Good morning. And welcome to the Oatly Fourth Quarter 2024 Earnings Conference Call. All participants will be in listen only mode. After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Brian Kearney, Vice President of Investor Relations. Please go ahead.

Good morning and thanks for joining us today. On today’s call are our Chief Executive Officer, Jean-Christophe Flatin; our Global President and Chief Operating Officer, Daniel Ordoñez; and our Chief Financial Officer, Marie-José David. Before we begin, please review the disclaimer on Slide 3. During this call, management may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our future results of operations and financial position, industry and business trends, business strategy, market growth, and anticipated cost savings. These statements are based on management’s current expectations and beliefs and involve risks and uncertainties that could differ materially from actual events or those described in these forward-looking statements. Please refer to the documents we have filed with SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. Also, please note that on today’s call, management will refer to certain non-IFRS financial measures, including adjusted EBITDA, constant currency revenue and free cash flow. While the company believes these non-IFRS financial measures will provide useful information, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with IFRS. Please refer to today’s release for reconciliation of non-IFRS financial measures to the most comparable measures prepared in accordance with IFRS. In addition, Oatly has posted a supplemental presentation on its website for reference. With that, I’d now like to turn the call over to Jean-Christophe.

Thank you, Brian, and good morning, everyone. Slide 5 has the key messages I want you to take away from today’s presentation. First, let me tackle up front our 2024 performance versus guidance. Despite a very robust volume growth of plus 8.8% versus 2023, our 2024 topline results came in below our guidance at 4.8% in constant currency revenue growth. At the same time, our profitable growth focus has delivered our adjusted EBITDA at the favorable end of our guidance range. This demonstrates that Oatly is a much stronger company than it has been two and a half years ago. Over the past two years, we have indeed executed a significant transformation where we now have a much healthier business with clear strategy, clear accountability, stronger margins and significantly improved profitability. Looking ahead to 2025, we expect to drive our first full year of profitable growth. Specifically, we expect constant currency revenue growth in the range of 2% to 4%. As you saw in our press release, we expect an approximately 300-basis-point impact to our goals from a change in sourcing decisions at our largest U.S. customer. Absent this impact, our guidance range would have likely been 5% to 7%. We expect adjusted EBITDA in the range of $5 million to $15 million, and we expect capital expenditures in the range of $30 million to $35 million. We expect to drive this profitable growth by leveraging our brand to ignite positive momentum in the category, while simultaneously driving additional efficiencies. So, let’s dig in. Slide 6 outlines the significant transformation that we have methodically executed over the past two years. One area of change has been in our supply chain. Today, we have a more simplified supply chain that has become a strategic asset. In December, we announced we were closing our Singapore facility, and today we are announcing that we have discontinued construction of our second Chinese facility. With those two announcements, we have five manufacturing plants globally, with no additional plants being built. These five plants can produce approximately 900 million liters of product. We are guiding to $30 million to $35 million of CapEx, which is approximately 4% of revenue. And I am pleased to report that we achieved 99% customer fill rates in 2024, which highlights the significant benefits of increased focus. We have also made significant changes outside of our supply chain. First, we have significantly simplified our overhead structure. Today, we are much leaner, with approximately 1,500 employees, down 500 over the past two years. When it comes to mindset, as profitable growth is our North Star, we now make deliberate, margin-focused decisions about channels, customers and products. We have also augmented our approach to marketing to focus on relevant and integrated brand activation. Slide 7 shows the financial impact. On our second quarter 2023 earnings call, I said that we must have a stronger business before we have a significantly bigger business. I am pleased to report that we have strengthened the business. Versus 2022, our revenue grew by approximately $100 million or 14%. Our gross margin expanded 18 percentage points. And our adjusted EBITDA improved by over $230 million. We are clearly making good, healthy progress. Slide 8 further highlights our healthy progress. Each of our three operating segments improved their adjusted EBITDA by over $70 million in the past two years. While we also made good progress in reducing our corporate expenses. Our teams embraced the challenge, made the necessary changes and drove the sales. To be clear, we have executed this transformation in order to enable our mission. Our mission is an important part of our culture and I believe it makes Oatly truly unique. We have maintained our mission and purpose throughout our transformation and we remain committed to it going forward. As we look ahead to 2025 on Slide 10, we now expect to enter our profitable growth era by driving topline growth and positive adjusted EBITDA. While our constant currency revenue growth rate is expected to be impacted by approximately 300 basis points from a sourcing decision at our largest U.S. customer, we believe the underlying growth rate of our business remains healthy, with further expected distribution gains in all channels and innovation performance that Daniel will detail for us later. Slide 11 shows our priorities for 2025. Our top priority is to ignite category momentum. To do that, we will continue increasing our relevance, aggressively attack the barriers to conversion from dairy, and increase the availability of our products to both new and existing consumers. As we are igniting this category momentum, we intend to continue our aggressive pursuit of cost efficiency. Over the past two years, we have built a strong efficiency muscle and we intend to flex that muscle in 2025 again, to drive margin expansion, simplify for speed and impact and provide further fuel for growth-driving reinvestment. Our final 2025 priority is to fulfill our financial commitment of delivering our first full year of profitable growth as a public company.

