Oatly Group AB (Nasdaq: OTLY) (“Oatly” or the “Company”), the
world’s original and largest oat drink company, today announced
financial results for the second quarter and six months ended
June 30, 2023.
Jean-Christophe Flatin, Oatly’s CEO, commented,
“In the second quarter, we continued to make progress towards our
goal of achieving profitable growth in 2024. As expected, we
continued our sequential improvement of gross margin and increased
our advertising investments to continue to fuel growth. This
progress is most evident in our EMEA and Americas segments, both of
which continued to improve Adjusted EBITDA while increasing
demand-generating investments.”
Flatin continued, “However, as Asia has
transitioned to a post-pandemic era, consumers have behaved
differently than we had originally expected, and we need to adjust.
Similar to the improvement plans that we have been executing in
EMEA and Americas, we have initiated a comprehensive improvement
plan that will enable our Asia business to adapt to the evolving
environment and strengthen the core business before building a
significantly bigger business. We have also taken actions to
further simplify our corporate functions and Americas segment
overhead, which will lead to additional cost savings as well as
increased focus and agility. While we are reducing our 2023 sales
guidance, we continue to expect to achieve our fourth quarter gross
margin target of the high 20%s, and we remain on-track for
achieving positive adjusted EBITDA in 2024.”
The tables below reconcile revenue as reported
to revenue on a constant currency basis by segment for the three
and six months ended June 30, 2023 and 2022.
|
|
Three months ended June 30, |
|
|
$ Change |
|
|
% Change |
|
|
|
|
|
|
2023 |
|
|
2022 |
|
|
As reported |
|
|
Foreign exchange impact |
|
|
In constant currency |
|
|
As reported |
|
|
In constant currency |
|
|
Volume |
|
|
Constant currency price/mix |
|
EMEA |
|
|
96,989 |
|
|
|
82,485 |
|
|
|
96,989 |
|
|
|
30 |
|
|
|
96,959 |
|
|
|
17.6 |
% |
|
|
17.5 |
% |
|
|
7.2 |
% |
|
|
10.3 |
% |
Americas |
|
|
61,832 |
|
|
|
51,775 |
|
|
|
61,832 |
|
|
|
— |
|
|
|
61,832 |
|
|
|
19.4 |
% |
|
|
19.4 |
% |
|
|
1.7 |
% |
|
|
17.7 |
% |
Asia |
|
|
37,166 |
|
|
|
43,698 |
|
|
|
37,166 |
|
|
|
(1,840 |
) |
|
|
39,006 |
|
|
|
-14.9 |
% |
|
|
-10.7 |
% |
|
|
-5.1 |
% |
|
|
-5.6 |
% |
Total
revenue |
|
|
195,987 |
|
|
|
177,958 |
|
|
|
195,987 |
|
|
|
(1,810 |
) |
|
|
197,797 |
|
|
|
10.1 |
% |
|
|
11.1 |
% |
|
|
3.4 |
% |
|
|
7.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, |
|
|
$ Change |
|
|
% Change |
|
|
|
|
|
|
2023 |
|
|
2022 |
|
|
As reported |
|
|
Foreign exchange impact |
|
|
In constant currency |
|
|
As reported |
|
|
In constant currency |
|
|
Volume |
|
|
Constant currency price/mix |
|
EMEA |
|
|
195,205 |
|
|
|
172,968 |
|
|
|
195,205 |
|
|
|
(7,478 |
) |
|
|
202,683 |
|
|
|
12.9 |
% |
|
|
17.2 |
% |
|
|
6.8 |
% |
|
|
10.4 |
% |
Americas |
|
|
125,873 |
|
|
|
98,792 |
|
|
|
125,873 |
|
|
|
— |
|
|
|
125,873 |
|
|
|
27.4 |
% |
|
|
27.4 |
% |
|
|
4.1 |
% |
|
|
23.3 |
% |
Asia |
|
|
70,554 |
|
|
|
72,384 |
|
|
|
70,554 |
|
|
|
(3,806 |
) |
|
|
74,360 |
|
|
|
-2.5 |
% |
|
|
2.7 |
% |
|
|
6.8 |
% |
|
|
-4.1 |
% |
Total
revenue |
|
|
391,632 |
|
|
|
344,144 |
|
|
|
391,632 |
|
|
|
(11,284 |
) |
|
|
402,916 |
|
|
|
13.8 |
% |
|
|
17.1 |
% |
|
|
6.0 |
% |
|
|
11.1 |
% |
Second Quarter 2023 Highlights
- Revenue of $196.0 million, a 10.1% increase compared to the
prior year period; on a constant currency basis, revenue increased
11.1%.
- Gross margin in the quarter was 19.2%, an increase of 340 basis
points compared to the prior year period and 180 basis points
compared to the first quarter of 2023.
- Net loss attributable to shareholders of the parent was $86.7
million compared to net loss of $72.0 million in the prior year
period.
- EBITDA loss of $63.0 million; Adjusted EBITDA loss of $52.5
million, which is a decrease of $0.9 million compared to the prior
year period.
- Closed on all previously-announced financing transactions
during the quarter, raising $465 million before fees and other
related expenses.
- After the quarter ended, initiated a comprehensive improvement
plan in the Asia segment, which includes increasing focus on the
core business, a simplification of the product portfolio, and a
reduction in operating costs.
