Oatly(US:OTLY)2026-02-11 14:02Financial Data and Key Metrics Changes - Oatly achieved its first full year of profitable growth, with revenue growth of 4.7% and positive Adjusted EBITDA of $6.8 million for the full year [24][25] - In Q4, revenue grew by 9.1%, with a constant currency growth of 4.3%, and gross margin improved to 34.5%, an increase of 580 basis points year-over-year [24][25] - Adjusted EBITDA for Q4 was positive $11 million, which is $17.1 million higher than the same quarter last year [24][25] Business Line Data and Key Metrics Changes - Volume growth in Europe and international segments was 13.9%, contributing to a $9.9 million increase in segment-adjusted EBITDA [26] - North America experienced an 8.8% revenue decline primarily due to a change in sourcing strategy at a large customer, but excluding this customer, the segment grew 10% in the quarter [26] - Greater China saw a slight decline in constant currency revenue, but the food service channel grew by 5% [26] Market Data and Key Metrics Changes - In established markets, Europe and international segments grew by 7%, while expansion markets saw fantastic growth of 54% [17] - North America also achieved solid growth of 7% in both retail and food service when excluding the largest food service customer [17] - Household penetration is increasing, particularly among younger consumers, indicating a positive trend for the brand [19] Company Strategy and Development Direction - Oatly is focused on executing a refreshed growth playbook that emphasizes increased relevance, attacking barriers to conversion, and increasing availability to consumers [13][20] - The company plans to continue investing in new product innovations, including flavored Barista products and matcha offerings, to attract a broader consumer base [21][23] - A strategic review of the Greater China segment is planned for 2026, with options including a potential carve-out to maximize growth [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving stronger profitable growth in 2026, expecting constant currency revenue growth of 3%-5% and Adjusted EBITDA of $25 million-$35 million [12][28] - The company is committed to improving free cash flow, which is expected to be negative in 2026 but will show improvement from 2025 levels [27][28] - Management highlighted the importance of maintaining a culture of efficiency and continuous improvement to support growth [11] Other Important Information - Oatly has reduced its cost of goods sold per liter by 23% and total SG&A by nearly $100 million, reflecting significant restructuring efforts [9][10] - The company is focused on brand-building investments, particularly in the first half of 2026, to support its growth strategy [28] Q&A Session Summary Question: Expectations for North America food service in 2026 - Management noted that they have diversified their customer base and expect continued growth outside of the large customer that has been a drag on performance [33][35] Question: Enhancing protein content in response to competitors - Management emphasized their focus on fiber rather than protein, aligning with consumer trends towards fiber-rich diets [40][41] Question: Drivers of oat milk category declines in U.S. retail - Management acknowledged category softness but highlighted their strong performance and penetration growth, indicating a positive outlook for the brand [46][49] Question: Free Cash Flow expectations and improvements - Management explained that Free Cash Flow has not improved sequentially due to various factors, but they expect significant improvements in 2026 driven by higher Adjusted EBITDA and better working capital management [67][70]