Thank you, JC, and good morning everyone. Slide 13 shows our 2025 priorities as introduced by JC. I will provide additional color and context on these priorities and how we plan to execute them. Let’s start with priority one, which is creating the second wave of category momentum. First, I would like to highlight that we posted broad-based steady growth in 2024, as demonstrated on Slide 14. Europe and international had solid growth in both channels, with good contribution from both established and the expansion market. North America reported double-digit revenue growth in retail and 8% growth in food service. As we have previously discussed, North America has been aggressively diversifying its food service business, proactively balancing growth and margin. Excluding the segment’s largest customer, food service sales grew by 22% in 2024, which shows you just how aggressive we have been. North America has been impacted by a change in sourcing decisions at our largest food service customers, and while they remain large and important, we will continue to systematically expand our food service customer base with the same balance criteria, as the opportunity remains massive. Our Greater China segment posted strong double-digit growth in the second half of this year, after it fully lapped its strategic reset. This is driven by our expanded presence in the food service channel. Slide 15 shows our Barista portfolio. It is second to none in velocities and product performance, and it continues to be our largest business and our growth driver. The range continues to expand in breadth and depth, including new items that drive relevance and ubiquity for different locations, channels and price points. In North America, for instance, Barista grew by 10% in 2024, aided by the distribution expansion of the original Barista and the addition of the new creamers to the lineup. In Europe and international, Barista grew by 13% in 2024, growing both the original Barista organically and with incremental growth coming from the 1.5 liters, lighter taste, the organic range and the jiggers. Slide 15 shows we have driven this without a category win at our back. Despite this category sluggishness we have seen in both Europe and in the U.S., we have continued to drive growth. In both markets, our retail takeaway grew in the mid-single-digit in the last 52 weeks, as we have continued to take steady share in nearly every one of our markets. This supports our continued belief that there is a clear difference between plant-based milks versus oat milks and versus Oatly. As I mentioned in the past, we cannot wait for others to grow this category and just take share from less relevant competitors. Oatly has long been the only brand proven to drive category growth and we intend to use that competitive momentum to do it once again. Slide 17 shows the household penetration for the U.K. and the U.S. If we showed additional countries, the story would be identical. Household penetration for the category has plateaued around 20% to 30%. Considering the health, product performance, and climate relevance of our products, as well as the meaning of our brand to younger generations, we see that 70% to 80% of categories take place as an enormous opportunity. Slide 18 shows the first step in recruiting that remaining 70% to 80%, which is to make oat milk relevant to a broader population. In the U.K., we activated the brand, alerting consumers to our semi-oat milk that is tailor-made addition to the daily cup of tea. But it’s just a single activation to expand how we think about oat milk, the results have been quite solid. Our base velocities infected quickly. Interestingly, almost 80% of the volume improvement came from consumers that are new to plant-based milks, showing the power of the brand to increase penetration and convert people away from cow’s dairy when the offering is newsworthy and relevant. However, we know a simple change in messaging is not enough. Slide 19 shows two of the biggest factors we believe are preventing the category from breaking through that 20% to 30% penetration level. The first is the preconceived notions on taste. We know that most people who have not considered trying oat milk believe it does not taste good even before they try it. The second and more recent barrier is misinformation. Following the rise of social media, we see a rise in misinformation, especially on the nutritional value of oat milk. Slide 20 shows one of the first steps in conquering the historical barrier of taste and preconception. In Germany, we used our unique voice to entice consumers with a very single message based on our local market research that proves that over one in two German consumers prefer oat milk to cow’s milk in a blind test. Imagine that, it’s phenomenal. After two months of this integrated brand activation, our baseline sales increased by over 9%. And this is only the beginning with plenty to come. Onto misinformation then on Slide 21. We are increasingly seeing noise on social and in legacy media disparaging the nutritional facts of oat milk. As the most recognizable brand, we often find oat milk is the poster child of these attacks. Many of these false claims are at best misguided and at worst deliberately misleading. Fortified plant-based meals like oat milk are recommended in dietary guidelines around the world. We are a company rooted in science and we stand behind the nutritional makeup of our products. So we refuse to sit by and let consumers continue to fall victim to this disinformation. We have been and will continue to work with and partner with healthcare professionals, journalists, influencers and registered dietitians to debunk misinformation and to ensure the correct science-backed true facts get to consumers without us adding to the noise. In short, we will continue to set the record straight in a very ugly way, of course. We are enthused to see the welcoming initial reactions from these relevant key opinion leaders and their commitment to advocate for science and for facts. Turning now to Slide 22. The final piece of the plan is to continue increasing our distribution and ensure our products are more available be it in new spaces, channels or customers. We continue to believe there is vast opportunity in the European food service channel and we continue to make progress in creating new moments of consumption. For example, many European airlines are showcasing our jiggers on their in-flight menus, replicating the success we have had across the railway networks. These intentional choices on spaces and customers continue to stimulate the oat milk consumption habit. In U.S. retail, we already have our highest ever weighted distribution and our highest ever share of the plant-based milk category. And we have secured additional distribution gains in both chilled and ambient. This new distribution is already coming online just as we launched last year’s range reviews. Our teams will be aggressively pursuing additional opportunities in all channels with customers of all sizes. And in Greater China, we’re excited to announce that we will be entering the Club Channel in 2025. The Chinese retail channel is very large and we’re very excited to partner with these great club stores to start capturing the opportunity in a disciplined way and more actively diversifying our channel footprint.