- The Company has taken the necessary steps to further reduce its
SG&A costs in both its Americas segment and its Corporate
functions in order to further enhance the simplicity and agility of
the organization. Collectively between the SG&A savings in the
Asia segment, the Americas segment, and Corporate functions, the
Company targets to achieve approximately $85 million of savings in
2024.
Second Quarter 2023 Results
Revenue increased $18.0 million, or 10.1%, to
$196.0 million for the second quarter ended June 30, 2023,
compared to $178.0 million for the second quarter ended
June 30, 2022. Excluding a foreign currency exchange headwind
of $1.8 million, revenue for the second quarter was $197.8 million,
or an increase of 11.1%, on a constant currency basis. The increase
was primarily driven by price increases implemented in EMEA
primarily during the first quarter of 2023 and the Americas in the
third quarter of 2022, in addition to continued volume growth for
the Company’s products in each of the EMEA and Americas segments.
Sold volume for the second quarter of 2023 amounted to 125 million
liters compared to 121 million liters in the same period last year.
Produced finished goods volume for the second quarter of 2023
amounted to 130 million liters compared to 124 million liters for
the same period last year.
The Company experienced revenue growth in the
retail and foodservice channels in the second quarter of 2023
compared to the second quarter of 2022.
Gross profit was $37.7 million for the second
quarter of 2023 compared to $28.1 million for the second quarter of
2022, and $34.1 million for the first quarter of 2023. Gross margin
in the second quarter was 19.2% compared to 17.4% in the first
quarter. The quarter-over-quarter increase was primarily driven by
cost improvements in the Americas supply chain, which were
partially offset by increased inventory write-offs and
co-manufacturer penalties in the Asia segment linked to the slower
than expected post COVID-19 recovery.
Research and development expenses in the second
quarter of 2023 decreased $0.4 million to $5.3 million compared to
$5.7 million in the prior year period.
Selling, general and administrative expenses in
the second quarter of 2023 increased $9.6 million to $106.7 million
compared to $97.1 million in the prior year period. The increase
was primarily due to $5.6 million in employee related expenses,
$2.9 million in branding, advertising and marketing expenses, and a
$3.7 million reduction in reimbursement from the depositary
relating to the administration of the ADR program. The increase was
offset by a decrease of $2.2 million in customer distribution
costs.
Other operating income and expenses, net for the
second quarter of 2023 decreased to an expense of $1.1 million
compared to an income of $0.2 million in the prior year period,
comprised primarily of a net foreign exchange loss.
In the second quarter of 2023, finance expenses
were $11.5 million compared to $0.6 million in the prior-year
period. The increase was primarily driven by expenses related to
the Company’s recent financing activities.
Net loss attributable to shareholders of the
parent was $86.7 million for the second quarter of 2023 compared to
net loss of $72.0 million in the prior year period. The increase in
net loss was almost entirely driven by the increase in finance
expenses.
EBITDA loss for the second quarter of 2023 was
$63.0 million, compared to an EBITDA loss of $62.6 million in the
second quarter of 2022. The increase in EBITDA loss was primarily a
result of higher selling, general and administrative expenses
offset by higher gross profit.
Adjusted EBITDA loss for the second quarter of
2023 was $52.5 million, compared to a loss of $53.4 million in the
second quarter of 2022, or essentially flat.
EBITDA, Adjusted EBITDA (Loss), and Constant currency revenue
are non-IFRS financial measures defined under “Non-IFRS financial
measures.” Please see above revenue at constant currency table and
“Reconciliation of IFRS to Non-IFRS Results” at the end of this
press release.
The following tables set forth revenue, Adjusted
EBITDA, EBITDA and loss before tax for the Company's three
reportable segments for the periods presented.
Revenue, Adjusted
EBITDA and EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, 2023 (in thousands of U.S.
dollars) |
|
EMEA |
|
|
Americas |
|
|
Asia |
|
|
Corporate* |
|
|
Eliminations** |
|
|
Total |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue from external customers |
|
|
96,989 |
|
|
|
61,832 |
|
|
|
37,166 |
|
|
|
— |
|
|
|
— |
|
|
|
195,987 |
|
Intersegment revenue |
|
|
359 |
|
|
|
— |
|
|
|
1,696 |
|
|
|
— |
|
|
|
(2,055 |
) |
|
|
— |
|
Total segment revenue |
|
|
97,348 |
|
|
|
61,832 |
|
|
|
38,862 |
|
|
|
— |
|
|
|
(2,055 |
) |
|
|
195,987 |
|
Adjusted EBITDA |
|
|
7,270 |
|
|
|
(9,414 |
) |
|
|
(21,900 |
) |
|
|
(28,424 |
) |
|
|
— |
|
|
|
(52,468 |
) |
Share-based compensation expense |
|
|
261 |
|
|
|
(607 |
) |
|
|
(1,291 |
) |
|
|
(785 |
) |
|
|
— |
|
|
|
(2,422 |
) |
Restructuring costs(1) |
|
|
— |
|
|
|
(2,407 |
) |
|
|
(136 |
) |
|
|
(5,429 |
) |
|
|
— |
|
|
|
(7,972 |
) |
Costs related to the YYF
Transaction(2) |
|
|
— |
|
|
|
(154 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(154 |
) |
EBITDA |
|
|
7,531 |
|
|
|
(12,582 |
) |
|
|
(23,327 |
) |
|
|
(34,638 |
) |
|
|
— |
|
|
|
(63,016 |
) |
Finance
income and (expenses), net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(11,512 |
) |
Depreciation and amortization |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(12,464 |
) |
Loss before tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(86,992 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, 2022 (in thousands of U.S.
