Oatly(OTLY) - 2023 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION 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 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 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 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 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 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 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 Note 1. Corporate information - Oatly Group AB is a public limited company incorporated and domiciled in Sweden, manufacturing, distributing, and selling oat-based products[15][16] Note 2. Summary of significant accounting policies - 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] - No material impact is expected from new and amended IFRS standards not yet adopted[19] Note 3. Significant accounting judgments, estimates and assessments - Significant judgments and key sources of estimation uncertainty are consistent with those applied in the 2022 annual consolidated financial statements[20] Note 4. Seasonality - 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] Note 5. Segment information 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] Note 6. Share-based compensation - Share-based payments expense decreased to $8.0 million for Q1 2023 from $10.0 million in Q1 2022[37] - 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][36] Note 7. Finance income and expenses 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 - 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] - Unrecognized tax losses in Sweden are the main driver of the Group's effective tax rate[39] Note 9. Intangible assets - Total intangible assets increased to $128.3 million as of March 31, 2023, from $127.7 million as of December 31, 2022[40] - Amortization expense for Q1 2023 was $1.0 million, up from $0.8 million in Q1 2022[40] Note 10. Property, Plant and Equipment - 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] - Additions in construction in progress are mainly related to investment in new and existing production facilities[41] - Depreciation expense for Q1 2023 was $7.8 million, up from $7.2 million in Q1 2022[43] Note 11. Leases - Right-of-use assets increased to $113.3 million as of March 31, 2023, from $108.6 million as of December 31, 2022[47] - 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][45] 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][50] Note 12. Other non-current receivables - 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] - 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][52] Note 13. Fair value of financial instruments - 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][56][57] 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][60] Note 14. Inventories - Total inventories decreased to $108.2 million as of March 31, 2023, from $114.5 million as of December 31, 2022[61] - Inventories recognized as an expense (cost of goods sold) for Q1 2023 were $152.9 million (Q1 2022: $141.9 million)[61] - Write-downs of inventories to net realizable value increased to $3.5 million in Q1 2023 (Q1 2022: $2.0 million)[62] Note 15. Trade receivables - Trade receivables, net, increased to $106.7 million as of March 31, 2023, from $101.0 million as of December 31, 2022[63] - Allowance for expected credit losses decreased from $3.7 million to $1.8 million[63] - Largest currency exposures for trade receivables are EUR ($32.6 million), USD ($27.1 million), and GBP ($25.0 million)[63] Note 16. Other current receivables - Other current receivables increased to $32.2 million as of March 31, 2023, from $17.8 million as of December 31, 2022[64] - Includes $13.7 million credit toward future capital expenditures related to the YYF transaction for oat base capacity completion at Dallas-Fort Worth[64] Note 17. Cash and cash equivalents - Cash and cash equivalents decreased to $78.8 million as of March 31, 2023, from $82.6 million as of December 31, 2022[65] - Comprises short-term deposits ($25.0 million) and cash at bank and on hand ($53.8 million)[65] Note 18. Non-current assets held for sale - 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] - 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] - 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] - As of December 31, 2022, assets held for sale amounted to $142.7 million, with an impairment of $38.3 million recognized[66][67] Note 19. Share capital and other contributed capital - As of March 31, 2023, and December 31, 2022, 68,847 thousand warrants were outstanding[70] - As of March 31, 2023, 592,320 thousand ordinary shares were registered, with 107 thousand held as treasury shares[72] Note 20. Liabilities to credit institutions - 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] - 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][75] - 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] Note 21. Provisions - 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] - Additional restructuring provisions of $1.1 million were recognized in Q1 2023[79] Note 22. Accrued expenses - Total accrued expenses decreased to $117.7 million as of March 31, 2023, from $123.0 million as of December 31, 2022[80] - Key components include accrued personnel expenses ($31.6 million), production expenses ($25.6 million), and variable consideration ($18.0 million)[80] Note 23. Related party disclosures - 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] Note 24. Loss per share - Basic and diluted loss per share was $(0.13) for Q1 2023, an improvement from $(0.15) in Q1 2022[84] - Weighted average common shares outstanding were 592.3 million for Q1 2023[84] - Potential dilutive securities (RSUs and stock options) were anti-dilutive and not included in calculations[85] Note 25. Commitments and Contingencies - 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] - 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] - 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] Note 26. Events after the end of the reporting period - 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][92] - Existing shareholders and institutional investors purchased the notes for an aggregate $291 million (3% original issue discount)[91][149] - 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] - 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] - 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][99] - Announced Jean-Christophe Flatin as the new CEO, effective June 1, 2023, with Toni Petersson transitioning to Co-Chairman of the Board[100] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 - 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][104] - 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][106] 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] Components of Results of Operations and Trends and Other Factors Affecting our Business Strategic actions – an update - Implemented strategic actions to adapt supply chain, simplify organizational structure, and drive