Thank you, Daniel, and good morning, everyone. Slide 27 shows an overview of the quarterly and full year P&L. For the full year, we reported 5.1% revenue growth and constant currency revenue growth of 4.8%. This was slightly below the guidance we provided last quarter, as category growth remained sluggish. We continue to drive strong gross margin expansion, with the fourth quarter margin expanding 540 basis points year-over-year, bringing the full year margin expansion to 930 basis points. Adjusted EBITDA was a loss of $6.1 million in the quarter and was a loss of $35.3 million, which is at the favorable end of our guidance range. Slide 28 shows the breaking items of our total company revenue growth. As you can see, both our fourth quarter and full year revenue growth was driven primarily by volume growth. We grew volume by 9.9% in the fourth quarter and 8.8% for the full year. Slide 29 shows the drivers of our strong year-over-year gross margin expansion. In both the fourth quarter and full year, the biggest driver of our margin expansion was absorption and supply chain improvement. Our supply chain has become a strategic asset as the teams have maintained high customer service levels to support our growth, while also embracing an efficiency mindset to drive out waste, renegotiate contracts and reduce costs. Slide 30 shows the year-over-year improvement in our adjusted EBITDA. In both the fourth quarter and full year, our improvement was primarily driven by a very good increase in gross profit. In the fourth quarter, we had a slight year-over-year headwind in SG&A as we increased our advertising investment to drive growth. Slide 31 shows segment level details. There are three big takeaways on this slide. First, this is our second quarter of all three segments reporting profitable growth. Second, two of our segments showed profitable growth on a full year basis. Third, each segment brought solid volume growth in both the fourth quarter and full year. Our strategic initiatives and growth plans clearly continue to work. Turning to our balance sheet and cash flow on Slide 32. Our balance sheet remains solid. At the end of the quarter, we had $99 million of cash and $186 million of our credit facilities. Note that our revolving credit facility is completely undrawn and the quarterly changes in its value have been driven by foreign exchange rates. We continue to believe that our business plan remains fully funded with our path to profitable growth. Our profitability continues to improve. We continue to optimize our capital expenditures and working capital, and cash impacts of our exited and discontinued factories remain on track. The middle of the slide shows our free cash flow improvement. Our 2024 free cash flow was $156 million use of cash, which is our best performance since the IPO and a $319 million improvement since 2022. In the fourth quarter, free cash flow was a $23 million use of cash, which was our best quarterly performance since the IPO and an improvement versus Q3. On the right side, you can see our progress on working capital. We have reduced trade working capital by $23 million over the past two years. We have done this while growing revenue, which has resulted in our trade working capital as a percentage of revenue falling by over 500 basis points. I have repeatedly said that improving our cash flow is a top priority for me and we are clearly making good progress. Our first priority for 2025 is to deliver our first full year of profitable growth as a public company. Slide 34 shows the detail of what we expect. We expect constant currency revenue growth in the range of 2% to 4%. Our largest U.S. customer has made a change in how they will source oat milk. While they remain a large customer, we currently expect the change to cause an approximately 300-basis-point headwind to our total company growth. For adjusted EBITDA, we expect to report in the range of positive $5 million to $15 million. We expect the year-over-year adjusted EBITDA improvement to be primarily driven by growth profit. While we continue to monitor and evaluate the tariff situation in our North America segment, and our teams are preparing for possible scenarios, we have not included any potential expected impacts into our guidance. We expect adjusted EBITDA to improve as we move through 2025, driven by a combination of the business continuing to strengthen, higher brand investment early in the year and Q1 naturally being a lower sell due to Chinese New Year. We expect CapEx to be in the range of $30 million to $35 million for the full year. This reflects how now simplified supply chain network of five plants with no additional plants under construction. Slide 35 shows the building blocks of our expected improvement in adjusted EBITDA. We expect the biggest improvement to come from efficiencies in our supply chain and SG&A. We have already taken the appropriate actions to achieve the majority of the savings and we have clear plans and timelines to achieve the remainder. We will continue to regularly evaluate our entire cost structure to seek out additional efficiencies. For example, in December, we announced the closure of our Singapore plant, which we expect will save us nearly $10 million annually. We have also recently renegotiated many contracts that will lower our input costs, as well as internally communicated some changes that will lead to additional SG&A savings as we move through the year. We are controlling the controllables and have clear plans to deliver on our guidance. This concludes our prepared remarks. Operator, we are now prepared to take questions.