dollars) |
|
EMEA |
|
|
Americas |
|
|
Asia |
|
|
Corporate* |
|
|
Eliminations** |
|
|
Total |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
from external customers |
|
|
82,485 |
|
|
|
51,775 |
|
|
|
43,698 |
|
|
|
— |
|
|
|
— |
|
|
|
177,958 |
|
Intersegment revenue |
|
|
9,493 |
|
|
|
241 |
|
|
|
537 |
|
|
|
— |
|
|
|
(10,271 |
) |
|
|
— |
|
Total segment revenue |
|
|
91,978 |
|
|
|
52,016 |
|
|
|
44,235 |
|
|
|
— |
|
|
|
(10,271 |
) |
|
|
177,958 |
|
Adjusted EBITDA |
|
|
5,313 |
|
|
|
(19,584 |
) |
|
|
(10,765 |
) |
|
|
(28,331 |
) |
|
|
— |
|
|
|
(53,367 |
) |
Share-based compensation expense |
|
|
(1,433 |
) |
|
|
(1,120 |
) |
|
|
(1,842 |
) |
|
|
(4,790 |
) |
|
|
— |
|
|
|
(9,185 |
) |
EBITDA |
|
|
3,880 |
|
|
|
(20,704 |
) |
|
|
(12,607 |
) |
|
|
(33,121 |
) |
|
|
— |
|
|
|
(62,552 |
) |
Finance
income and (expenses), net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(593 |
) |
Depreciation and amortization |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(11,877 |
) |
Loss before tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(75,022 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, 2023 (in thousands of U.S.
dollars) |
|
EMEA |
|
|
Americas |
|
|
Asia |
|
|
Corporate* |
|
|
Eliminations** |
|
|
Total |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
from external customers |
|
|
195,205 |
|
|
|
125,873 |
|
|
|
70,554 |
|
|
|
— |
|
|
|
— |
|
|
|
391,632 |
|
Intersegment revenue |
|
|
1,210 |
|
|
|
— |
|
|
|
3,136 |
|
|
|
— |
|
|
|
(4,346 |
) |
|
|
— |
|
Total segment revenue |
|
|
196,415 |
|
|
|
125,873 |
|
|
|
73,690 |
|
|
|
— |
|
|
|
(4,346 |
) |
|
|
391,632 |
|
Adjusted EBITDA |
|
|
13,854 |
|
|
|
(19,720 |
) |
|
|
(38,616 |
) |
|
|
(57,859 |
) |
|
|
— |
|
|
|
(102,341 |
) |
Share-based compensation expense |
|
|
(761 |
) |
|
|
(1,651 |
) |
|
|
(2,702 |
) |
|
|
(5,355 |
) |
|
|
— |
|
|
|
(10,469 |
) |
Restructuring costs(1) |
|
|
(1,008 |
) |
|
|
(2,594 |
) |
|
|
(136 |
) |
|
|
(5,429 |
) |
|
|
— |
|
|
|
(9,167 |
) |
Costs related to the YYF
Transaction(2) |
|
|
— |
|
|
|
(375 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(375 |
) |
EBITDA |
|
|
12,085 |
|
|
|
(24,340 |
) |
|
|
(41,454 |
) |
|
|
(68,643 |
) |
|
|
— |
|
|
|
(122,352 |
) |
Finance
income and (expenses), net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(13,508 |
) |
Depreciation and amortization |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(24,697 |
) |
Loss before tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(160,557 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, 2022 (in thousands of U.S.
dollars) |
|
EMEA |
|
|
Americas |
|
|
Asia |
|
|
Corporate* |
|
|
Eliminations** |
|
|
Total |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
from external customers |
|
|
172,968 |
|
|
|
98,792 |
|
|
|
72,384 |
|
|
|
— |
|
|
|
— |
|
|
|
344,144 |
|
Intersegment revenue |
|
|
24,539 |
|
|
|
813 |
|
|
|
537 |
|
|
|
— |
|
|
|
(25,889 |
) |
|
|
— |
|
Total segment revenue |
|
|
197,507 |
|
|
|
99,605 |
|
|
|
72,921 |
|
|
|
— |
|
|
|
(25,889 |
) |
|
|
344,144 |
|
Adjusted EBITDA |
|
|
(543 |
) |
|
|
(41,597 |
) |
|
|
(25,732 |
) |
|
|
(56,884 |
) |
|
|
— |
|
|
|
(124,756 |
) |
Share-based compensation expense |
|
|
(3,017 |
) |
|
|
(2,412 |
) |
|
|
(3,791 |
) |
|
|
(10,002 |
) |
|
|
— |
|
|
|
(19,222 |
) |
EBITDA |
|
|
(3,560 |
) |
|
|
(44,009 |
) |
|
|
(29,523 |
) |
|
|
(66,886 |
) |
|
|
— |
|
|
|
(143,978 |
) |
Finance
income and (expenses), net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,984 |
|
Depreciation and amortization |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(22,608 |
) |
Loss before tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(163,602 |
) |
* Corporate consists of general overhead costs not allocated to
the segments.