profitability with an asset-light strategy[110] - 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] - Recorded $1.2 million in restructuring costs in Q1 2023 related to organizational simplification, with further opportunities expected throughout 2023[113] Impact of the Current Macroeconomic Environment on our Results - COVID-19 pandemic in mainland China continued to impact business in Q1 2023, but improvement is expected throughout the remainder of 2023[114] - 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] Revenue - 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] - Oatmilk accounted for over 90% of consolidated revenue in Q1 2023[116] - 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] Cost of goods sold - Cost of goods sold consists primarily of raw materials (oats), packaging, co-manufacturing fees, direct labor, overhead, warehousing, and transportation[118] - 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] Gross profit and margin - Gross profit margin benefits from localized production capacity and is expected to improve through manufacturing operational performance, leveraging fixed costs, and procurement efficiencies[119] - Pricing actions have been implemented to partially offset significant inflation, with further actions possible[120] Operating expenses - 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] - 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] - Other operating income and (expenses), net, primarily consists of net foreign exchange gains/losses on operating activities[123] Other - Finance income and (expenses), net, includes interest on loans and leases, and foreign exchange gains/losses on financing arrangements[124] - Income tax (expense)/benefit represents current and deferred income taxes, reflecting earnings and applicable tax rates in various jurisdictions[124] Results of Operations Revenue - Revenue increased by $29.5 million (17.7%) to $195.6 million in Q1 2023, driven by sold volume growth and price increases[127] - Excluding a $9.6 million foreign currency headwind, constant currency revenue increased by 23.5% to $205.3 million[128] - Sold finished goods volume increased to 128 million liters in Q1 2023 from 118 million liters in Q1 2022[128] - 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][130] - 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] Cost of goods sold - Cost of goods sold increased by $11.2 million (7.5%) to $161.6 million in Q1 2023, primarily due to higher revenue[132] Gross profit and margin - 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] - 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] Research and development expenses - 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] Selling, general and administrative expenses - 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] - 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] Other operating income and (expenses), net - 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] Finance income and (expenses), net - 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] Income tax (expense)/benefit - 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] Seasonality - 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] Liquidity and Capital Resources - Oatly's primary requirements for liquidity and capital are to finance working capital, capital expenditures ($180-$200 million for 2023), and organizational capabilities[139] - As of March 31, 2023, cash and cash equivalents were $78.8 million, with access to $259.7 million in undrawn bank facilities[140][141] - 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] Sustainable Revolving Credit Facility and Term Loan B Facility - 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][145] - 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] - Debt under SRCF, EIF Facility, and Term Loan B ranks pari passu and shares the same security and guarantees via an Intercreditor Agreement[145][146][147] Convertible Notes - 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][150] - Existing shareholders and institutional investors purchased the notes for an aggregate $291 million (3% original issue discount)[149] - 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] Other Credit Facilities - EIF Facility: €3.4 million ($3.7 million) outstanding as of March 31, 2023, with term extended to October 2025[153] - 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] Cash Flows Net cash flows used in operating activities - 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] Net cash from/(used in) investing activities - 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] - 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] Net cash from/(used in) financing activities - 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] Contractual Obligations and Commitments - Refer to Note 25 Commitments and Contingencies for details on contractual commitments[160] Non-IFRS Financial Measures Definitions and Reconciliations - 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] - 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] - 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] 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 - The company did not have any off-balance sheet financing arrangements or relationships with unconsolidated entities during the period[171] Critical Accounting Policies and Significant Judgments and Estimates - Interim condensed consolidated financial statements are prepared in accordance with IFRS, requiring estimates and assumptions[172] - No material changes to critical accounting policies and estimates from those discussed in the 2022 Annual Report[174] Recent Accounting Pronouncements - Refer to Note 2 Summary of significant accounting policies for discussion of recently adopted and issued accounting pronouncements[175] Item 3. Quantitative and Qualitative Disclosures About Market Risk 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] - 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] PART II – OTHER INFORMATION Covers legal proceedings, risk factors, unregistered sales of equity securities, defaults, mine safety disclosures, and other information Item 1. Legal Proceedings 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] Item 1A. Risk Factors 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] - There have been no material changes to the company's risk factors since those reported in the 2022 Annual Report[178] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] Item 3. Defaults Upon Senior Securities There have been no defaults upon senior securities - None[180] Item 4. Mine Safety Disclosures Not applicable - Not applicable[181] Item 5. Other Information No other information to report in this section - None[182] Signatures Contains the official signatures, confirming the due authorization and filing of the report by Oatly Group AB's Chief Financial Officer 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][185][186]