The first question comes from Kaumil Gajrawala with Jefferies. Please go ahead.

Hey, everybody. Good morning and good afternoon. I guess let’s dig into the goal for profitability in 2025 being driven by gross margin. Maybe if we could talk a bit about breaking down what the drivers within that gross margin will be. I see some of the details you provide on supply chain, but is there a pricing component, a mixed component, regional pieces, some of those types of things? Any more details in that what looks like is sort of the fat piece of the thing that will swing you to profitability? I think that’d be useful.

Hi, Kaumil. This is Marie-José. I hope you are doing well. Thank you for your questions. Let me elaborate on the answer in addition to what we discussed in the prepared remarks. In those remarks, we mentioned that we anticipate an improvement in gross profit, as you pointed out, which comes from several areas. First, we are optimizing our production footprint. We have made some announcements regarding that. Second, we are maximizing our global sourcing resources. Lastly, we are managing our product mix. There are various factors that could impact our final outcome, including our sales guidance, customer mix, and possibly foreign exchange rates, as I already noted. The key takeaway for 2025 is that we will make progress toward our long-term gross margin target of 35% to 40%. I hope that addresses your question.

It does. And then, maybe if we could just talk about the U.S. a bit and this might be very short-term, but just in very recent results, it looks like promo activity has really spiked, at least in the Nielsen data that we’re looking at. Is there something going on in the industry that we should be aware of as we’re starting 2025?

Thanks, Kaumil. How are you doing? Daniel here. Yeah. You’re spot on. There’s been some volatility in the last that you’re looking at the scanner data the last four weeks, but if we look at a bit more 12 weeks, this is how we see things in the U.S., right, apart from the category dynamics that you see that by yourself. So the biggest driver we see moving forward would continue to be new distribution and the nuance here in the very short-term is that this year’s new distribution will hit a little bit later than last year. So expect a brief blip in the lapping periods between one year and the other. That would be one. The second one that you see in terms of our own performance is a little bit of a drag from the discontinued older innovation and the ones that have been diverging a little bit from our focus, like frozen novelties or cream cheese. That erodes in the short-term 400 basis points to 500 basis points of a growth, but this is short-term and we expect this to be lapped in the coming months, right. Those are the, let’s say, mechanical ones. Importantly, this is how we look at things, Kaumil. We see solid, consistent velocities of our core portfolio milks and creamers in both units and dollars. So all these while we register highest ever dollar shares in plant-based milk and oat milk in the recent periods and in the longer term. So we expect that with the upcoming incremental ACV that you saw in the prepared remarks and in the main banners, we should be maintaining the steady growth trajectory that we have posted so far.

I could ask about the issue related to your largest customer. Was this potentially a business that was already losing money and could this be contributing to higher gross margins, or is there another explanation for what’s happening?