** Eliminations in 2023 refer to intersegment revenue for sales
of products from EMEA to Asia and from Asia to EMEA. Eliminations
in 2022 refer to intersegment revenue for sales of products from
EMEA to Asia, from Americas to Asia, and from Asia to EMEA.(1)
Relates primarily to severance payments as the Company continues to
adjust its organizational structure to the current macro
environment. (2) Relates to the closing of the Ya Ya Foods USA LLC
Transaction.
EMEA
EMEA revenue increased $14.5 million, or 17.6%,
to $97.0 million for the second quarter of 2023, compared to $82.5
million in the prior year period. The foreign exchange impact on
revenue was minor for the period. The increase in revenue was
primarily driven by price increases introduced at the beginning of
the year as well as solid volume growth in oat drinks.
Approximately 81.7% of EMEA revenue was from the retail channel for
the second quarter of 2023 compared to 81.8% in the prior year
quarter. The sold finished goods volume for the three months ended
June 30, 2023 and 2022 amounted to 68 million and 64 million
liters, respectively.
EMEA EBITDA increased $3.7 million to a benefit
of $7.5 million for the second quarter of 2023 compared to a
benefit of $3.9 million in the prior year period. The increase in
EMEA EBITDA was primarily due to higher gross profit offset by
higher operating expenses, primarily driven by higher branding and
advertising expenses. Adjusted EMEA EBITDA was a benefit of $7.3
million compared to a benefit of $5.3 million in the prior year
period.
Americas
Americas revenue increased $10.1 million, or
19.4%, to $61.8 million for the second quarter of 2023, compared to
$51.8 million in the prior year period. This increase was primarily
due to price increases across all customers and channels.
Approximately 51.2% of Americas revenue was from the retail channel
in the second quarter of 2023 compared to 55.3% in the prior year
quarter. The sold finished goods volume for the three months ended
June 30, 2023 and 2022 amounted to 36 million and 35 million
liters, respectively.
Americas EBITDA improved $8.1 million to a loss
of $12.6 million for the second quarter of 2023 compared to a loss
of $20.7 million in the prior year period. The increase in Americas
EBITDA was primarily due to higher gross profit driven by the price
increases implemented in the third quarter of 2022. Adjusted
Americas EBITDA, which excluded restructuring cost of $2.4 million
and recurring share-based compensation expense of $0.6 million, was
a loss of $9.4 million compared to a loss of $19.6 million in the
prior year period.
Asia
Asia revenue decreased $6.5 million, or 14.9%,
to $37.2 million for the second quarter of 2023, compared to $43.7
million in the prior year period. Excluding a foreign currency
exchange headwind of $1.8 million, Asia revenue for the second
quarter was $39.0 million, or a decrease of 10.7%. The Asia segment
was impacted by a slower-than-expected post-COVID-19 recovery in
China. Approximately 56.9% of Asia revenue was from the foodservice
channel for the second quarter of 2023 compared to 58.3% in the
prior year quarter. The sold finished goods volume for the three
months ended June 30, 2023 and 2022 amounted to 21 million and
22 million liters, respectively.
Asia EBITDA decreased $10.7 million to a loss of
$23.3 million for the second quarter of 2023 compared to a loss of
$12.6 million in the prior year period. The decrease in Asia EBITDA
was primarily due to lower gross profit and margin as our revenue
and capacity utilization was impacted by the previously mentioned
slower than expected recovery in China and higher operating
expenses. Adjusted Asia EBITDA, which excluded recurring
share-based compensation expense of $1.3 million, was a loss of
$21.9 million compared to a loss of $10.8 million in the prior year
period.
Corporate Overhead
Oatly’s Corporate overhead adjusted EBITDA,
which consists of general overhead costs not allocated to the
segments, in the second quarter of 2023 was $28.4 million, an
increase of $0.1 million compared to the prior year period.
Balance Sheet and Cash Flow
As of June 30, 2023, the Company had cash
and cash equivalents of $340.7 million, and total outstanding debt
to credit institutions of $125.5 million. Net cash used in
operating activities was $113.1 million for the six months ended
June 30, 2023, compared to $127.3 million during the prior
year period which was primarily driven by improved working capital.
Capital expenditures were $39.5 million compared to $111.3 million
in the prior year period and, in addition, proceeds from the sale
of assets related to the YYF Transaction was $44.0 million for the
six months ended June 30, 2023. Net cash from financing
activities was $367.3 million reflecting the close on the
previously-announced financing transactions.
As previously communicated, on May 9, 2023 the
Company entered into an agreement with an affiliate of Hillhouse
Investment Management Ltd. ("Hillhouse") to sell an additional $35
million in Convertible Notes, resulting in approximately $34
million in financing after reflecting an original issue discount of
3% (the “HH Notes”). The purchase and sale of the HH Notes closed
on May 31, 2023.
OutlookThe Company has
initiated a comprehensive improvement plan in its Asia segment that
the Company believes will enable it to adapt to the evolving
post-pandemic consumer environment, and prepare it for profitable
growth. The improvement plan includes increasing focus on the core
business, a simplification of the product portfolio, and a
reduction in operating costs.
The Company has also taken the necessary steps
to further reduce its SG&A overhead costs in both its Americas
segment and its Corporate functions. These reductions are expected
to further enhance the simplicity and agility of the
organization.
