidated Financial Statements This section presents unaudited consolidated statements of operations, financial position, and cash flows for Q4 and FY2022 - The Consolidated Statement of Operations details revenue, costs, and expenses, resulting in a net loss of $125.2 million for Q4 2022 and $392.6 million for the full year[46] - The Consolidated Statement of Financial Position shows total assets of $1.23 billion and total equity of $791.1 million as of December 31, 2022[48] - The Consolidated Statement of Cash Flows indicates a net cash usage of $268.9 million in operating activities and $201.7 million in capital expenditures for the full year 2022[49]