No. We have consistently managed the food service channel in the U.S. and everywhere else. We are balancing decisions related to growth and volume with margin considerations. We will continue to make these decisions as we progress, focusing on both growth and margin. In this context, it's important to note that each customer in the U.S. now accounts for over 20% of the 2024 U.S. sales and only 7% of total company sales. Therefore, any volume we lose results in less cost absorption, and your question is very relevant. We expect to keep tracking on our relentless journey of gross margin improvements we set course two years ago. So you see, we maintain controlling the controllables, and as we said, this large customer continues to be large and super important to us as it is the continued growth in food service channel overall.

Got it. Okay. Great. Thank you.

Thank you.

The next question comes from Max Davenport with BNP Paribas. Please go ahead.

Hey. Thanks for the question. I thought you gave a very helpful update on the category sluggishness that we’re seeing right now and it’s encouraging to hear you aren’t waiting for others and you’ve got plans in place to get the category moving in the right direction. I also recognize that you regardless are posting differentiated performance versus the category, but can you expand on how much you think is in your control with regard to improving the category this year? And then also how much of the pressure right now is simply the lack of ability to bring in new households and then how much are you seeing in terms of existing households maybe leaving the oat milk category because of some of the headwinds you announced in terms of the misinformation on nutrition? Thanks very much.

Thanks for the question, Max. I appreciate your effort to understand our situation. To begin with, I want to emphasize that Oatly has successfully achieved this before, and we are determined to do it again. We don’t believe there is anything preventing us from starting this next wave of growth. Looking at the bigger picture, we recognize that these types of shifts don’t follow a simple growth trend; instead, they come in waves influenced by the adoption among different consumer groups, such as Millennials and GenZ, who respond differently to various contexts. The factors related to sustainability are perceived differently by them as well. There are a couple of key points to address in your question. First, regarding growth, I want to highlight that the performance we’re currently experiencing, even without strong tailwinds, is expected to continue. We see ongoing opportunities for steady growth through improved distribution and increased penetration with our diverse new portfolio, which is promising across various formats and concepts. We are also excited about the growing presence of our brand in new international markets, which are beginning to reach significant scale. We started this endeavor two years ago and are pleased with our progress. Second, you might have noticed our shift in marketing strategy. We’re not changing our unique model but are instead refining how we allocate our marketing resources. This approach is evident in our recent campaigns, like our integrated tea activation in the U.K. and the taste experience in Germany. These efforts aim to address the primary barrier to adoption, which is taste. We believe that the perception of plant-based milk is heavily influenced by taste prior to consumption, and we’re encouraged by initial results in Germany that show our potential to attract new consumers to oat milk. We continue to have strong faith in the Oatly brand. Our recent collaboration with Nespresso, which you may have heard about, has already shown signs of success, with our Oatly pods quickly selling out and ranking highly among Nespresso products. This gives me confidence that we will soon share more specific details about how we are bringing new households into the Oatly brand and experiencing early signs of category growth. However, we recognize it is still early in this process. Internally, we are focusing on category growth as one of our controllable factors moving forward.