Collectively between the anticipated SG&A
savings in the Asia segment, the Americas segment, and Corporate
functions, the Company targets to achieve approximately $85 million
of savings in 2024.
While the Asia improvement plans are in the
early stages, changes in our structure, operations and business
plan can be expected. The improvement actions, once fully
determined, could result in an impairment charge of the Asia
segment assets. The Company is unable to make a reasonable
determination of an estimate of the severance and, if any, other
costs and charges associated with its organizational improvement
plans in Asia at this time and expects to communicate the outcome
of such determination no later than the time at which it reports
results for the third quarter of 2023.
Based on the Company’s assessment of the current operating
environment, the Company is updating its revenue and capital
expenditure guidance for the full year ending December 31, 2023 and
maintaining its fourth quarter gross margin guidance. The Company
now expects:
- Revenue growth on a constant currency basis in the range of 7%
to 12% compared to full year 2022,
- Foreign exchange to reduce net sales by approximately 130 basis
point for the year,
- Gross margin to improve sequentially quarter-over-quarter in
fiscal 2023, reaching the high-20%s in the fourth quarter, and
- Capital expenditures between $110 million and $130
million.
Also the Company continues to believe this
progress will enable it to deliver positive Adjusted EBITDA for the
fiscal year 2024.
This outlook is provided in the context of
significant volatility related to the COVID-19 pandemic and the
transition to a post-pandemic environment, the war in Ukraine,
macroeconomic uncertainty, and other geopolitical
uncertainties.
The Company cannot provide a reconciliation of
constant currency revenue growth or Adjusted EBITDA guidance to the
nearest comparable corresponding IFRS metric without unreasonable
efforts due to difficulty in predicting certain items excluded
from these non-IFRS measures. The items necessary to reconcile
are not within Oatly’s control, may vary greatly between periods
and could significantly impact future financial results.
Conference Call, Webcast and
Supplemental Presentation Details
Oatly will host a conference call and webcast at
8:30 a.m. ET today to discuss these results. The conference call,
simultaneous, live webcast and supplemental presentation can be
accessed on Oatly’s Investors website at
https://investors.oatly.com under “Events.” The webcast will be
archived for 30 days.
About Oatly
We are the world’s original and largest oat
drink company. For over 25 years, we have exclusively focused on
developing expertise around oats: a global power crop with inherent
properties suited for sustainability and human health. Our
commitment to oats has resulted in core technical advancements that
enabled us to unlock the breadth of the dairy portfolio, including
alternatives to milks, ice cream, yogurt, cooking creams, and
spreads. Headquartered in Malmö, Sweden, the Oatly brand is
available in more than 20 countries globally.
For more information, please visit
www.oatly.com
Forward-Looking Statements
This press release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Any express or implied statements contained in
this press release that are not statements of historical fact may
be deemed to be forward-looking statements, including, without
limitation, statements regarding our financial outlook for 2023 and
long-term growth strategy, anticipated supply chain performance,
anticipated impact of our improvement plans, plans to achieve
profitable growth and anticipated cost savings as well as
statements that include the words “expect,” “intend,” “plan,”
“believe,” “project,” “forecast,” “estimate,” “may,” “should,”
“anticipate,” “will,” “aim,” “potential,” “continue,” “is/are
likely to” and similar statements of a future or forward-looking
nature. Forward-looking statements are neither promises nor
guarantees, but involve known and unknown risks and uncertainties
that could cause actual results to differ materially from those
projected, including, without limitation: our history of losses and
inability to achieve or sustain profitability; including due to
elevated inflation and increased costs for transportation, energy
and materials; the impact of the COVID-19 pandemic, including the
spread of variants of the virus, on our business and the
international economy; reduced or limited availability of oats or
other raw materials and ingredients that meet our quality
standards; failure to successfully achieve any or all of the
benefits of the Ya Ya Foods USA LLC Transaction; failure to obtain
additional financing to achieve our goals or failure to obtain
necessary capital when needed on acceptable terms, or at all;
failure of the financial institutions in which we hold our
deposits; damage or disruption to our production facilities; harm
to our brand and reputation as a result of real or perceived
quality or food safety issues with our products; food safety and
food-borne illness incidents or other safety concerns which may
lead to lawsuits, product recalls or regulatory enforcement
actions; our ability to successfully compete in our highly
competitive markets; reduction in the sales of our oatmilk
varieties; failure to effectively expand our processing,
manufacturing and production capacity, or failure to find
acceptable co-packing partners to help us expand, as we continue to
grow and scale our business; our ability to ramp up operations at
any of our new facilities; failure to meet our existing or new
environmental metrics and other risks related to sustainability and
corporate social responsibility; litigation, regulatory actions or
other legal proceedings including environmental and securities
class action lawsuits; changes to international trade policies,
treaties and tariffs; global conflict and the ongoing war in
Ukraine; changes in our tax rates or exposure to additional tax
liabilities or assessments; failure to expand our manufacturing and
production capacity as we grow our business; supply chain delays,
including delays in the receipt of product at factories and ports,
and an increase in transportation costs; the impact of rising
commodity prices, transportation and labor costs on our cost of
goods sold; failure by our logistics providers to deliver our
products on time, or at all; our ability to successfully ramp up
operations at any of our new facilities and operate them in
accordance with our expectations; failure to develop and maintain
our brand; our ability to introduce new products or successfully
improve existing products; failure to retain our senior management
or to attract, train and retain employees; cybersecurity incidents
or other technology disruptions; failure to protect our
intellectual property and other proprietary rights adequately; our
ability to successfully remediate previously disclosed material
weaknesses (which remained unremediated as of our most recent
fiscal year end) or other future control deficiencies, in our
internal control over financial reporting; our status as a foreign
private issuer; risks related to the significant influence of our
largest shareholder, Nativus Company Limited, entities affiliated
with China Resources Verlinvest Health Investment Ltd. has over us,
including significant influence over decisions that require the
approval of shareholders; and the other important factors discussed
under the caption “Risk Factors” in our Annual Report on Form 20-F
for the year ended December 31, 2022 filed with the U.S. Securities
and Exchange Commission (“SEC”) on April 19, 2023, and our other
filings with the SEC as such factors may be updated from time to
time. Any forward-looking statements contained in this press
release speak only as of the date hereof and accordingly undue
reliance should not be placed on such statements. Oatly disclaims
any obligation or undertaking to update or revise any
forward-looking statements contained in this press release, whether
as a result of new information, future events or otherwise, other
than to the extent required by applicable law.
