Oatly(OTLY) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a 3.2% year-over-year revenue growth and a constant currency revenue growth of 3.9% for the quarter [4] - Gross margin for the quarter was 29.2%, which is 1,000 basis points higher than a year ago [4] - Adjusted EBITDA was a loss of $11 million, representing a$ 41.5 million improvement compared to the same quarter last year [4][32] Business Line Data and Key Metrics Changes - The North America segment achieved nearly 10% revenue growth and was profitable in the quarter [2] - The European & International segment reported constant currency revenue growth of 7.5% and adjusted EBITDA of $12.6 million [40] - The Greater China segment experienced a volume growth of over 26% in the quarter, although it faced a 15.9% constant currency decline due to strategic resets [63][65] Market Data and Key Metrics Changes - In Europe, the retail channel grew by 13%, leading to market share gains in oat milk of 370 basis points year-on-year [42] - The foodservice side of the business in North America grew by 9% in the quarter [87] - The company noted strong growth in new European markets, with triple-digit growth in Spain and Belgium [1][19] Company Strategy and Development Direction - The company is focused on bringing the Oatly magic to more people and engaging with new consumers while expanding geographically [34] - There is a commitment to maintaining cost discipline while investing in demand generation to drive growth [38] - The company plans to continue its strategic initiatives across all segments, with a focus on executional excellence [56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the second half of the year, updating full-year guidance to expect constant currency revenue growth in the range of 6% to 10% [31] - The company remains cautious about the consumer macroenvironment but is pleased with progress in the Greater China segment [3] - Management emphasized the importance of maintaining a focus on profitable growth as a long-term goal [10][60] Other Important Information - The company has a strong liquidity position with$ 335 million available to fund its business plan [23][91] - The strategic reset in Greater China is expected to yield more favorable growth rates in the upcoming quarters [45][92] - The company is actively working on SG&A cost savings and has completed two rounds of savings programs [76][107] Q&A Session Summary Question: What is the outlook for pricing in China and globally? - Management indicated that the pricing strategy will be influenced by the performance of new customer agreements and overall market conditions [5][96] Question: What are the expectations for cash burn in the second half of the year? - Management confirmed that they remain on track for a total cash outflow of no more than $20 million related to plant exits [67][104] Question: How is the company managing entry approaches in different competitive landscapes? - The company is adapting its strategies based on market maturity and competitive dynamics, focusing on brand uniqueness and consumer engagement [24][110] Question: What is the expected cadence of EBITDA progression in the back half of the year? - Management stated that while they do not provide specific quarterly guidance, they expect continued improvement in EBITDA as they focus on profitable growth [98][100]