Yes. Very helpful. And as I look at your plans for 2025, it strikes me that much of the EBITDA progress you’re targeting is actually completely unrelated to sales and to category growth, and it’s much more related to supply chain improvements that are completely in your own control regardless of where the category goes. So I was hoping you could just give us an update on where you are on that supply chain journey longer term as we think about the continued progress you could make on that front beyond 2025. Thanks very much. I’ll leave it there.

Thank you for the question. To address your inquiry, the first key strategy is the significant recalibration of our supply chain. We have decided to discontinue three new factory projects in the U.S., U.K., and now China, along with closing our Singapore plant. This shift allows us to concentrate all our execution capabilities and capital expenditure on five existing sites worldwide, which is crucial. We believe that this recalibration enhances our focus, and focus drives performance, which is fundamental to our business. The second strategic focus is our ongoing pursuit of supply chain efficiency and maintaining an asset-light structure. This has been a significant factor in our gross margin improvement, which reached a full-year gross margin of 28.7%, indicating an increase of 9.3 percentage points from last year. As you mentioned, this improvement is a substantial driver of our EBITDA progress for 2025, as we continue to pursue further efficiencies within a more streamlined and effective network. That's what you can expect from us.

Great. Thanks very much.

The next question comes from Ken Goldman with JPMorgan. Please go ahead.

Hi. It’s Elsa on for Ken. So it does seem like the majority of the year-over-year improvement and adjusted EBITDA for 2025 is expected to be driven by increases in gross profit tied to supply chain productivity. How should we think about the cadence of that improvement as we go throughout the year?

I will take it. Thank you for the question. So as we said, adjusted EBITDA, and you just mentioned this again, will improve as we move through 2025, driven by the combination of the business continuing to improve, higher brand investment as well early in the year and Q1 naturally being a lower sell quarter due to the Chinese New Year. Now, with that said, let me tell you that we have three things that are happening in 2025. First – and how you need to look at the segments of the year. First, the expansion markets continue their growth rate and will improve the segment growth rate as we move through the year. Second, in the second half of 2024, we increase our promotional activity in Europe, which has impacted our constant currency revenue growth and we expect that to be less of a headwind as we enter in the second half of 2025. And the third point is that we expect our new integrated brand activation investment of the first half to drive accelerated growth in the second half. So the way to look at the segments within the year is pretty driven by these major three things that I just pulled out.

Great. Thanks. I’ll pass it on.

The next question comes from Michael Lavery with Piper Sandler. Please go ahead.

Thank you. Good morning and good afternoon. I just wanted to come back to the largest customer in the U.S. I realize it’s not unprofitable, but to your point, it helps cost absorption even if it may be lower margin than retail. Can you give us a sense of what, if any, risk to the remaining business there? You anticipate it sounds like there’s been a couple times now the footprint that you represent there has been cut back. Any look ahead of how maybe stable that is going forward or what should we expect there? Thank you.