Non-IFRS Financial Measures
We use EBITDA, Adjusted EBITDA and Constant
Currency Revenue as non-IFRS financial measures in assessing our
operating performance and in our financial communications:
“EBITDA” is defined as loss for the period
attributable to shareholders of the parent adjusted to exclude,
when applicable, income tax expense, finance expenses, finance
income and depreciation and amortization expense.
“Adjusted EBITDA” is defined as loss for the
period attributable to shareholders of the parent adjusted to
exclude, when applicable, income tax expense, finance expenses,
finance income, depreciation and amortization expense, share-based
compensation expense, restructuring costs, asset impairment charge
and other costs related to assets held for sale.
“Constant Currency Revenue” is calculated by
translating the current year reported revenue amounts into
comparable amounts using the prior year reporting period’s average
foreign exchange rates which have been provided by a third
party.
Adjusted EBITDA should not be considered as an
alternative to loss for the period or any other measure of
financial performance calculated and presented in accordance with
IFRS. There are a number of limitations related to the use of
Adjusted EBITDA rather than loss for the period attributable to
shareholders of the parent, which is the most directly comparable
IFRS measure. Some of these limitations are:
- Adjusted EBITDA excludes depreciation and amortization expense
and, although these are non-cash expenses, the assets being
depreciated may have to be replaced in the future increasing our
cash requirements;
- Adjusted EBITDA does not reflect interest expense, or the cash
required to service our debt, which reduces cash available to
us;
- Adjusted EBITDA does not reflect income tax payments that
reduce cash available to us;
- Adjusted EBITDA does not reflect recurring share-based
compensation expense and, therefore, does not include all of our
compensation costs;
- Adjusted EBITDA does not reflect restructuring costs that
reduce cash available to us in future periods;
- Adjusted EBITDA excludes asset impairment charge and other
costs related to assets held for sale, although these are non-cash
expenses, the assets being impaired may have to be replaced in the
future increasing our cash requirements; and
- Other companies, including companies in our industry, may
calculate Adjusted EBITDA differently, which reduces its usefulness
as a comparative measure.
Adjusted EBITDA should not be considered in
isolation or as a substitute for financial information provided in
accordance with IFRS. Below we have provided a reconciliation of
EBITDA and Adjusted EBITDA to loss attributable to shareholders of
the parent, the most directly comparable financial measure
calculated and presented in accordance with IFRS, for the periods
presented.
We use constant currency information to provide
a framework in assessing how our business and geographic segments
performed excluding the effects of foreign currency exchange rate
fluctuations and believe this information is useful to investors to
facilitate comparisons and better identify trends in our business.
Above we have provided a reconciliation of revenue as reported to
revenue on a constant currency basis for the periods presented.
Financial Statements
Interim condensed consolidated statement of
operations
(Unaudited) |
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
(in thousands of U.S.
dollars, except share and per share data) |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Revenue |
|
|
195,987 |
|
|
|
177,958 |
|
|
|
391,632 |
|
|
|
344,144 |
|
Cost of
goods sold |
|
|
(158,331 |
) |
|
|
(149,814 |
) |
|
|
(319,888 |
) |
|
|
(300,152 |
) |
Gross profit |
|
|
37,656 |
|
|
|
28,144 |
|
|
|
71,744 |
|
|
|
43,992 |
|
Research
and development expenses |
|
|
(5,321 |
) |
|
|
(5,718 |
) |
|
|
(11,035 |
) |
|
|
(9,982 |
) |
Selling,
general and administrative expenses |
|
|
(106,695 |
) |
|
|
(97,060 |
) |
|
|
(205,550 |
) |
|
|
(201,133 |
) |
Other
operating income and (expenses), net |
|
|
(1,120 |
) |
|
|
205 |
|
|
|
(2,208 |
) |
|
|
537 |
|
Operating loss |
|
|
(75,480 |
) |
|
|
(74,429 |
) |
|
|
(147,049 |
) |
|
|
(166,586 |
) |
Finance
income and (expenses), net |
|
|
(11,512 |
) |
|
|
(593 |
) |
|
|
(13,508 |
) |
|
|
2,984 |
|
Loss before tax |
|
|
(86,992 |
) |
|
|
(75,022 |
) |
|
|
(160,557 |
) |
|
|
(163,602 |
) |
Income
tax benefit/(expense) |
|
|
273 |
|
|
|
3,032 |
|
|
|
(1,739 |
) |
|
|
4,153 |
|
Loss for the period, attributable to shareholders of the
parent |
|
|
(86,719 |
) |
|
|
(71,990 |
) |
|
|
(162,296 |
) |
|
|
(159,449 |
) |
Loss per share, attributable to shareholders of the
parent: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted |
|
|
(0.15 |
) |
|
|
(0.12 |
) |
|
|
(0.27 |
) |
|
|
(0.27 |
) |
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted |
|
|
593,189,505 |
|
|
|
591,945,667 |
|
|
|
592,757,116 |
|
|
|
591,861,800 |
|
Interim condensed consolidated statement of financial
position
(in thousands of U.S.
dollars) |
|
June 30, 2023 |
|
|
December 31, 2022 |
|
|
|
(Unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
Non-current
assets |
|
|
|
|
|
|
Intangible assets |
|
|
122,171 |
|
|
|
127,688 |
|
Property, plant and
equipment |
|
|
504,743 |
|
|
|
492,952 |
|
Right-of-use assets |
|
|
109,379 |
|
|
|
108,598 |
|
Other non-current
receivables |
|
|
47,240 |
|
|
|
7,848 |
|
Deferred tax assets |
|
|
14,717 |
|
|
|
5,860 |
|
Total non-current
assets |
|
|
798,250 |
|
|
|
742,946 |
|
Current
assets |
|
|
|
|
|
|
Inventories |
|
|
102,825 |
|
|
|
114,475 |
|
Trade receivables |
|
|
102,835 |
|
|
|
100,955 |
|
Current tax assets |
|
|
307 |
|
|
|
243 |
|
Other current receivables |
|
|
33,925 |
|
|
|
17,818 |
|
Prepaid expenses |
|
|
22,244 |
|
|
|
23,413 |
|
Cash and cash equivalents |
|
|
340,730 |
|
|
|
82,644 |
|
|
|
|
602,866 |
|
|
|
339,548 |
|
Assets held for sale |
|
|
— |
|
|
|
142,703 |
|
Total current
assets |
|
|
602,866 |
|
|
|
482,251 |
|
TOTAL
ASSETS |
|
|
1,401,116 |
|
|
|
1,225,197 |
|
EQUITY AND
LIABILITIES |
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Share capital |
|
|
105 |
|
|
|
105 |
|
Treasury shares |
|
|
(0 |
) |
|
|
(0 |
) |
Other contributed capital |
|
|
1,628,045 |
|
|
|
1,628,045 |
|
Other reserves |
|
|
(265,002 |
) |
|
|
(171,483 |
) |
Accumulated deficit |
|
|
(817,351 |
) |
|
|
(665,524 |
) |
Total equity
attributable to shareholders of the parent |
|
|
545,797 |
|
|
|
791,143 |
|
Liabilities |
|
|
|
|
|
|
Non-current
liabilities |
|
|
|
|
|
|
Lease liabilities |
|
|
87,418 |
|
|
|
82,285 |
|
Liabilities to credit
institutions |
|
|
115,211 |
|
|
|
2,668 |
|
Deferred tax liabilities |
|
|
637 |
|
|
|
— |
|
Provisions |
|
|
6,600 |
|
|
|
7,194 |
|
Total non-current
liabilities |
|
|
209,866 |
|
|
|
92,147 |
|
Current
liabilities |
|
|
|
|
|
|
Lease liabilities |
|
|
14,720 |
|
|
|
16,823 |
|
Convertible Notes |
|
|
400,244 |
|
|
|
— |
|
Liabilities to credit
institutions |
|
|
10,332 |
|
|
|
49,922 |
|
Trade payables |
|
|
81,201 |
|
|
|
82,516 |
|
Current tax liabilities |
|
|
4,299 |
|
|
|
5,515 |
|
Other current liabilities |
|
|
11,644 |
|
|
|
11,823 |
|
Accrued expenses |
|
|
116,475 |
|
|
|
123,037 |
|
Provisions |
|
|
6,538 |
|
|
|
3,800 |
|
|
|
|
645,453 |
|
|
|
293,436 |
|
Liabilities directly
associated with the assets held for sale |
|
|
— |
|
|
|
48,471 |
|
Total current
liabilities |
|
|
645,453 |
|
|
|
341,907 |
|
Total
liabilities |
|
|
855,319 |
|
|
|
434,054 |
|
TOTAL EQUITY AND
LIABILITIES |
|
|
1,401,116 |
|
|
|
1,225,197 |
|
Interim condensed consolidated statement of cash
flows
(Unaudited) |
|
For the six months ended June 30, |
|
(in thousands of U.S.