Thank you, Michael. It's great to hear from you. This is Daniel. I'd like to address a few points we discussed earlier regarding our significant customer. Unfortunately, I can't provide a definitive yes or no answer to your question. However, I want to emphasize our exposure to this key customer. Currently, this customer accounts for only 20% of our 2024 U.S. sales from last year and 7% of our total company sales. This gives you an idea of its size and the implications of our decisions. Now, regarding your question about the outlook, when we talk to consumers and baristas within our food service and coffee segments, they consistently note a significant quality and performance difference between our products and those of our competitors. This feedback reinforces our confidence in our ability to continue aggressively pursuing new customers, expanding distribution, and increasing our market penetration. Moreover, as illustrated by our recent quarter, we've experienced 22% growth outside of this major customer, indicating that our reliance on them is decreasing. We will keep focusing on what we can control, maintain this valuable customer relationship, and drive our business forward.

Okay. Yeah. That’s a helpful color to add. And then just on Asia with your decision to discontinue the second China plant, you said that the Manchon can support the current business and growth. Had your expectations for the market opportunity there changed? How much is there maybe an influence of the current macro environment in China versus a longer-term view? Maybe just help us understand what if anything changed in your outlook for demand and how that impacted this decision?

Thank you so much, Michael. JC here. I’ll take it. First of all, let me confirm that our business in Greater China is showing a lot of development trends at the moment. We have reported profitable growth in this market since Q3 of 2024 and we see that as a direct result of the research strategy that our China team has executed with excellence. I could also comment on the fact that our relationships with our key customers and partners there are stable and we see them as being highly productive. So overall, what do we see in China? On the food service side, which is the majority of our business in China, we really see promising systemic momentum across all our important customer base. It’s a very vivid, vibrant environment there and we have great relationships with the key customers. Beyond this, as you have heard from Daniel, we are excited to announce that we will be entering the Club Channel in 2025. And this Chinese retail channel is extremely large and we are very excited to partner with these great club stores to start capturing the opportunity in a very efficient way and more actively diversify our Chinese food chains. So, overall, what you hear from us is we continue to see a lot of opportunities in China.

Okay. That’s great. Thank you very much.

The next question comes from John Baumgartner with Mizuho. Please go ahead.

Good morning. Thanks for the question. Maybe first off, it’s nice to see the guidance for positive EBITDA in 2025 and that milestone. And I’m curious if you could walk through that in a bit more detail. This past year, there was some flexibility in the model where you invested at a healthy level for trade and support to coincide with increased distribution. And you’ve incorporated some year-on-year drag in 2025 from larger brands building as well. But I’m curious, given the plans to build more distribution again this year, the comments you’ve made around challenges to household penetration, what’s your confidence you’ve adequately built in enough reinvestment into the guide, whether for marketing, for trade, for pricing? I’m just curious as to your confidence level in at least the low end of EBITDA guidance for this year?

Thank you so much, John. Jean-Christophe here. I’ll start and probably get the compliment from my friend Daniel here to answer your question. So thank you for noticing that achieving profitable growth, as you know, it is, has been, and will remain being our North Star. And I have to say, it’s a very important moment today for our teams, for ourselves, marking the moment to guide in 2025 a kind of a new era, which is the first full year of profitable growth as a public company. It’s an important moment for us. We are pleased with the significant structural progress we have made so far, mainly the gross margin increase and the SG&A recalibration that we highlighted. And you spotted it very well. These two levers have significantly changed the peanut shape of this business over the past two years. And because we continue and will continue to work on them, they will continue to explain the vast majority of our EBITDA improvements between 2024 and the 2025 guidance. Attached to that, what we will remain extremely disciplined on is both the cost and the capital. So what we have applied so far is a very strong turnaround mindset and we are turning it into an ongoing efficiency obsession mindset. And with this mindset, and this is exactly this mindset that will drive us to make deliberate, margin-focused decisions when it comes to new channels, new customers, new markets and new products. So that’s the way overall, I wanted to start there by saying what will fuel and drive the vast majority of the EBITDA improvements and what’s the mindset with which we make these decisions? Now, over to Daniel to give more color.