dollars) |
|
2023 |
|
|
2022 |
|
Operating activities |
|
|
|
|
|
|
Net loss |
|
|
(162,296 |
) |
|
|
(159,449 |
) |
Adjustments to reconcile net loss to net cash flows |
|
|
|
|
|
|
—Depreciation of property, plant and equipment and right-of-use
assets andamortization of intangible assets |
|
|
24,697 |
|
|
|
22,607 |
|
—Write-downs of inventories |
|
|
7,609 |
|
|
|
8,165 |
|
—Impairment (gain)/loss on trade receivables |
|
|
(268 |
) |
|
|
132 |
|
—Share-based payments expense |
|
|
10,469 |
|
|
|
19,222 |
|
—Movements in provisions |
|
|
2,797 |
|
|
|
— |
|
—Finance (income) and expenses, net |
|
|
13,508 |
|
|
|
(2,984 |
) |
—Income tax expense/(benefit) |
|
|
1,739 |
|
|
|
(4,153 |
) |
—Loss/(gain) on disposal of property, plant and equipment |
|
|
237 |
|
|
|
(682 |
) |
—Other |
|
|
(815 |
) |
|
|
(227 |
) |
Interest
received |
|
|
2,317 |
|
|
|
1,346 |
|
Interest
paid |
|
|
(7,657 |
) |
|
|
(6,076 |
) |
Income
tax paid |
|
|
(12,191 |
) |
|
|
(1,042 |
) |
Changes
in working capital: |
|
|
|
|
|
|
—Decrease/(increase) in inventories |
|
|
2,371 |
|
|
|
(23,308 |
) |
—Increase in trade receivables, other current receivables, prepaid
expenses |
|
|
(1,934 |
) |
|
|
(10,356 |
) |
—Increase in trade payables, other current liabilities, accrued
expenses |
|
|
6,327 |
|
|
|
29,529 |
|
Net cash flows used in operating activities |
|
|
(113,090 |
) |
|
|
(127,276 |
) |
Investing activities |
|
|
|
|
|
|
Purchase
of intangible assets |
|
|
(1,569 |
) |
|
|
(2,558 |
) |
Purchase
of property, plant and equipment |
|
|
(39,465 |
) |
|
|
(111,264 |
) |
Investments in financial assets |
|
|
(1,651 |
) |
|
|
— |
|
Proceeds
from sale of assets held for sale |
|
|
43,998 |
|
|
|
— |
|
Proceeds
from short-term investments |
|
|
— |
|
|
|
148,269 |
|
Net cash flows from investing activities |
|
|
1,313 |
|
|
|
34,447 |
|
Financing activities |
|
|
|
|
|
|
Proceeds
from Convertible Notes |
|
|
324,950 |
|
|
|
— |
|
Proceeds
from liabilities to credit institutions |
|
|
176,956 |
|
|
|
— |
|
Repayment of liabilities to credit institutions |
|
|
(97,680 |
) |
|
|
(1,032 |
) |
Payment
of loan transaction cost |
|
|
(31,815 |
) |
|
|
— |
|
Repayment of lease liabilities |
|
|
(5,102 |
) |
|
|
(5,846 |
) |
Cash flows from/(used in) financing
activities |
|
|
367,309 |
|
|
|
(6,878 |
) |
Net increase/(decrease) in cash and cash
equivalents |
|
|
255,532 |
|
|
|
(99,707 |
) |
Cash and
cash equivalents at the beginning of the period |
|
|
82,644 |
|
|
|
295,572 |
|
Exchange
rate differences in cash and cash equivalents |
|
|
2,554 |
|
|
|
(13,664 |
) |
Cash and cash
equivalents at the end of the period |
|
|
340,730 |
|
|
|
182,201 |
|
Non-IFRS Financial Measures –
Reconciliation
(Unaudited) |
|
Three months ended June 30, |
|
|
Six months ended June 30, |
|
(in thousands of U.S.
dollars) |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Loss for the period, attributable to shareholders of the
parent |
|
|
(86,719 |
) |
|
|
(71,990 |
) |
|
|
(162,296 |
) |
|
|
(159,449 |
) |
Income tax
(benefit)/expense |
|
|
(273 |
) |
|
|
(3,032 |
) |
|
|
1,739 |
|
|
|
(4,153 |
) |
Finance
(income) and expenses, net |
|
|
11,512 |
|
|
|
593 |
|
|
|
13,508 |
|
|
|
(2,984 |
) |
Depreciation and amortization
expense |
|
|
12,464 |
|
|
|
11,877 |
|
|
|
24,697 |
|
|
|
22,608 |
|
EBITDA |
|
|
(63,016 |
) |
|
|
(62,552 |
) |
|
|
(122,352 |
) |
|
|
(143,978 |
) |
Share-based compensation
expense |
|
|
2,422 |
|
|
|
9,185 |
|
|
|
10,469 |
|
|
|
19,222 |
|
Restructuring costs(1) |
|
|
7,972 |
|
|
|
— |
|
|
|
9,167 |
|
|
|
— |
|
Costs
related to the YYF Transaction(2) |
|
|
154 |
|
|
|
— |
|
|
|
375 |
|
|
|
— |
|
Adjusted
EBITDA |
|
|
(52,468 |
) |
|
|
(53,367 |
) |
|
|
(102,341 |
) |
|
|
(124,756 |
) |
(1) Relates primarily to severance payments as the Company
continues to adjust its organizational structure to the current
macro environment.(2) Relates to the close of the Ya Ya Foods USA
LLC Transaction.
Contacts
Oatly Group AB
+1 866-704-0391
investors@oatly.com
press.us@oatly.com
Oatly Group AB (NASDAQ:OTLY)
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Oatly Group AB (NASDAQ:OTLY)
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