That’s a great question, John. As you can imagine we have been all hands on deck for a while reassessing our choices here. So, long story short, it’s not about allocating more investments into the brand. It’s about the how are we allocating investment into the brand to drive and bring down these barriers of further conversion, right? So, in one hand, your question was about our confidence levels. I believe that our plans are fully resourced when it comes to the confidence levels to deliver what we are guiding for today, not more and all the efficiencies that JC was referring to are blended into the resource we are allocating. And I would like to mention again what I was referring to a couple of remarks ago, which is what do we mean by the how, right? And where this new marketing approach is simply being more precise and more intentional in how we articulate the brand activities against this new category context, which is focused on barriers to penetration and we’re deploying that in a much more integrated manner. In the early days, we were very encouraged with the results. So, precise resource allocation while protecting the brand and the uniqueness of the model of this brand and the teams behind, which is what sets us apart.

Okay. Thanks for that. It’s helpful. And then, coming back to Kaumil’s question on margins, just to focus more on the OpEx line, you’ve made quite a bit of progress the last few years reducing expenses and you’ve got another benefit coming through in 2025 guidance. But bigger picture, how do we think about incremental OpEx reductions from here? Are there more reductions to be had following what you achieved in 2025, or at this point, are the incremental gains just more about leveraging the existing base from volume growth?

Thank you for the follow-up, John. We are always seeking efficiency and believe there is still more to achieve. We are committed to this mindset, which has evolved from a turnaround approach to a culture focused on ongoing efficiency. We will channel this mindset into further improvements in both supply chain and SG&A. As mentioned by MJ in the prepared remarks, we are currently working on reducing SG&A as we enter 2025, and these efforts are being implemented. It's important to note that when benchmarking against peers, our total SG&A includes both advertising and distribution costs, which may not be the same for all companies, affecting comparisons. Additionally, some of our SG&A reflects strategic, profitable choices, such as investments in new markets to develop categories and drive growth. As we strive for growth, you can expect continued active efforts on SG&A improvements. A portion of our SG&A will align with our volume goals but will not exceed those. Moreover, we anticipate leveraging the fixed portion of our SG&A as we pursue ongoing improvements. We are committed to this process and understand its importance in achieving our goals.

Maybe last one for me real quick. You highlight the degree of incrementality for new consumers into the plant-based beverages category in the U.K. And I’m curious, tying back to some of the softness in consumption growth, what’s your opportunity if you look more at capturing existing plant-based beverage buyers who already have overcome the hurdles of maybe taste concerns and nutritional misinformation? Looking back in the U.S. evolution where almond came into the category about 10 years ago and took quite a bit of share from soy milk, thinking about oats’ ability to take share from soy or almond from better functionality, whether it’s in creamers, ingredients, recipes, how do you think about the ability to maximize that, taking share of the existing plant-based beverage consumer base in addition to just getting more household incrementality?

Thanks, John. Daniel, I'll address that. When we look at the portfolio, my response is twofold. Our main goal is to continue expanding this category. This isn't just driven by our mission; it's a key focus for us, and I want to reiterate that. Over the past couple of years, we've been steadily increasing our market share, which means we are competing not only against other oat milk brands but also against other types of crops. If you examine the other crops in both the U.S. and Europe, you'll notice that they are declining as we continue our mission and focus on conversion. Referring back to the chart that John mentioned, which illustrates our Barista All Things Coffee portfolio, you can break this portfolio down into two components, aligning with what you're observing. We're expanding across various formats by making our presence felt in different channels, occasions, consumption moments, and price points. We're successfully capturing market share from all sorts of competitors, both within and outside the plant-based milk category. Looking at different products in that portfolio, such as the Organic Barista or the Lighter Taste Barista, we are not only attracting new consumers but also gaining share from existing plant-based milks. I don't want to give a vague answer by suggesting we do both, as effective strategy involves making choices. We prioritize conversion, and we've demonstrated over the last two years that by gaining share from other crops and competitors, we are achieving our objectives.

Great. Thank you very much.

Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Brian Kearney for any closing remarks.

Great. Thanks a lot everyone for joining us. Feel free to reach out to me if you have any follow-up questions. Everybody, have a great day.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.